Estimated cost of GB milk production falls

Published 3 June 15

The estimated typical cost of milk production* in GB fell around 5% over the year to March 2015, a decrease of roughly 1.5 pence per litre. Lower concentrate costs contributed to this, despite an increase in concentrate usage in 2014/15. Herd replacement costs reduced following falls in heifer prices, whilst other inputs such as cereals, straw, fertiliser and fuel also dropped in price.

Although these cost savings provide some welcome relief on margins, for many they will have been more than offset by the approximate 25% drop in average GB farmgate milk price.

Estimated typical GB milk production costs for 12 months ending Mar-15 (ppl)
  Top 25% Bottom 25%
Total cash costs of   production  23.4 30.5
Total full   economic costs of production* 26.5 36.2
% change cost   of production compared to 2013/14 -5.0% -4.8%

 †Top and bottom 25% ranked on net margin after total full economic costs of production

Source: AHDB/DairyCo

*Total full economic cost of production includes cash costs, imputed unpaid family labour, depreciation, rental value of owner occupied land and imputed finance costs. Estimates are based on historic figures then adjusted using changes in milk yields, concentrate usage and input prices.