Wednesday, 11 August 2021
By Patty Clayton
Feed prices have been relatively high this year, putting pressure on farmer margins. The variable quality of silage, means even those with full clamps may need to purchase in additional feed. With risks remaining around further increases in feed prices as we move towards the winter months, it’s worth assessing the extent that margins are exposed.
We’ve previously looked at the milk to feed price rate for farmers on different milk contracts, as prices have differed by market segment. While this provides some insight into the difference in margin pressure faced by individual farmers, it assumes all farms face the same exposure to high prices for bought-in feed. Differences in farming systems, overall yields and the amount of concentrate used per cow mean the level of risk is not the same for all farmers.
The table shows the average amount of concentrate feed fed per litre produced across calving systems and type of contract over a 7-year period from 2012/13 to 2018/19.
To assess how exposed farms are to increases in feed prices, we’ve measured what proportion of the annual average milk price is used to cover the cost of purchased concentrate feed per litre of milk. The feed cost per litre has been calculated using average concentrate prices.
This measure is shown in the below chart, which compares the average share of feed costs from the past 3 years (2018-2020) to year-to-date figures for 2021 (Jan-May 2021).
Regardless of milk contract, or calving system, feed is taking a larger share of the milk price so far this year than on average. Given its low reliance on purchased feeds however, spring block calving systems have been less impacted than other systems.
By knowing where your farm typically operates in terms of exposure to purchased feed costs, you can determine the risk to your margin in the light of potential changes in both feed and milk prices, relative to your overall feed demand.
Our Agri-market outlooks provide that insight, highlighting the key trends and elements that will shape those trends in the next few months.
 Includes youngstock and milking herd
 Based on AHDB standard litre prices by contract type (aligned liquid, non-aligned liquid, cheese and manufacturing)
Sign up for regular updates
You can subscribe to receive Dairy market news straight to your inbox. Simply fill in your contact details on our online form and select the information you wish to receive.
While AHDB seeks to ensure that the information contained on this webpage is accurate at the time of publication, no warranty is given in respect of the information and data provided. You are responsible for how you use the information. To the maximum extent permitted by law, AHDB accepts no liability for loss, damage or injury howsoever caused or suffered (including that caused by negligence) directly or indirectly in relation to the information or data provided in this publication.