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Marginal growth expected in GB milk production for upcoming season
Thursday, 23 March 2023
GB milk production for the 2023/24 season is forecast to reach 12.46bn litres, 0.5% more than the current milk year, according to our March forecast update. The current season is expected to finish at 12.39bn litres, up by 0.2%. The improvement in yields seen since September 2022 has boosted the current season total, which was running behind throughout the first half of the season by around 1-2%.
The improvements in milk production in the second half of the 2022/23 season were predominantly driven by higher yields, encouraged by the high milk prices paid through the winter months. Cow numbers were relatively stable, with the size of the GB milking herd in January 2023 only 0.8% lower than a year earlier. This is the smallest annual decline since January 2018, according to data from BCMS.
At the latest Milk Forecasting Forum, it was generally agreed that the current yields were likely to continue through the spring period. However, there are some risks to production in the second half of the season when working capital requirements increase against a backdrop of declining milk prices.
In general, inflation in key input costs has slowed in recent months, although prices for fuel, fertiliser and feed remain high in historic terms. With announced cuts to milk prices in the first three months of the year reaching up to 6.45ppl, and further cuts expected in the lead up to the spring flush, farm margins will come under increased pressure through the season.
This pressure could be exacerbated if grass growth this spring does not allow for depleted silage clamps to be replenished. The combination of increased production costs, lower milk prices and strong cull cow prices could lead to higher-than-expected destocking, limiting production over the winter months.
Overall, our baseline forecast assumes yields will begin to fall back following the spring flush, while the GB milking herd will remain relatively stable. Yield growth through the summer and autumn is expected to slow from current levels of around 2-3% to more typical annual growth rates of 1-1.5% per annum.
Our next update to the forecast will be in June, when there will be more certainty over price levels and silage availability.
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