British dairy farmers are quitting their businesses in record numbers, according to the latest AHDB survey.
The data shows that there were approximately 7,130 producers in the UK in April 2024. This is 5.8% fewer than the previous year. This compares to 7,570 producers in April 2023 and 7,500 in October 2023. This suggests that 440 farms closed over the winter. Average milk production per farm is increasing, but average herd growth has remained stable. This suggests that the industry will continue to consolidate.
Food Standards Agency data (which differs from AHDB estimates) shows that the greatest loss of dairy farmers was in the North West and North of England, followed by the Midlands and Mid West (16), including Devon, Somerset and Wiltshire (where 13 dairy farmers stopped supplying milk). AHDB data is based on the number of active milk producers, while the FSA or Defra may check less frequently or count dairy farms that are unlikely to be commercially viable.
Why are British dairy farmers leaving the sector? Freya Shuttleworth, AHDB Senior Livestock Analyst, explains there are several factors.
Milk prices have declined significantly from their 2022 peak, even though they are historically higher. The combination of high cull cow prices and continued inflationary pressures on inputs such as fuel, feed, and energy, along with higher interest rates pushing up borrowing costs, could have prompted producers to shut down as margins narrowed.
According to Defra, the average farmgate price of milk in the UK was 38.43 ppl in June 2024. This is 13.08 ppl lower than the maximum price paid to farmers in 2022 and 1.53 ppl lower than in June 2023.
In terms of input costs, fertilizer prices have remained relatively stable since 2023. However, fuel prices are increasing by 3.5 % per year.
The Savills 2024 Farmland Report estimates land value growth in England at an average of 4 billion pounds by 2023. Land availability is high in the North. Values in Scotland remained stable, and stock levels were negative in 2023. Prices in Wales increased by an average of 23 billion pounds, with trading at a 23-year high. Supply also increased by over 40 billion pounds.
This also coincided with some of the wettest conditions on record, which disrupted forage production. Many cattle were housed earlier than usual, and spring turnout was delayed.
For some producers, increased pressure from regulatory bodies (such as nitrate vulnerable zones or slurry storage) may also have been an incentive to stop before making long-term investments.
It is important to note that some farms close or sell because no one is willing to replace them.
She added that the investigation only began in 2019.
The April 2024 figure is the largest decline, but annual changes have previously ranged between -1.9% and -4.7%. This decline is therefore not a new trend, but rather the continuation of long-term changes in the industry.
She said the biggest fluctuations in milk prices during this period occurred in 2021, when prices rose sharply. However, producers continued to report negative changes during this period.
Since the mid-1990s, the number of British dairy farmers has declined by about 70 percent. Cow numbers have also declined by about 28 percent. Annual milk production has increased as cow-to-farmer efficiency has improved. Production in 2023/24 was 0.2% higher than the previous year.
What is the outlook for the British dairy industry? And how likely is it that we will see an increase in the number of producers?
Shuttleworth said there is always room for fresh blood, and that should be encouraged. But the consolidation trend is expected to continue.
The dairy herd remains relatively stable, despite the declining number of producers. The number of dairy cows has declined over the years, but industry workers are working to increase productivity. Average yields per animal are higher, and milk production is relatively stable.
In the 2023/24 season, Britain's milk volumes are down only 1.6 per cent on the previous season – our earliest ever record – compared with an 11.5 per cent decline in the dairy herd. [January 2016 vs January 2024, ed.].
The analyst said environmental regulations would focus industry efforts on increasing efficiency across the entire supply chain, from farm to store.
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