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Milk to feed price ratio finally starting to rise in UK

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Staff Writer | October 21, 2016
Comparing feed prices to milk prices is another tool to indicate the financial pressures on farm. Feed costs typically account for between 30% and 40% of the total cost of production, according to AHDB dairy.
Milk to feed price
Britain   The lower the ratio, the more difficult it will be
The lower the ratio, the more difficult it will be for farmers to cover their cash costs and, in particular, feed costs with returns for milk.

Over the last 5 years, the ratio of farmgate milk price# to feed price* has averaged 1.06.

Since early 2015, the ratio has been running below 1, mainly off the back of falling farmgate milk prices. The ratio hit its lowest level in at least 15 years of just 0.82 in June 2016, but has lifted slightly since this date.

The lift has been achieved from higher farmgate prices, while feed prices remained relatively stable up until August.

Defra has not yet released the September farmgate milk price. However, dairy feed prices did increase by 4% between August and September, so farmgate prices will need to lift by more than this amount to ensure the ratio continues to improve.