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Dairy producers are expected to see a return to profitability in the 2024-25 milk year following losses in 2023-24. The increase in dairy profitability is mainly due to higher milk outputs rather than cost savings, as reported by Wiltshire-based farm business consultancy firm Douglas Green Consulting. They anticipate an average profit of 1.1p/litre for conventional dairy producers in 2024-25, compared to a loss of 1.5p/litre the previous year.

Cost of production is forecasted to slightly increase by 0.3p/litre to 45.6p/litre for 2024-25, while total output is expected to rise by 3.2p/litre to 47p/litre due to stronger milk prices. Despite top 25% of producers achieving below-average output in 2023-24, overall profitability was higher due to lower costs.

Founder and director Douglas Green noted that lower purchased feed costs have helped in the past year, although inflation of overheads offset some savings. Many farmers faced challenges in producing quality forage, leading to increased reliance on purchased feed. He mentioned that while the cost per tonne of feed has decreased, the spend per litre may have increased.

The Dairy Group projected a similar trend with a return to profit of 0.5p/litre forecast for 2024-25, depending on milk prices for the remainder of the year. They advised on reducing feed costs by optimizing home-produced forage and buying cost-effective energy and protein sources.

GB milk supplies were tight during the summer but have increased recently, with daily milk deliveries up by 2.2% in mid-October. Dairy market specialist Chris Walkland suggested that supply could fluctuate as cows transition to silage, and the milk to feed price ratio influenced production levels.

Despite dairy dispersal sales increasing, the industry has seen a decrease in the number of producers, with approximately one exiting the industry daily. As of April 2024, there were 7,130 GB dairy producers remaining, but Mr. Green estimated that only 4,000 farms producing 3m litres a year would be sufficient to maintain milk production at 12bn litres annually.

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