Study gives encouragement to smaller dairy farmers

A research study published today, commissioned by Milk Link, one of the UK's leading integrated dairy businesses, has found that the efficient use of managerial inputs on-farm is much more important than size in determining whether a dairy enterprise is successful.

The study, carried out by the Centre for Rural Research at the University of Exeter, identified a number of key requirements for dairy farming success including a need to raise skills in dairying, particularly at managerial level; a need for the use of more sophisticated management tools such as professional advice; and more effective use of benchmarking, typically in collaboration with other producers.

Declining profitability has resulted in an increase in the restructuring of herd numbers, with many industry commentators suggesting the only way for dairy farmers to sustain their business is to increase their herd size. However, the new research has highlighted that there are efficient smaller herds, which are able to outperform many less efficient larger herds. The research shows that many smaller-scale producers have scope for improving their farm's performance and strengthening the viability of their business. In particular, it highlights the fact that the top 25 per cent of smaller farms achieved a higher output, with considerably lower variable and fixed costs, resulting in increased profits.

Specific findings are that the best farms had:

Higher stocking rates

More efficient use of concentrate feed

Lower cost structures

Much higher profitability levels.

Martin Turner, principal author of the study, commented:

"Many studies have identified a bleak future for smaller-scale dairy farming. Our study points to the areas which need attention if such units are to survive and also shows that there are many successful examples of well-run smaller herds that can compete with the large units. The effect of improved management is a dramatically stronger 'bottom line'. Remarkably the difference in net profit between the top and the bottom quartiles was more than £50,000 per farm, which is extremely encouraging for smaller herd dairy farmers."

Mark Brooking, Membership Director at Milk Link, added:

"This study is a positive boost for dairy farmers with smaller herds, as it proves that they can compete successfully in the market if they demonstrate good technical and business managerial skills. In addition to the ongoing technical information we share with our members, Milk Link will be analysing the findings of the report and passing information onto members about how to achieve similarly high outputs, through a reduction in their variable and fixed costs."