The financial hit to British dairy farmers for April 2020 amounts to £9.4 million as a result of the coronavirus crisis, new research by AHDB suggests.
The loss of foodservice markets as a result of the Covid-19 pandemic has affected a significant number of dairy farming businesses in the country.
Of the estimated 9,200 dairy farmers in Britain, more than 5,200 have experienced a decline in their milk price, ranging from 0.5p per litre to 4ppl and over.
The figures are part of a new report by the AHDB looking into the financial impact of the coronavirus on the dairy sector.
It shows that nearly 500 farmers had milk collections cancelled, 500 had payments deferred, 2,200 asked to reduce milk output and 700 had the volume they get paid a full price on reduced.
A number of farmers have suffered more than one of these impacts, according to Chris Gooderham, head of market specialists for dairy, and Patty Clayton, lead dairy analyst, who both wrote the report.
So far, three-quarters of the farmers in Britain have had some form of impact on them as a result of coronavirus.
AHDB's assessment is that 12 percent have seen a high impact and a further 14 percent a medium impact on their businesses.
The greatest impact on dairy farmers financially so far has come from the reduction in milk prices, Mr Gooderham and Ms Clayton explained.
On announcements made to date, the impact of milk price cuts in April alone is put at over £7m, they said, and this impact increases to nearly £13m in the month of May when other reductions come into play.
This would put the overall impact for price cuts at £20m over the two months, the report suggested.
Overall, the financial hit to dairy farmers for April 2020 is calculated at £9.4m, the authors said, but with further price cuts already announced for May as well as some significant cashflow challenges, losses would continue.
"The cost of reducing milk volume will vary greatly between farmers, based on the amount they are required to reduce by, but also on the approach they take to cutting volumes back," the report explained.
"A farmer who feeds milk to dairy calves will be able to offset lost revenue with reduced calf feeding costs. A farmer who dries cows off early, or reduces feed, should be able to make a feed cost saving.
"Although it is recognised that the spring is not the easiest time to cut feed for those using the spring grass flush."
The report added assumed a drop in concentrate feed of 4 percent to get a milk volume reduction of a similar amount.
The net loss to the farmers who have been asked to cut back milk production of doing such a move is 18.1ppl on the volume that they reduce by.
"Therefore a 3% drop in milk output equates to 0.54ppl on all of their milk (18.1ppl x 3%)," the report's authors said.
"For the farmers so far asked to reduce output, if they did so by 3% the overall cost is put at £1.9m per month. This is the loss of revenue after netting off potential cost savings."
The loss from disposal of milk will be highly dependent on any insurance that the farmer has, but is estimated to be another £280,000 so far in April, Mr Gooderham and Ms Clayton said.
"Whereas payment deferrals should in theory only be costed based on interest rates, and would therefore be fairly minimal.
"However, the implications on cashflow for some farmers would be far more significant."
