High machinery costs were the biggest factor affecting competitiveness of the typical UK dairy farm against businesses in other countries.
This is according to new analysis which looks at costs and margins for British dairy farms and their counterparts around the globe.
Dairy businesses are exposed to the global markets through the UK’s international trade in dairy products, which puts British produce in direct competition with that of farms from abroad.
Understanding costs of milk production in other dairy exporting nations allows analysts to gauge how competitive UK farms are.
Looking at typical farm data from 15 of the world’s largest dairy exporting countries showed larger profits were associated with lower overhead costs.
Breaking overhead costs down further showed that lower machinery costs were also associated with larger profits.
To see how the UK’s overheads compared with the best performing typical farms from exporting nations, AHDB's analysis ranked farms from these 15 countries by their profit margin to produce a top and bottom 10 farms.
The typical UK farm compared fairly well across most areas, with costs generally not far off those of the top ten.
However, machinery stands out sharply as the single area in which the typical UK farm is spending considerably more than its competitors, with costs more than double those of the top 10.
The analysis suggests machinery is an area in which some UK farms may have scope to tighten up costs and improve profits.