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Dairy Farm Business Income Forecast – Defra Research 2024

Farm Business Income Research For Dairy Farmers

The forecasted average Farm Business Income (FBI) for dairy farms in the upcoming 2023/24 period is set at £50,000, marking a staggering 78% decline from the exceptional highs of 2022/23. This significant decrease is primarily attributed to a substantial fall in livestock output, predominantly driven by a decrease in output from milk and milk products of approximately 19%.

2024 A Drastic Downturn – Understanding the Dynamics

The decline in farmgate prices for milk, which began to falter in early 2023 following the volatility of the previous year, serves as a primary catalyst for the reduction in livestock output. Despite relatively stable milk volumes and animal numbers compared to the previous period, the downward pressure on prices significantly impacts overall farm income.

Defra statistics reveal a notable drop in the average farmgate price from 43.59p per litre to 37.83p per litre between March and December 2023, highlighting the market readjustment.

Dairy Market Challenges

In addition to the woes in livestock output, crop output is anticipated to decline by just under a third, with wheat bearing the brunt of this reduction. Despite these challenges, input costs are forecasted to remain unchanged, with lower feed costs and wages offsetting increases in general farming costs.

Notably, the reduction in the number of workers, rather than lower wages, contributes to the decline in wage costs. However, property costs and other livestock costs are expected to experience slight increases.

Financial Balancing Act

For dairy farms, the average Basic Payment is expected to hover around £14,800, representing approximately 30% of overall FBI. This underscores the importance of government support in stabilizing farm incomes amidst market fluctuations. Furthermore, agri-environment payments are predicted to rise significantly by 43%, reaching £11,400. This emphasizes the growing importance of sustainable farming practices and diversification efforts in bolstering farm revenues.

In conclusion, the forecasted outlook for dairy farm business income in the 2023/24 period presents formidable challenges. However, with strategic management, adaptation to market dynamics, and leveraging available support mechanisms, dairy farmers can navigate these turbulent waters. As we navigate through uncertain times, let us remain resilient, innovative, and committed to the sustainability and prosperity of the dairy farming sector.

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