Weaker productivity makes it hard to produce at a competitive price and still make a profit, leaving UK dairy products vulnerable.
In the UK, productivity on dairy farms has gone down over the last ten years, while productivity in other major dairy-producing countries has stayed the same or gone up.
The International Farm Comparison Network (IFCN) has found that the average UK dairy farm is now less productive than it used to be.
Productivity is the ratio of the amount of output to the amount of input. It is a way to measure how well something works.
If you look at the productivity of a typical 160-cow herd in North-West England as pence per litre (ppl) of output vs. input, you can see that it has been going down over the last ten years.
IFCN data shows that this is also happening on a typical North German farm, so the UK is not alone.
But farms in other places, like Denmark and Belgium, which have been exporting dairy for a long time, are getting more out of their animals.
Countries that are exporting more, like Spain, Poland, and Belarus, have also become more productive.
(Source: IFCN, AHDB)
It is hard to produce at a competitive price and still make a profit when productivity is low. This makes it easy for countries with more efficient production to undercut UK dairy products.
With the prices of inputs being so high right now, it may be hard for farms to improve productivity in the near future, at least in terms of outputs per person.
The AHDB looked at the data from the IFCN and said, “International comparisons of productivity like this often lead to two comments.
“The first is that the UK was already more productive, so some other countries are just catching up.
“This may be partly true, but the data shows that farms in a few of these countries are now more efficient than those in the UK.”
The AHDB also said, “A common second question is, if a lot of British milk is sold in the UK, why does this matter to farmers here?”
“The direct result is that herds make less money because they use more resources to make less.”
The AHDB said that imports and exports expose the UK to global dairy prices, so UK herds are in the same market as those in Poland, Spain, and any other country that exports dairy.
“Costly inputs do make people think about efficiency, and farms will carefully think about whether the output is worth the input,” the levy board said.
“If things get better, the key is to keep putting more emphasis on efficiency, which will lead to better profits, productivity, and competitiveness in the future.”
