AHDB Anticipates Slowdown in GB Milk Production Amidst ‘Winter Crisis’
The Agriculture and Horticulture Development Board (AHDB) has projected a deceleration in milk production across Great Britain. This comes in the wake of dwindling milk prices and soaring input expenses, potentially culminating in a ‘winter crisis’ for cash flow.
This predicament is further compounded by the surge in interest rates, leading to escalated costs in borrowing and overdrafts, as noted by the levy board.
AHDB’s latest milk forecast update indicates an estimated production of 12.32 billion litres for the 2023-2024 season. This represents a marginal 0.5% decrease compared to the preceding milk year.
The current milk year has outpaced the previous year’s production, primarily driven by the upswing in prices witnessed towards the end of 2022 and the onset of 2023. Consequently, this surge led to augmented yields and a slackening in the rate of cows exiting the herd, explains AHDB.
Additionally, the consistently favourable wet weather experienced throughout the majority of the summer translated into abundant forage availability, ensuring that production levels remained ahead of last year’s figures.
However, AHDB raises concerns regarding the combination of substantially reduced milk prices and prohibitively costly input expenses. This could potentially place many farmers on the brink of a cash flow crisis during the winter months.
Moreover, a substantial number of producers are poised to contend with a sizable tax bill, following a year of substantial milk cheques.
Susie Stannard, AHDB’s lead analyst, provides further insight, stating, ”
“There will be little incentive for farmers to push cows and herd reductions could be made to boost cash flows later in the autumn/winter.
“Therefore, we expect that milk flows will begin to dwindle, steadily in the short term, with potential for some bigger reductions in the early part of 2024.
“There is a risk that some farmers may elect to keep their foot on the production pedal to keep their overall milk cheques at a reasonable level.
“However, bearing in mind current costs of production, chasing marginal litres for a headline milk cheque could be damaging for on-farm profit margins but also contribute further towards the current over-supply issues.”
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