Archive: New Farm Business Income estimates reveal impact of reduced prices

Published 4 February 15

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Dairy farm businesses are expected to see an 11% drop in Farm Business Income (FBI) in 2014/15 (March to February) according to Defra forecasts. This translates to an average of £78,000 this year, down from £87,800 in 2013/14. Many might be surprised that the drop is not bigger but this is because the first half of the year was not as bad as the second half.

Milk production has been high and input costs were lower over the year, which would have helped to boost incomes. However the drops in milk prices which occurred at the end of the year were sufficiently large to offset these positives. On average, milk prices in the first half of 2014/15 were around 5% higher than in the previous year, but expected to be about 16% lower on average over the second half.

Incomes for dairy farmers are likely to see a further significant drop in 2015/16 as prices are expected to remain low until later in the year.

 UK milk production and price trends