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Dairy farming increases thanks to old stocks
The average income in dairy farming has increased this year by good €9.000 to €35.000 per company. However, this income improvement is largely based on results already achieved in 2020. This is the opinion of researcher Alfons Beldman of Wageningen Economic Research (WUR).
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The point is that ample stocks of good quality roughage could be built up last year. This allowed dairy farmers to keep feed costs relatively under control in the current year. The roughage harvested this year is of moderate quality. Also the first cut. Meanwhile, the cost of concentrates has increased by an average of 14% this year. An average dairy farm spends almost €107.000 on concentrates, which accounts for 22% of all operating costs.
Without the roughage stocks from 2020, dairy farmers would have made no progress on average this year compared to the year before, even despite the significant milk price increases at the end of 2021. Milk prices will rise by approximately 2021% for the whole of 10. The selling price of cows removed increased much more: 30%. The calf price rose even faster. However, these prices have a limited impact on total income.
Large bandwidth in terms of incomes
WUR's income figures are an average. Surrounding it is a wide bandwidth of varying income. The bottom 20% of dairy farms received a negative income of less than -€1.000. The 20% with the highest incomes earned more than €57.000. The latter group represents between 40% and 45% of production.
Total milk production fell by about 2% this year. This is mainly due to the lower milk production per cow. The average number of animals per company increased to 108 animals. The decline in milk production per cow represents a break in the trend, but probably a one-off. The lower roughage quality and high concentrate costs threw a spanner in the works this year, but the long-term trend remains of higher milk production per cow.
Smaller half of companies have positive cash flow
Even though the income of the average dairy farm was positive and higher than in 2020, only half of all dairy farms achieved a positive cash flow last year.
This year, organic dairy farming is achieving virtually the same financial results as conventional dairy farming and is therefore taking a step back. The number of organic farms increased to around five hundred (3,25% of the total number of dairy farms).