Scots dairy farmers at an advantage over their English peers

They show the average farm ended up with a deficit of 0.22p per litre (ppl) after all drawings in the financial year 2010 compared with the previous year when milk prices were higher and the end-of-year figure showed a profit of 3.11ppl.

Presenting the figures at a conference in Castle Douglas, Rob Hitch, of accountants Dodd & Co, Carlisle, said the Scottish income figures were bolstered by the single farm payment (SFP), which was much higher than the equivalent support in England, with Scottish dairy farmers receiving an average of 4.84ppl in SFP.

"This is 2.2ppl higher than the average of all the accounts and with the average farm ending up with a 0.22 ppl deficit, this is a significant competitive advantage," he said, qualifying this with the comment that this situation would change with the reform of the Common Agricultural Policy.

He added that had the support scheme operating in Scotland been working south of the Border, then a considerable number of English milk producers would have generated a year-end surplus.

He also pointed out that a number of the Scottish clients in the survey were recipients of considerable amounts of money coming from the Scottish Rural Development Programme which has no equivalent in England and again this as a big advantage in modernising their buildings and increasing the scale of their dairies.

Apart from the cross Border differences, Hitch said the main difference in profitability came with scale of the milking operation. Larger units were generally more profitable, with smaller scale businesses being unable to spread their costs as well as their bigger neighbours.

"Size counts in the dairy business, he said. "It brings economies of scale."

His company figures showed that the top 25 per cent of performing milk farms were milking an average of 312 cows compared with those in the least profitable 25 per cent where the average number of cows was 104.