Dairy farmers substantially decreased their costs of milk production in 2015, according to new results in the International Farm Comparison Network’s (IFCN) Dairy Report 2016.
Strong cost reductions took place in Western Europe and Central and Eastern European countries due to exchange rate and post-quota effects, while costs were stable or rising in China, India and the US, mainly due to inflation rates, labour and feed costs. However, reductions in milk prices had a stronger effect than the decline in costs. As a result, farm income experienced a serious drop in 2015, which continued in 2016.
According to Dr Amit Saha, who leads farm analysis at IFCN: “Worst hit dairy farmers in terms of profitability in 2015 were in Western Europe, North America and Oceania, where over 75 per cent did not cover their full economic costs. In other regions the situation was less dire, with roughly 30 per cent of farms not covering their costs.”
In other news this week, the US Department of Agriculture has agreed to purchase cheddar cheese worth $20 million. The purchase aims to reduce a private cheese surplus that has reached record levels, while assisting food banks and other food assistance recipients.
Agriculture secretary Tom Vilsack said: “While our analysis predicts the market will improve for these hardworking men and women, reducing the surplus can give them extra reassurance while also filling demand at food banks and other organisations that help our nation’s families in need.”