Milk and Oil Prices
We last wrote about this back in March 2020 when fuel prices had hit a low point of $20 with a milk price around 26 ppl. Since then, as the graph shows (below) fuel prices have been on a steady rise with milk price following a similar trend. Over this period the ratio between milk price and fuel has been 1:1.77, i.e., the fuel price has been 1.77 times the milk price. With fuel prices now at $76.63 we should be seeing milk prices of 42 ppl for the ratio to remain the same. At present we are between 7 and 10 ppl below this.
If you also factor in an increase of £400 per tonne for fertiliser, £50 per tonne for feed these costs increases have added a further 1.7 ppl for fertiliser and 1.6 ppl for feed there is clearly a need for the milk price to increase further in order for farm businesses to breakeven. This is before taking into consideration other cost increases, which could amount to a further 1 ppl.
Given the milk price paid is not under the farmers direct control the above further emphasises the need to focus on what can be controlled within the business and how your business compares to other similar businesses.
Through the AHDB we can offer a free half day initial appraisal of your business to identify key areas that you should be focussing on that are within your control. To discuss this further please contact Phil on 07798 673665 or e-mail firstname.lastname@example.org
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