Milk Price to Feed Price Ratio

AHDB regularly reports on the milk price to feed price ratio (MFPR).  This shows the relationship between milk price and feed price, which is vital as purchased feed costs are by far the largest variable cost on most dairy farms.

The long term (five year) average of this ratio is just under 1.25. (1.25kg Concentrates pays for 1 litre of milk).  It has been at or near this level for a long time – far longer than five years.  This ratio compares the price of milk per litre with the feed price per kilogram.  So, a low figure is bad, and a high figure is good.

Back last winter, the MFPR was around 1.35 to 1.45.  Milk price was high, and so for every Kg of extra concentrate feed the cows were fed, you should have had a reasonable economic response with more milk produced.

Now, however, the story is the opposite.  The ratio fell to around 1.05 in the summer, as milk prices crashed, and feed prices stayed high.  For those at grass, this was not too much of a problem, but it was serious for housed herds who have to feed purchased feeds all year round.

But feed prices are still high and are similar to those prevailing last year.  Feed prices have fallen more slowly than the collapsing milk price.  So, for every extra Kg of concentrate, you need to produce much more milk to make it economic.

With increased stocks of forage made this summer, making the most of your forage is absolutely crucial to the financial success of your dairy business over the rest of the winter especially with depressed milk prices.   

Most milk producers can do little or nothing to influence your milk price apart from producing higher fat and protein milk whilst attaining the top-quality bands.  

Feed is the biggest cost on a dairy farm, and you control the amounts fed.  Can you feed your cows more efficiently?  Are you producing 50% of your milk from forage?  How much of the extra concentrates fed last winter when milk price was 40% higher than at present, now looks uneconomic to feed?

Challenge us to challenge your business to focus on what you can control, by contacting Gerard at gerardfinnan@fcgagric.com  or Tel: 07976 426420.  Purchasing and allocating feed and making better quality silages are two such areas that can have a huge impact on business profits.