ONE of the biggest single factors affecting the future of a dairy farm business is the presence of a successor, according to the latest DairyCo report.
The report - The structure of the GB dairy farming industry – what drives change? commissioned by DairyCo and undertaken by Andersons, has found that those businesses with a successor in place were considerably more likely to be looking to increase production than those without.
Despite common perceptions, milk prices were found to have only a weak impact on business intentions.
DairyCo/AHDB senior analyst Patty Clayton explains: “It was found that farms achieving a higher milk price were no more likely to expand than other producers, but there were other factors such as succession that had greater significance.”
Consistent with the findings of DairyCo’s Milkbench+ report last year, cost of production levels were found to be a major driver influencing decision making as they account for the majority of variation in profit levels.
Interestingly, while farms with high levels of profit were more inclined to consider expansion, farms with low profit levels were just as likely to expand as to exit the industry.
Herd size was not found to be a significant factor in decisions to expand or exit the industry.
In fact, it was found that the average herd size of businesses looking to expand was no different to those looking to exit the industry.
The summary report, with detailed analysis of the factors affecting change is available to download from the DairyCo website.