Milk to feed price ratio tracks below 5-year average

After hitting a record high in October 2017, the milk to feed price ratio (MFPR) has been in decline ever since.

The farm-gate milk price dropped off at the start of the year; meanwhile, higher straight prices have resulted in concentrate prices creeping up.

Combined, analysis by the Agriculture and Horticulture Development Board (AHDB) has resulted in the ratio in March dropping below the 5-year average for the first time since October 2016.

Since March, the MFPR has remained relatively level around 1.23.

Concentrate prices are estimated to have increased by around £9/t since March to £230/t in July. The fact that the MFPR has remained relatively stable during this period indicates that recent increases in farm-gate milk prices are only just compensating for rising feed costs.

AHDB’s milk to feed price ratio (MFPR) has recently been relaunched to provide more up-to-date information about the relationship between farm-gate and concentrate prices.

Up until now, AHDB has used concentrate prices quoted by Kingshay and Promar and farm-gate milk prices from Defra in the MFPR calculation.

However, these prices can be two to three months out-of-date by the time they are available.

Going forward, as well as quoting these prices, AHDB will also quote a theoretical price. This new calculated MFPR is based on projected farm-gate price movements and calculated concentrate prices.

The ratio will vary greatly from farm-to-farm depending on milk price achieved and type of feed used.

The ratio should only be used as a guide to the cost-revenue relationship in the country. It reflects similar patterns to the actual milk to feed price ratio below.

The table above is based on actual quoted concentrate prices from Kingshay and Promar, and the latest official average farm-gate milk price published by Defra.