DairyCo - Farmer Intentions Survey 2015

Farmer Intentions Survey 2015

Luke Crossman

Senior AnalystAHDB Market Intelligence

Background to the survey

• Used to investigate:– Confidence in own farm and industry

– Production and investment intentions

• Conducted annually since 2004

• Representative survey of 850 dairy farmers across GB by herd size and region

• Results weighted to national profile using Precision Prospecting dairy producers data

Timing of the survey

• December 2014

• Complete reversal of previous year:

– GB farmgate prices around 20% lower than

previous year

– Global supply/demand imbalance

– Further pressure on prices, short-term

– Long-term message still positive

Important to remember

• Variation in farmgate prices so vast

• December 2013

– 3.73ppl between top and bottom

• December 2014

– 11.93ppl between top and bottom

How milk is paid forBased on estimated milk volumes

60%23%

17%

Buyer discretion

Market related (e.g. Arla, Dairy Crest/DCD formula)

Cost related (e.g. Tesco, Sainsbury's)

Since the surveyThe impacts on confidence

• Situation with First Milk

• Potentially more positive short-term future

wholesale price signals

– GDT auction continues to provide glimmer of

hope

Weighted average GDT prices

0

1,000

2,000

3,000

4,000

5,000

6,000

Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14

$/t

on

ne

Source: GDT platform

Confidence in own businessnext 12 months

0%

10%

20%

30%

40%

50%

60%

ExtremelyPessimistic

Pessimistic Neither Pessimisticor Optimistic

Optimistic Extremely Optimistic

2013 2014 2015

Confidence in own businessnext 5 years

0%

10%

20%

30%

40%

50%

60%

ExtremelyPessimistic

Pessimistic Neither Pessimisticor Optimistic

Optimistic Extremely Optimistic

2013 2014 2015

Confidence in the industrynext 5 years

0%

10%

20%

30%

40%

50%

60%

ExtremelyPessimistic

Pessimistic Neither Pessimisticor Optimistic

Optimistic Extremely Optimistic

2013 2014 2015

Confidence breakdown

3.37

3.50

3.78

3.50

3.73

3.47

3.80

3.88

3.92

3.93

3.00 3.10 3.20 3.30 3.40 3.50 3.60 3.70 3.80 3.90 4.00

GB

Less than 1 year

300+

Under 30

Maximisers

Business Industry

Confidence in Voluntary Code

0%

5%

10%

15%

20%

25%

30%

35%

ExtremelyPessimistic

Pessimistic NeitherPessimistic or

Optimistic

Optimistic ExtremelyOptimistic

Don't know

2014 2015

Investment intentionsPast vs future

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Yes No Unsure

2014 2015

Investment intentionsPast 5 years investments

76%

24%

Yes No

Investment intentionsPercentage of those investing

4%

6%

62%

46%

7%

11%

0% 10% 20% 30% 40% 50% 60% 70%

Farm Diversification

Renewables

Buildings

Equipment

Land

Livestock

Production intentionsnext 2 years – excluding “Don’t know”

6%2%

60%

33%

Leave milk production Decrease production Stay the same Increase production

Production intentionsnext 2 years – who’s increasing?

6% 2%

58%

34%

England

5%2%

70%

23%

Scotland

5%1%

60%

35%

Wales

Production intentionsnext 2 years – who’s increasing

27%

38%

33%

47%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

10-99 100-149 150-299 300+

Production intentionsnext 2 years – who’s increasing

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

10-99 100-149 150-299 300+

Herd size

2014 2015

Production intentionsnext 2 years

4% 6%

54%60%

31% 33%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Leave the industry Maintain current level of production Increase production

Production outlook*

-15%

-10%

-5%

0%

5%

10%

15%

05-07 06-08 07-09 08-10 09-11 10-12 11-13 12-14 13-15 14-16 15-17

Actual Survey Estimate

*based on farmer views collected in December 2014 regarding intended production levels over the next two years

†

†actual production will of course be conditional on weather and market conditions

Summary

• Short-term confidence has taken a knock

• Long-term confidence fairly strong

– Both in industry and own business

• Potential issues over understanding of

Voluntary Code

• Production set to increase

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