A prolonged period of low milk prices over 2016/2017 led to an average loss of 3.49p/litre on dairy farms, according accounting and consultancy firm Old Mill.

A survey among clients of the company showed that the average cost of production was 29.2p/l. As reported on P72, milk prices are only now tipping over the 30p/l mark after a number of consecutive rises in recent months.

Feed, labour and machinery are the main costs. If taking non-milk income into account – not including rent, finance or direct payments – the average farm profit was 0.28p/l.

However, with prices rising, there is a more positive outlook for the 2017/18 period.

“Efficient businesses should be able to generate a profit of around 3p/l,” as milk prices improve said Phil Cooper, partner at the Farm Consultancy Group, at the Dairy Show on Wednesday.

The average 2m litre producer should see profits rise from £5,600 to £62,000.

Costs of production are expected to remain unchanged at 29.19p/l (including £30,000 for unpaid labour) over the 2017/2018 period.

“We would expect to see increases in vet and medicine costs as more businesses start vaccinating stock – although some of this should be offset by a reduction in dry-cow therapy,” Cooper added.

“Depreciation could rise slightly, as renewed confidence leads to increased investment.”