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

1. Farmer Intentions Survey 2015
Luke Crossman
Senior Analyst
AHDB Market Intelligence

2. 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

3. 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

4. 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

5. How milk is paid for
Based 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)

6. Since the survey
The impacts on confidence
• Situation with First Milk
• Potentially more positive short-term future
wholesale price signals
– GDT auction continues to provide glimmer of
hope

7. 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
$/tonne
Source: GDT platform

8. Confidence in own business
next 12 months
0%
10%
20%
30%
40%
50%
60%
Extremely
Pessimistic
Pessimistic Neither Pessimistic
or Optimistic
Optimistic Extremely Optimistic
2013 2014 2015

9. Confidence in own business
next 5 years
0%
10%
20%
30%
40%
50%
60%
Extremely
Pessimistic
Pessimistic Neither Pessimistic
or Optimistic
Optimistic Extremely Optimistic
2013 2014 2015

10. Confidence in the industry
next 5 years
0%
10%
20%
30%
40%
50%
60%
Extremely
Pessimistic
Pessimistic Neither Pessimistic
or Optimistic
Optimistic Extremely Optimistic
2013 2014 2015

11. 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

12. Confidence in Voluntary Code
0%
5%
10%
15%
20%
25%
30%
35%
Extremely
Pessimistic
Pessimistic Neither
Pessimistic or
Optimistic
Optimistic Extremely
Optimistic
Don't know
2014 2015

13. Investment intentions
Past vs future
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Yes No Unsure
2014 2015

14. Investment intentions
Past 5 years investments
76%
24%
Yes No

15. Investment intentions
Percentage of those investing
4%
6%
62%
46%
7%
11%
0% 10% 20% 30% 40% 50% 60% 70%
Farm Diversification
Renewables
Buildings
Equipment
Land
Livestock

16. Production intentions
next 2 years – excluding “Don’t know”
6% 2%
60%
33%
Leave milk production Decrease production Stay the same Increase production

17. Production intentions
next 2 years – who’s increasing?
6% 2%
58%
34%
England
5%2%
70%
23%
Scotland
5%
1%
60%
35%
Wales

18. Production intentions
next 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+

19. Production intentions
next 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

20. Production intentions
next 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

21. 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

22. 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

23. To keep informed, sign up to:
• Monthly Report • Dairy Market Weekly

24. luke.crossman@ahdb.org.uk
0247 647 8722
07580 405431