Impacts of changing relative prices on farm level dairy production in the UK

This paper presents a linear programming model designed to evaluate the impact of changes in milk to milk-quotaleasing price ratios, nitrogen fertiliser and concentrate prices on the pro®tability of a technically ecient UK dairy farm. The model incorporates energy and protein requirements of cows of di€erent yield levels and allows substitution between forage and concentrate feeds. The results show that there is a large ®nancial incentive to reduce input levels and move to lower yielding cows as milk to milk-quota-leasing price ratios fall relative to prices for concentrates and nitrogen fertiliser. However, under proposed reforms to the Common Agricultural Policy, and at current UK milk prices, technically ecient producers will ®nd it pro®table to continue feeding relatively large amounts of concentrates to relatively high yielding cows. # 2000 Elsevier Science Ltd. All rights reserved.