Milk – the most basic of commodities – has been central to controversy in recent years, but never more so than during the summer of 2015. As the rate of milk consumptions continues to grow, British dairy farmers have seen their margins on milk fall and fall, almost simultaneously. Research has shown that dairy farmers now receive an average of 23.66p per litre of milk produced. This figure is 25% (around 7p per litre) less than they received last year.

Farmers’ averaging – good news for dairy farmers?

The sharp and dramatic fall in milk prices has put a number of UK dairy farmers under intense financial pressure. The recent extension of farmers’ averaging, from two years to five years, may now be particularly important for the dairy farming community. This extension may well help deal with, and mitigate, the impact of the ongoing fluctuations in margins and profits, and could provide farmers with invaluable tax and cash flow savings.

Cash flow is a real concern

Cash flow is undoubtedly a real concern. There are a number of opportunities available to farmers, whether it’s maximising tax reliefs, minimising tax liabilities, or even diversifying into alternative activities (which we have covered in detail) to cut their costs or bring additional revenues into the farm. However, each decision must be carefully considered. For example, by maximising one particular tax relief, you may jeopardise the long-term benefits of another.

It is therefore crucial to seek sound and proactive professional advice.

More from our agriculture experts

You can find all of our latest agriculture sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Richard Marsh is managing partner in the Doncaster office and joined Hawsons after working for two major international accounting firms. He has over 30 years’ experience in dealing with the needs of businesses of all sizes and acts for a wide range of commercial clients. For more details and advice, please contact  Richard on [email protected] or 01302 367 262. You can also follow Richard on LinkedIn.

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