For our dairy business, excluding the income and costs related to estate management and assuming no changes in the milk price from hereon, we are budgeting in 2018/19 an operating profit of £36,000 before depreciation applicable to the business of some £133,000. This £36,000 is the equivalent to 3.5% of the total income or turnover of the business - the operating margin. To sustain a business one needs to invest and it is necessary to recognise the importance of depreciation as a real cost of production. If one accounts for our depreciation charge then we will see a loss of £97,000. Our dairy budget can be summarised as follows:
|Sale of livestock & Other||57||1.82|
|Feed & Crops||-470||-14.90|
|Vet, AI, etc.||-62||-1.96|
|Dairy Chemicals & Other||-32||-1.00|
|Livestock contract costs||-6||-0.19|
As the results show our investment in the new farm infrastructure is not being covered let alone covering any return required to justify such investment.