Abstract
This paper presents a linear programming model designed to evaluate the impact of changes in milk to milk-quota-leasing price ratios, nitrogen fertiliser and concentrate prices on the profitability of a technically efficient UK dairy farm. The model incorporates energy and protein requirements of cows of different yield levels and allows substitution between forage and concentrate feeds. The results show that there is a large financial 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 efficient producers will find it profitable to continue feeding relatively large amounts of concentrates to relatively high yielding cows.
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