Dairy: Margin Per Litre, and Where It Leaks

Dairy is a volume business with a thin margin per litre. That combination is unforgiving: a small percentage lost between collection and sale can take most of the profit with it.

Know your margin per litre exactly

Take what you pay the producer per litre, add transport, cooling, testing, containers and handling labour, and set that against what you sell for. The number that remains is usually smaller than people expect, which is precisely why the leaks matter.

Volume in is not volume out

The gap between litres collected and litres sold is the number to hunt. It comes from several places at once:

• Measurement differences — collection point and delivery point rarely agree exactly
• Spoilage — cooling delays, a failed chiller, a long route on a hot day
• Rejected batches — milk that fails testing after you have already paid for it
• Spillage and residue — small at each transfer, meaningful across a month
• Unrecorded sales — milk that left but was never entered

Measure at every handover

Each point where milk changes hands is a place a discrepancy can appear and the only place it can be caught. Recording volume at collection, at the cooler and at sale turns one unexplained monthly shortfall into a specific, findable problem.

Quality is a price, not a formality

Testing that catches a problem before you pay for the batch is worth more than testing that documents it afterwards. The cost of a test is small against the cost of paying for milk you cannot sell.

Producer payments cut both ways

Paying producers accurately and on time is what keeps supply. Paying for volume you did not receive, or that spoiled before sale, is a loss you carry alone. Both depend on records that reconcile.

The one figure to watch

Litres collected against litres sold, every week. Where the gap widens, so does the loss — and a gap you can see is a gap you can chase.