DAIRY farmers have been urged to put more aside for their pension provision.

The Royal Association of British Dairy Farmers has recommended they introduce 0.34 pence per litre to the accounts to provide a pension of 50pc of final salary for both themselves and their spouse.

Lyndon Edwards, RABDF chairman, said the figure followed research carried out last month into the true picture on dairy farms.

Family labour was valued at 4.43ppl, rising up to 7.9ppl for those with hired labour.

He said: “Add together the labour plus pension values, and we recommend all farmers introduce the revised figure of up to 8.24ppl as an item in their dairy costings in order to demonstrate the true cost of milk production.”

Mr Edwards said RABDF was aware that most employers outside farming either provide a pension, or access to a scheme for their employees, where some, if not all costs, are included in an organisation’s labour expenditure.

The association believed that dairy farmers should not be treated any differently – but realised there were a number of ways that farmers could provide for their retirement.

Of those who responded to the RABDF Retirement Provisions Survey, 75pc with existing pension provision had personal pensions, and were diligently saving for retirement.

On average, they were saving six per cent of their earnings into a personal pension, compared to a national average of four per cent.

Furthermore, 66pc of those surveyed had a private pension, compared to a national average of just 39pc.

Mr Edwards said: “These farmers believed that they needed a minimum of £18,407 a year in retirement, or £23,926 to live comfortably, figures that are broadly in line with research conducted by the Pensions Commission which found that the average household needed 50pc of final salary as a minimum and 72pc of final salary to live comfortably.

“Working with Hargreaves Lansdown, a leading independent pension specialist and financial adviser, we concluded that despite their prudence, at current contribution rates, these farmers are on course to achieve just 15pc of their pre-retirement earnings in retirement.

“This is because the vast majority, 85pc of them are self-employed, and therefore do not receive an employer’s pension contribution worth on average six per cent of salary.

“Worse still, being self-employed means that they forego any entitlement to State Second Pension, worth about £3,500 a year from age 65.

“Hargreaves Lansdown advises a pension of 50pc of final salary for both farmers and their spouses could be achieved at a cost of just 0.34ppl.

“We believe that this is a fair figure to enable dairy farmers not only to hand over their reins and enable succession at the age of 65, but also to live comfortably in retirement.”

The RABDF therefore recommends farmers take the value of labour plus pensions and introduce the revised figure of up to 8.24ppl as an item in their dairy costings to demonstrate the true cost of milk production.

“We trust that accountancy firms together with the entire dairy food chain including retailers, processors and Government, will accept this latest data and fully understand the real role and financial value of family labour,”

said Mr Edwards.