A flat feed delivery rate means the near farms pay for the far ones
Updated: Oct 28
A full blower load into one bin, at a dairy unit down the road from the mill, takes very little time to discharge. Three small drops on a hill farm with a tight yard can take most of a morning. Many mills charge the same for both.
A single delivery charge, or one rate per tonne wherever the farm is, is simple to sell and easy to invoice. It also means the farms close to the mill, taking full loads, pay for the farms far away taking small and awkward drops. That has always been true. What has changed is the size of the gap. Diesel has risen by about two-fifths in a year. Mill tonnages are drifting down. The cost of serving a remote hill farm has moved further from the cost of serving the dairy unit down the road. A flat rate set in 2023 or 2024 now hides more than it did.
You can keep a flat rate. It is as well to know what it is paying for.
A delivered tonne is not a flat cost
Distance is the obvious driver. It is not the only one. Drop size matters, for the reasons above. Access matters. So does waiting, if the wagon sits at a busy unit. A flat rate averages all of this away, quietly.
The Department for Energy Security and Net Zero's weekly figures put average UK pump diesel at 199.2p a litre in the week of 26 October 2026. A year earlier it was 142.4p. That rise falls hardest on the long runs. Time is the other great cost. Logistics UK's Manager's Guide to Distribution Costs (October 2024) put driver employment at roughly £47,000 to £49,000 a year for a heavy artic, the largest single line in the cost of running one. A delivery that takes five hours costs more than three times one that takes an hour and a half, whatever the tonnage.
Fewer tonnes, the same wagons
AHDB's figures show GB feed compounders produced 853,700 tonnes in August 2026. That was 2.7% less than a year earlier, and 4.6% less over the first two months of the 2026/27 season. Cattle and calf feed was the biggest category, at 328,000 tonnes in the month. When tonnage falls and the fleet stays the same size, the standing cost of each wagon and driver is spread over fewer tonnes. The cost per tonne delivered rises even if nothing else changes.
Feed work also runs empty by its nature. A blower goes out full and comes back with nothing. The Department for Transport's 2024 road freight statistics show 30% of all GB lorry kilometres were run empty. For a feed wagon the empty share is close to half, because almost every mile out has a mile back.
How the near farms carry the far ones
Take an illustrative example. The numbers are round, chosen for clarity, and not taken from any business. Say a wagon and driver cost £60 an hour, plus £1 a mile in fuel, tyres and repairs. The rate is £10 a tonne delivered, wherever the farm is.
Near farm: 8 miles from the mill, one 28-tonne blower load, 1.5 hours yard to yard. Cost £90 plus £16, so £106, or about £3.80 a tonne. The customer pays £280.
Far farm: 35 miles away up a hill road, three 4-tonne drops across the farm, 5 hours and 90 miles. Cost £300 plus £90, so £390, or £32.50 a tonne. The customer pays £120.
On these numbers the near farm earns £174 over cost. The far farm loses £270. The business is not losing money overall. But every far drop is paid for by a near one. That may be a choice worth making; the far customers may bring volume the mill needs to run efficiently. The difficulty is that most businesses make the choice without knowing they have made it.
The flat rate is not the problem. Not knowing what it is paying for is.
A four-band test, from one month of tickets
No costing system is needed to see where the money is made. A month of tickets and a spreadsheet will do.
For each delivery, record the distance from the mill, the tonnes delivered, the number of drops, and the time from leaving the yard to getting back.
Work out a cost per hour for wagon and driver, and a running cost per mile, from last year's accounts and today's diesel price.
Put every delivery into one of four bands: near and full load, near and small drops, far and full load, far and small drops.
Work out the cost per tonne for each band, and set it against what each band paid.
In my experience the pattern is usually plain within an afternoon. The near, full-load band carries the business. The far, small-drop band is where the margin goes.
Keep the flat rate, if you like, but price the edges
Once the numbers are known, there are several sensible answers. Some mills keep the flat rate and add a minimum drop size, so the smallest loads pay their way. Others add a remote-area charge beyond a set distance, or move to two or three zones by postcode. A fuel surcharge tied to the government's weekly diesel price, published every Monday, is easy to explain. It also keeps the long runs from eating margin when prices move as they have this year. Some mills decide the far customers are worth keeping as they are. All of these are reasonable. What matters is that it is a decision.
What to do first
Pull one month of delivery tickets and add the drive time and number of drops to each.
Calculate a cost per hour and a cost per mile using current diesel prices, not the ones in last year's budget.
Sort the month into the four bands and compare cost per tonne with revenue per tonne in each.
Identify the ten customers furthest from break-even, and decide one by one whether to keep, reprice or set a minimum drop.
Write a fuel surcharge clause linked to the published weekly diesel price into the next round of customer terms.
Sources
Figures are taken from the sources listed and were correct at the time of writing. Where rules are described, check the latest official guidance and take qualified advice before acting.
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