Panic Slowly!

The last 12-15 months have seen multiple milk price rises and fall.  It’s been easier to count the months where there has been no change!  This is all the more reason to sit down and rationally work out on paper or a spreadsheet with or without your advisor and look at the affect on the average milk price across a year.  The average price is what determines a lot of your milk income outside your control, not what the price is in February or September.

To put in perspective, based on the calendar Year 2023 and forecasting say a net milk drop over the year of 8ppl, (so it could drop 12ppl and then recover 4ppl), the average price for 2023 drops 3ppl vs 2022 average!  Every farm is different depending on milk quality and seasonality etc.  This is not a milk price forecast but an example to demonstrate that the average drop is very different to the actual drop over a short period.

I see some farmers taking drastic short term decisions now to long term problems, based on reactions to changing prices and volatility.  Last Summer I was encouraging farmers to invest and plan the higher milk prices, but the future cashflows couldn’t be seen in the bank balance at the time.

Us as consultants are privy not only to multiple dairy farmers’ historical finances but also to forecasts up to three years in advance.  How can you budget three years ahead when you don’t know what the milk price will be in three months’ time, I hear you say?

Budgeting realistic assumptions that are outside your control and more importantly realistic assumptions of what you can control on your farm will produce a sound budget even one year ahead to make you realise to Panic Slowly….Don’t over react!

Cull the passenger cows, carry a few less but more profitable cows.  Rebuild forage stocks with less livestock in the short term.  Invest in labour saving devices whether its £300 on a Batt Latch or £40k on an auto heat detection system, take advantage of grants that will future proof your business, invest in clover and forage management systems to become less reliant on high carbon emitting, high cost fertilisers.  

You won’t be doing this on a whim, it will be based on solid realistic forecasting the future profits and cashflow of your business.  

Contact Gerard Finnan at gerardfinnan@fcgagric.com or on Tel: 07976 426420, to help you make business decisions with more confidence in uncertain times.