‘Dairy farmers need to organise a cash injection for next spring’

Dairy farmers are set to face a difficult spring in 2016 as a short term increase in milk price looks unlikely, according to Teagasc’s Pat Cashman.

According to the Mallow-based Dairy Advisor, dairy farmers should organise a cash flow injection for next spring as farm incomes could be down on both the spring of 2014 and 2015.

Speaking at the recent Teagasc Farm Facilities Event in Rathcormac, Co. Cork, the Dairy Advisor added that farmers should start planning now for their 2016 cash flow.

“Farmers should not take out any additional expenditure which will jeopardise them in 2016 and farmers need to organise a cash injection for next spring.

“Farmers need to have something set aside to keep them going when price falls. Unless milk price recovers between now and spring 2016, farm income will be back on spring 2015,” he said.

However, he added, that the fall in farm income in the first three months of this year may not be as severe as first thought as the additional production in a quota free environment counteracted the milk price fall.

“There were very small differences in milk cheques between the spring of 2014 and 2015 as the relative drop in price was counteracted by increased production.”

Cashman also said that the next four months of production are critical for farm profitability as 25-30% of total farm solids are produced during this period.

He said that dairy farmers should maximise income, and this can be done by producing more milk.

The additional income generated from this increased output will out weigh the costs of production, as the costs will be diluted across a larger milk pool, said Cashman.

Teagasc’s guide on planning for 2016 cash flow problems

  • Cull under performing stock and market these animals correctly
  • Maximise the value of calves
  • Use the sale of stock as a cash flow injection
  • Structure farm repayments, match income and expenditure
  • Borrow for investments, borrow enough when improving infrastructure
  • Reduce farm expenditure, potential to cut less silage in 2016 on the back of surplus stocks 

Comments

Please be considerate of others when commenting. All comments posted are subject to our commenting policy. Comments violating this policy will be removed without notice.