Making the dairy business more resilient

Dairy farms have seen significant variations in cashflow since spring 2022. Input costs such as feed, fuel, fertiliser, and energy increased significantly however farmgate milk and livestock prices also increased sharply with milk price peaking in December at 52ppl. However, the farmgate milk price received by dairy farmers has reduced significantly since January 2023, with an average base price of 28.5ppl paid in August 2023. Input costs have not reduced at a similar pace meaning that for most dairy farms, the current milk price received is below the cost of production. This volatility in milk price highlights the need for dairy farms to ensure the business is more resilient to cope with fluctuating cashflow. Financial planning is vital to ensure there is sufficient cash available for the business to trade through periods of depressed milk price.