Summer Dairy Business Review

With the increase in milk price many people in the industry feel that the financial pressure is off. The overdrafts built up over the past two years as a result of the low milk price would start to be reduced as positive cashflow is returned to many dairy businesses.

However, for a proportion of the farms we see, this is not the case. Overdrafts are in fact increasing as ageing creditors at the opening position of the financial year need to be paid, and the need for ongoing business planning remains strong.

The situation is not helped if you are one of those farmers whose milk flow seems to be behind budget.

With a shortage of starchy forage in the summer months, if maize ran out, feed spend was higher than originally budgeted. Where farms have experienced a combination of reduced milk volumes and an increased feed spend over the summer period, businesses are short of working capital.

‘’As ever quality forage is key’’ : Tom Bell, Dairy Farm Management Specialist

Those with quality grass leys and good grazing management skills have faired well this year, holding milk sales, driving margin and generating good cashflows.  Now is the time to start to prepare for 2018.

Silage made in 2017 is of very variable quality. The early and frequently cut material is of very good quality in terms of energy and protein, whilst the silages impacted by delays, both voluntary and forced by the weather, may be very challenging to balance. The impact on the feed costs is massive with up to a 4ppl differential not uncommon.

In the quality vs quantity conundrum; quality scores hands down again!

Looking ahead to the autumn: Maize silage quality is excellent, and we are seeing very good responses to feeding it. This will help address nutritional issues, contribute to lower feed costs and claw back lost margins some have experienced.