Every business we are dealing with are experiencing cashflow pressures, suppliers are finding customers are taking longer to pay bills. It is crucial that all parties communicate at an early stage, explain the issues, and give realistic payment timings. Don’t expect suppliers to be comfortable with deferred payment, but offer interest, and part payments if the whole balance cannot be cleared.

Speak to the bank at an early stage to see if they are able to offer assistance. Producing a cashflow projection should help to see where the position improves. We can help in the production of a cashflow and budget, contact us, and let us help release some pressure.

Our annual benchmarking of dairy farms continually shows yield from forage to be a key profit driver. Now that grass quality and growth is at its peak, make full use of it. If cows are are grass full time, with an ME of just over 12, 20 litres of milk is easily possible. Challenge cows who are in calf and condition score 3+, these will produce some cheap milk. Assess the grass, an don’t be afraid to reduce the parlour cake a bit. If you don’t do it now, the chance will be lost.

A lot of dairy farmers are unsure as to whether they will actually be better off under the current pricing, allowing for the increases in costs. The main cost increases are seen in the “3 F’s” – Feed, Fertiliser and Fuel. Assuming that the milk price for most has increased by 7-8 pence per litre, returns have increased by an average of £560 per cow.

Costs have increased by £70 per tonne for feed, £150 per tonne for fertiliser and 40% for fuel. The combined effect of these cost increase is around £320 per cow or 4.3 pence per litre. For the average dairy farmer, there should therefore be an extra profit of £240 per cow, or 3.2 pence per litre.

A very good article in Farmer’s Guardian regarding the WiRE conference at Harper Adams, reminded me of a few salient points that we should all bare in mind!

• For business analysis a pen, paper and calculator are all that are required
• Understanding profit is essential
• The results of your annual accounts should never be a surprise – you should have an idea what the answer will be
• Spending more than you take in is not sustainable
• Improving profit doesn’t mean necessarily working harder – it may mean selling for a better price, or spending less
• Don’t be afraid of money, or your bank statement