MMN July 2023 – How Resilient is your Dairy Farm?

As milk prices continue to drop, now is the time to consider whether your dairy business is resilient to survive the financial challenges that unexpected changes within the industry can bring. To maintain your business through these volatile periods, it is vital to plan for the future, re-evaluate budgets each year and save money where possible for the hard times. Looking ahead and planning for the business’s future direction is important in ensuring that there is a level of security for the continuation of the business.

A good starting point is to look at how the business has performed over the past five years. Using the five-year average, you can begin to take a long-term look at the business over the next five years to ensure that it copes with the volatility in milk price, as well as the high and lows of variable costs which can greatly impact on cash flow. For the long-term vision, using the five-year average milk price will provide a realistic budget for income against estimated feed costs and other input costs which are not easy to predict far ahead.

People are a key part of any business and having a professional workforce can improve performance and resilience of the farm. Developing and training your current staff can increase staff retention, whilst focusing on recruitment is key for future generations in the business. It is important to consider how the business will deal with absences and whether all staff can do the variety of jobs which may need to be covered if there are staff absences. Areas to consider include how easy is it for staff to find and follow protocols, and how effective is the communication between staff members. Ensuring your farm is a great place to work will aid in attracting good quality staff in the future.

Your herd of cows are also an important asset. Good management of the herd to attain a high health status will help protect your future return. Take time each year to re-evaluate your current herd health plan with your vet to determine if there are any areas or diseases that you need to focus on to improve the health status of the herd. Your cows are your working asset, and you must spend money and time on them to ensure the resilience and future of your business.

Climate change and more extreme weather patterns have put new pressures on farmers that can affect business resilience. Consider how you can prepare for future extreme weather events which can affect feed availability for the herd. Monitoring grass growth with a plate meter on a regular basis and recording the data can help you monitor grass availability and whether it meets demand throughout the year. Record data about the yield of crops and silage that are grown on the farm. Having this data means you can compare year-on-year growth rates and determine the quantity of feed the farm will have available for the winter or during dry summers when you may need to supplement. Have a back-up plan in case extra feed is required during a wet spring or dry summer. Has the farm got extra forage or do you need to budget in the cost of buying in forage or forage replacers in these situations?

Business resilience is a key part of ensuring your business is still performing in the future. Areas to consider and focus on include budgeting for the next five years, staff retention and recruitment, health status of the herd and feed availability. Considering these areas within your dairy business can help you determine where the strengths and weaknesses are, providing opportunities to make it more resilient.

cara.campbell@sac.co.uk; 01586 552502