DAIRY farmers – many of whom invested heavily in their enterprises following a peak milk year in 2022 – have been advised this week to put in place a series of prudent financial measures.

According to IFAC – the farming and agribusiness specialists – the financial landscape shifted considerably during the course of 2023 for the dairy sector.

Cash reserves have tightened and some dairy farmers have ‘depleted their rainy day funds’ while the adverse weather conditions of recent months have been no help either.

According to Philip O’Connor, Head of Farm Support at Ifac, the changed financial landscape that emerged through 2023 has not shown any significant improvement through the early months of this year.

“Cashflow continues to be squeezed by various factors, including inflation, higher interest rates, and adverse weather conditions affecting fodder, grass, and turnout dates.

“While it’s evident that some bad habits emerged during the prosperous times of 2022, now is the opportune moment to correct them,” he advised.

Philip O’Connor advised dairy farmers looking at a more difficulty financial situation to put a five-step plan into place as follows:

The creation of a realistic 12-month budget; assessment of essential expenses; invest wisely; examine the cost base; and review current borrowings.

In relation to the 12-month budget, Ifac advises farmers to look back at their past financial records; to make realistic yield predictions; to factor in personal drawings; anticipate labour inflation of 5% to 10%; and not to overlook tax liabilities and pension payments.

Philip O’Connor also advises farmers to draw up a realistic list of expenses and to tailor any investments towards projects that offer tangible financial benefits to the farm.

Pictured: Philip O’Connor, Head of Farm Support at Ifac