Charles Holt (Lincoln) 

What will your milk price be next month?  You can probably answer that one quite accurately.  What will it be in three months’ time?  More difficult.  But what will it be in a year’s time?  Frankly, you have absolutely no idea.

I have always said that the best predictor of milk price to use when planning major capital expenditure in your dairy is the five year rolling average milk price, which is published by AHDB.  The latest figure for this is 33.47ppl, for April 2023.  That looks very miserable when price has recently been above 50ppl for some producers.  But it probably won’t have been there for long (at least not a full year), and no one should have dared to believe it could be the ‘new normal’.

We know costs of production are now above 40ppl for most producers, and if milk price is budgeted at under 34ppl this would clearly result in a business deficit for most.  But what you must build into your business is some resilience.  So, if the milk price does fall to the five-year farmgate average, can you survive for a while?  Will your reserves allow you to hold out?

And crucially, what can you do to reduce costs in the business?  Are there some investments that you could sensibly make that will reduce running costs, or significantly improve your financial performance?  Are there other income sources on the farm that could be developed?   These are the sort of matters that should be taking your time, not fretting about milk price – that you cannot alter.

To discuss ways of making your dairy business more resilient to milk price and weather shocks, contact Charles at charlesholt@fcgagric.com or your local FCG Office.