The above table shows the above major inputs making up 45% of total costs of production which have increased in price between 15 – 47% in the past year.  Milk price on average has increased by 17%.  For some on premium contracts, milk price may not have changed.  This price inflation presents a serious threat to any profit recovery in the dairy sector if not managed properly on a farm by farm basis.  This starts with knowing your costs of production and budgeting ahead.

Many assume because milk price has increased that they can take the pressure off controlling costs.  Not true.  Do a simple budget on a page for your business and see the effect of this price inflation eroding the milk price increase.  There is no guarantee of these milk prices being maintained.  The same is true on the inputs, though you can forward purchase and fix price of your inputs.

Do your figures now or get an expert assessment by contact Gerard at gerardfinnan@fcgagric.com or your local FCG office.