Surviving the Milk Price of 2009 and Planning for the Future

There is an urgent requirement to put in place short-term strategies to survive the low milk price of 2009, and in the longer term to develop low cost grass-based systems to counteract future volatility in the price of milk. That is the main message from the Teagasc dairy open day taking place at the Moorepark Dairy Production Research Centre, Fermoy, County Cork, today, Thursday 18 June.

Teagasc researcher Padraig French said: “World market price fluctuation is driven by changes in the overall supply/demand balance and this is set to continue. FAPRI-Ireland indicate that over the next decade, milk price in Ireland is likely to average from between 26 to 28 cent per litre. However, historical analysis of world markets shows that milk price could fluctuate between 20 and 40 cent per litre.”

Dr French maintained that the business strategy adopted at farm level in a fluctuating milk price scenario is substantially different to that where milk price is static. He continued: ”This requires dairy farmers to develop low cost highly efficient grass-based systems of milk production. Key to this requirement is a high EBI, high health status, compact calving herd, a long grazing season with increased reliance on high quality grazed grass, and low cost labour efficient farm infrastructures.”

At a special conference at today’s open day, a panel of dairy farmer speakers identify six key actions to survive the low milk price of 2009. These include:

1. Complete a cash flow budget for the remainder of 2009, balancing expected monthly milk receipts against necessary expense;
2. Delay spending that is not immediately required: maintenance and expansion investments;
3. Discuss financial options with advisers, discussion group members, bank manager;
4. Place increased emphasis on grassland management and reduce expenditure on purchased feeds;
5. Review stock numbers: sell surplus stock to improve cash flow over the coming months;
6. Take care of yourself: you are not alone, continue to take time off and do the things you enjoy.