This week’s milk payments will probably be the biggest ever received on most farms. June is the peak milk month and most co-ops have increased milk prices from last month. This is really good news, but it presents farmers with a dilemma: what to do with the money? The biggest fear I have is that the foot will be taken off the pedal when it comes to managing costs, and the extra cash that should have been generated in the high milk price will be consumed by increased expenditure. Let’s face it, farmers have a good track record of doing this, with numerous research projects showing that the farmer’s margin stays the same, regardless of milk price. So what should farmers do with the extra cash that is going to be generated over the next few months?
Paying off bills is the obvious one. Most merchants are still owed money for meal and fertiliser. Perhaps you could get a discount if you were to pay them all off now? Contractors are owed money for silage and slurry. In many cases they won’t come looking until later in the year but cash is important to them so again, a discount could be worked into the price. Paying down debt is another option. Whether or not this is a good idea is down to personal preference and exposure to debt. Bankers don’t always view this as being overly positive when viewing future proposals – having a cash deposit is more attractive to them.
Building up soil fertility has a huge return on investment. Now is a good time to be spreading lime. I’m hearing of very good deals being done for fertiliser now too, with delivery later in the year or next spring.
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Building up a rainy day fund is probably one of the best options. This can take a number of forms – livestock, hard cash or feed stocks.
The important thing is that you are actually wealthier after 2017 than you were after 2016. This wealth can either be in the profit and loss account or the balance sheet, but don’t give it all away to others.
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This week’s milk payments will probably be the biggest ever received on most farms. June is the peak milk month and most co-ops have increased milk prices from last month. This is really good news, but it presents farmers with a dilemma: what to do with the money? The biggest fear I have is that the foot will be taken off the pedal when it comes to managing costs, and the extra cash that should have been generated in the high milk price will be consumed by increased expenditure. Let’s face it, farmers have a good track record of doing this, with numerous research projects showing that the farmer’s margin stays the same, regardless of milk price. So what should farmers do with the extra cash that is going to be generated over the next few months?
Paying off bills is the obvious one. Most merchants are still owed money for meal and fertiliser. Perhaps you could get a discount if you were to pay them all off now? Contractors are owed money for silage and slurry. In many cases they won’t come looking until later in the year but cash is important to them so again, a discount could be worked into the price. Paying down debt is another option. Whether or not this is a good idea is down to personal preference and exposure to debt. Bankers don’t always view this as being overly positive when viewing future proposals – having a cash deposit is more attractive to them.
Building up soil fertility has a huge return on investment. Now is a good time to be spreading lime. I’m hearing of very good deals being done for fertiliser now too, with delivery later in the year or next spring.
Building up a rainy day fund is probably one of the best options. This can take a number of forms – livestock, hard cash or feed stocks.
The important thing is that you are actually wealthier after 2017 than you were after 2016. This wealth can either be in the profit and loss account or the balance sheet, but don’t give it all away to others.
If you would like to speak to a member of our team, please call us on 01-4199525.
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