Milk price is dominating discussion at the minute. The outlook is somewhat more uncertain for 2015 than has been the case over the past few years. However, a lot can happen in the five months between now and when our seasonal production levels start to increase again.

We have seen in the past how the global supply and demand balance is exposed to weather conditions, food scares, currency shifts and/or geopolitical issues. The key unknowns at present are how long Russia will remain closed and, as ever, what the true state of play is in China with regard to production and demand.

Nevertheless, given the current situation, it would be foolish for farmers not to look at how robust their business model is in the face of lower milk prices. The focus should not be on second-guessing what the price will be – putting a structured plan in place that allows you to respond to the production environment that develops would be a much better use of time.

There will always be temporary measures that a business can take when faced with short-term challenges. In the context of dairying, reducing key input costs is an option. Some farmers will reduce fertilizer bills by utilising soil reserves of P&K when cashflow is tight. A revision of expansion plans may also release additional capital into the business and/or reduce expenditure.

Irrespective of the decision, the key is to plan ahead and not be forced to make a kneejerk reaction to a short-term cashflow problem that will have long-term consequences for farm profit.

Strong milk price combined with excellent grass-growing conditions will drive 2014 profit levels. In this regard, financial discipline will be key. Short-term tax avoidance measures that will see the business incur longer-term financial liabilities need to be avoided.

As discussed at the Winter Milk Conference this week, farmers and banks need to work together to increase the lifetime of loans to match the investment. Paying for land and milking parlours with a loan taken out over five to seven years leaves the business exposed to a year when milk prices are low and/or feed prices rise.

At farm and processing level, investing in a liquid/winter milk business that may or may not be present in three years’ time, the uncertainty on the level of bonus available to pay for higher costs, or indeed how the milk will be paid for, is not a good strategy. Farmers are not making two- or three-year investments. In the main, they are 10-year investments at a minimum. It has become clear over the last number of years that milk solids (fat and protein) is and will continue to be the primary payment method for a country exporting the majority of its product. The various processors need to make this clear to suppliers north and south of the border.

Meanwhile, any changes to the market environment will be a test for our processing sector. Strong demand has undoubtedly provided a two-year grace period with all co-ops delivering strong results for 2013. However, what lies ahead? Will the assurances we have seen from chief executives in recent months around milk price be delivered? Is the repositioning at the top of the monthly milk league tables sustainable or merely an attempt to deflect immediate attention from the long-term sustainability of the business model? Time will tell.

Whether it happens in 2015 or beyond, there is no doubt that a sustained period of market pressure will occur. This will quickly reveal the co-ops that have taken a long-term approach to adding value to Irish dairy and those who are merely riding on the crest of a wave.