First Milk members have been urged to reconsider their business plans to survive the milk price slump by John Owen, Royal Association of British Dairy Farmers Council member and farm manager at Gelli Aur College, Carmarthen which carries a 500 cow split calving herd supplying First Milk.
“We First Milk members, together with the rest of producers are currently in a position where we cannot do anything to influence milk price,” he says. “We can only take First Milk’s word that the co-op is not in danger of collapse; we have to take its statement as read, accept and support the board. First Milk has promised to take our milk and as many litres that we produce. We simply have nowhere else to go.
“First Milk members may not be alone. Whilst the co-operative has declared its hand, there is speculation that other milk buyers may be in as bad a position.”
Mr Owen has already reappraised Gelli Aur dairy enterprise business plan last week which resulted in capital expenditure plans put on hold. He urged other First Milk suppliers to follow suit.
“Check out your current true costs of production. If you don’t know, then engage with someone who can help – take advantage of DairyCo’s free half day consultancy. Make sure your costs include labour, capital repayments and reinvestment. Budget on the low side of milk price - for an average 20ppl; then maintain a clear cash flow forecast and budget and monitor against performance.
“Speak to your bank manager; if you need to lend money, then he will be more likely to be supportive if you have a carefully planned cash flow forecast and budget.
“If you have creditors then they need to be managed carefully; take advice from your bank manager.
“Inputs and investments needs to be reconsidered. Delay any capital expenditure, only progress with spend that is absolutely necessary and will offer a quick return. Check out input costs and put in place a system that makes more use of forage – the cheapest is grass.”
He adds: It’s not just about farmers examining their businesses and costs; it’s a two way process – farmers should be encouraging their suppliers to look at their production costs too.”