Act early if facing cash flow issues
Input price increases, lower milk price and poor grass growth have all combined to put significant pressure on farm cashflows. Given this, Teagasc Dairy Specialist, Patrick Gowing reminds farmers of the importance of completing a quick cash test.
Take your current account balance on the 1st of September this year, minus your current account balance on the 1st of January 2026, minus your current creditors, and then divide by your average cow numbers.
Based on our projected figures, we would expect the average farm to be at about -€100 to + €100 net cash per cow at a minimum.
If you fall within this range, it suggests your farm has been quite resilient during 2026 and is likely to finish the year with a positive cash flow. If your figure is below this range, it means the farm is likely to finish in a cash deficit for the 2026 year. If you are worried, seek advice from your advisor/accountant and do a more detailed cash flow analysis.
Reaction time vital
Farmers who find they are under cash flow issues need to react fast. Small changes early can save drastic actions later. The banks are aware there may be cash flow issues and can help, but they need to be told in time.
One area that may warrant consideration is to retrospectively finance some capital projects farmers completed out of cash flow. For example, if you constructed a new calf shed for €50,000 in 2025, this could be borrowed against, putting the cost over 10 years rather than trying to pay for it in one. This would bring the €50,000 you spent on the shed back into your current account.
If you are worried about a high tax bill, this can also be borrowed against and spread out over 12 months.
If you have an issue with fodder and also have a cash issue, you need to look at culling cows early and use the funds of the stock to help purchase additional fodder. While holding the animals may make more money in the future, that is only an option if you have the cash to carry the stock for the additional time.
While we would hope that milk price would improve into 2027 and, with it, we see an improvement in cash flow on farm, we have to take the time to make sure the farm is in the lowest cost of production it can be over the coming years.
We are likely to see these swings in milk price and weather impacts as time goes by and is your farms cost structure best suited for these fluctuations? Completing a profit monitor to establish your costs of production and plotting your farm business forward is essential to help secure your farm business going forward.
Also read: Feeding advice for late-cut grass silage