Cash flow warnings on milk price fallout
Supplies two years ahead of 2020 targets but some operations will struggle to stay 'afloat'
Published 04/11/2015 | 02:30
Dairy farmers have been warned that cash flow problems could hit many farms next spring, as expanding herds present mounting credit costs.
Teagasc warned that available cash on farms may become tight in the busy months ahead, and agriculture consultant Mike Brady urged farmers to plan now and consider their finance options.
The warnings come as figures show that the country's dairy sector is racing ahead of projections this year, and is now expected to hit the targetted 50pc increase in Food Harvest 2020 plans two years ahead of schedule.
Dairy farms will deliver 6.2bn litres of milk this year - a massive 1.1bn litres more than baseline produced in 2009. Some of the biggest increases are coming in the back-end, with a 16pc rise in milk flowing through the pipes of the creameries during September compared to last year and some processors reporting a 30pc in October.
Dr Pat Dillon, head of Teagasc Moorepark said that the initial 50pc of the projected increase in milk supply will be relatively easy to achieve and that's reflected in this year's growth figures.
"We could expect a 6pc increase this year, with a 4pc to 5pc increase in the following years" said Dr Dillon. "Based on our milk solids we look set to achieve the target by 2018."
Ireland's milk production surged by 9pc up to August this year on 2014, with the UK recording a more modest 1.5pc growth, the Netherlands up 4pc and Germany up by less than a percentage point.
However, Dr Dillon cautioned that low milk prices could curb growth as farmers may "lose confidence", while weather conditions will also be a key factor.