Contingency fund 'offers way to cover your losses'
Most farmers might claim to be struggling to earn enough from their business to meet day-to-day living expenses.
However, with all the experts predicting that volatility will feature large in farming for the foreseeable future, one dairy farmer in Tipperary believes now is the time to create a contingency fund to cover another annus horribilus such as that of 2009.
Jim Delahunty, who milks 109 cows at Carrig on the Tipperary-Offaly border, told delegates at Teagasc's National Dairy Conference in Athlone that he was in the process of putting together a pot of money that will cover all household essentials for a full 12-month period.
"I got into the habit of putting money aside to cover the tax bill over the last number of years," said Mr Delahunty.
But it was when he was analysing the greatest threat to his business with Teagasc's dairy specialist, George Ramsbottom, that he hit on the idea of the need for a contingency fund to cover a bad year for milk prices.
"We were doing an analysis and realised that the biggest threat to my business is not so much disease or lack of finance. Instead, it is a low milk price year like we had in 2009," he said.
Mr Delahunty believes that all dairy farmers should be working on the basis of how they will be covered when, not if, another low milk price year occurs.
"In the past, dairy farmers were protected," he said. "Now there's really no bottom to where the milk price can go. It's a bit like stocks and shares. To be honest, I don't think dairy farmers really knew what a bad year could be like until 2009 hit us."