Vital for farmers to deal with credit problems promptly
Tom is a dairy farmers who milks 80 cows on heavy soils in the south of the country.
Following the wet summer of 2012, Tom realised he would have a potential problem in the spring of 2013, so in November 2012 he went to the bank to seek extra credit.
His finance (stocking loan) of €15,000 was approved by the bank and drawn down in February.
This additional credit was seen as an interim measure that would be paid off during 2013.
However, as a consequence of the poor spring, he incurred even more costs and now needs to readdress the problem.
Although this is not ideal, this is the reality on wet farms and highlights the need to review any plan on an ongoing basis.
Following completion of a cash-flow assessment with a Teagasc advisor, it was established that Tom would have a cash-flow deficit of €18,000 at the end of the year if he cleared all of his merchant debt, repaid the €15,000 loan taken out in February and purchased fodder that would be required.
He would also need a further €12,000 to carry him over until milk cheques started coming in the following spring.