At Least One Dairy Economist is Bullish on 2017

Is there light at the end of the tunnel for 2017 Dairy Farms?  Bonnie Collins with Cornell Cooperative Extension says one dairy economist is bullish on 2017.

In an interview with Farm Week, John Newton, senior director of economic research for the National Milk Producers Federation sees two positive signs.  “Dairy protein is uniquely positioned to meet all nutritional requirements with strong domestic demand" and herd numbers remain consistent as farmers continue to operate in a business-as-usual manner..

We haven’t seen a large change in cow numbers yet that would suggest farms are liquidating,” Newton said. “Some farms have cash flows that will allow them to ride it out, while for some farms it may be a tougher environment, especially if they’re heavily leveraged.

One of the keys to "riding it out" is cash flow versus leverage. Bonnie says managing cash flow does not have to be complicated. However, it is a matter of having a clear view of what dollars are flowing into the farm and how the outflow is being utilized.

Begin by listing all dollars coming into the household; milk revenue, animal sales, crop sales and off farm income. Next, list all dollars going out of the household.  You'll find lots of online tools to help you complete a cash flow budget. One of those is “Ag Decision Maker” from Iowa State University Extension and Outreach.

SOURCE: Cornell Cooperative Extension - Bonnie Collins