Many farmers are under pressure at the moment.
While the weather has been beautiful, its effects are beginning to bite, more especially for dairy farmers and tillage farmers.
The cost on a medium-size dairy farm, of 100 cows, is over €2,500 per month, where supplementary feeding is 3kg/day ahead of normal.
Some farmers in drier areas have racked up a month of extra feeding, and the prospect of another month or two of supplements is likely, as farmers try to build up reserves of grass.
The hidden costs of the drought, though, are concealed in lower production, and more importantly in costs to come next winter.
While first cut silage was taken out in excellent conditions, the prospect of a much reduced second cut is upon us, due to minimal regrowth, and diversion of fields which were set for cutting to grazing instead, as farmers try to keep grass ahead of animals.
Equally, tillage farmers face a less than certain coming few months.
Some spring barley in our area has started to push out the final leaf, marking the end of stem growth.
Plants are clearly stunted, and at only around half of normal height.
After a horrendously wet winter, the winter barley crop yield might also be reduced by slug damage, and by failure of crops to tiller well in February and March.
The forward prices for UK wheat, at €160 per tonne, a benchmark for our cereal prices, remains slightly ahead of harvest prices last year.
At current levels, the expected drop in yield of straw and grain is unlikely to be offset by the marginally higher prices on offer.
Tillage farmers will perhaps be able to take advantage of stronger than normal demand for straw, as dairy and beef farmers will look to supplement existing excellent quality silage with feeding straw during the winter.
Some livestock farmers will also look to bolster stocks of fodder through whole-cropping barley and wheat.
All is not lost though, for either sector.
By working together, tillage farmers may come to the rescue of livestock farmers, and derive additional income for themselves, through growing winter fodder such as rape, redstart, or ryegrass in drought-stricken areas.
Should the weather undergo a meaningful change in the next week or so, a lot of ground can be made up on farms.
From a finance perspective, being caught in a drought can leave a farmer financially stretched.
It is important to examine:
- what the likely financial impact for you is so far this year.
- to quantify what extra costs will be incurred for each week from here on in.
- and to see what impact will these extra costs have on your plans for the year.
Having quantified the impact as best you can, you are able to decide whether you have the savings and resources to trade through this difficulty without adjusting your spending plans.
Or, alternatively, do you need to make adjustments to your spending, to ensure you have enough profits left over to cover household costs, farm bills, and loan repayments.
Each farmer can tailor their own individual plan to suit their own circumstances.
For instance, some farmers might make very simple changes, such as holding off on planned reseeding, so they don’t lose out on valuable grass growth this year.
Others might decide to reduce cattle numbers, this is especially the case for dairy farmers carrying a mix of dairy and beef who can offload bullocks or beef heifers earlier than normal.
Others might need to take more aggressive action, such as holding off on planned construction, or restructuring debt by taking an interest-only break.
You must take whatever actions you need to remain as profitable as you can, but also to remain solvent and liquid. Remaining solvent means having more assets than liabilities.
For the vast majority, that’s not an issue.
Remaining liquid means having the capacity to pay bills as they fall due.
At this time of year, most farmers often have more debt (creditors) than money owing to them, but usually this corrects itself as the year goes on.
A lot of costs are incurred upfront, and it takes a while for production to kick in, whether that’s milk supply or the grain harvest.
If, having incurred these extra costs, you can’t see the numbers stacking up so that you will be able to clear your bills as you would like to, then you need to take action.
Fundamentally, the priority at the moment is keeping food ahead of cows and cattle, but don’t lose sight of the bigger picture.
Assess what actions you need to take to feed your animals in the short term, what actions you need to take to ensure you have enough fodder for the winter, and what actions you need to take to be able to finance these costs.
Help is available from fellow farmers and trusted advisors.