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How to plan your cashflow when milk prices are under pressure
Low milk prices make it much harder to stay on top of bills, especially when input costs aren't easing. When every euro counts, having a clear cashflow plan can help you stay in control and avoid difficult financial decisions later in the year.
Cashflow is simply the movement of money in and out of your farm business. When milk prices fall, that balance can quickly come under pressure. Planning ahead won't change the milk price, but it can help you prepare for the months when cash is likely to be tight, whether that's during spring fertiliser season or when feed costs increase.
Start with a realistic picture
The first step is to map out your expected income over the next 12 months. It doesn't have to be perfect, but it should give you an honest view of what you can expect.
Include all reliable sources of income, including:
Milk sales based on a realistic forecast price
Scheme payments
Stock sales
Any other regular farm income
With milk prices remaining unpredictable, it also helps to prepare three different budgets: a best-case scenario, a likely scenario and a stress-case scenario if prices stay low. This gives you a better understanding of how different milk prices could affect your cashflow.
Don't overlook the smaller costs
Once you've estimated your income, list all your expected monthly costs.
It's easy to focus on the larger expenses such as feed, fertiliser and loan repayments, but the smaller costs soon add up. Contractors, repairs, diesel, electricity, veterinary bills and household drawings should all be included.
Being honest about personal spending is just as important. Low milk price periods aren't the time to rely on rough estimates.
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Use technology to stay on track
Keeping your cashflow plan up to date is much easier when you're using a digital budgeting tool.
Solutions such as ifac's FarmPro or Cashminder bring your financial information together in one place, making it easier to compare actual spending against your budget and spot issues before they become bigger problems.
The aim isn't to create more paperwork, it's to have up-to-date information that helps you make better decisions.
Review your cashflow regularly
A cashflow plan shouldn't be something you complete once and forget about.
Review it at least every quarter so it reflects changing milk prices, costs and farm performance. Regular reviews help you stay in control and make decisions based on current information rather than assumptions.
If you know cashflow will be under pressure later in the year, you can plan how you'll manage it. Equally, if you expect a surplus, you can decide whether to reduce debt or rebuild savings.
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Use technology to stay on track
Keeping your cashflow plan up to date is much easier when you're using a digital budgeting tool.
Solutions such as ifac's FarmPro or Cashminder bring your financial information together in one place, making it easier to compare actual spending against your budget and spot issues before they become bigger problems.
The aim isn't to create more paperwork, it's to have up-to-date information that helps you make better decisions.
Review your cashflow regularly
A cashflow plan shouldn't be something you complete once and forget about.
Review it at least every quarter so it reflects changing milk prices, costs and farm performance. Regular reviews help you stay in control and make decisions based on current information rather than assumptions.
If you know cashflow will be under pressure later in the year, you can plan how you'll manage it. Equally, if you expect a surplus, you can decide whether to reduce debt or rebuild savings.
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What should a dairy farm cashflow plan include?
Your cashflow plan should include:
Milk income using a realistic forecast price
Scheme payments and stock sales
Feed and fertiliser costs
Veterinary expenses
Contractors and repairs
Electricity (ESB)
Diesel
Insurance
Loan repayments
Merchant credit
Household drawings
Planning becomes even more valuable when margins are tight. While it won't change market conditions, a well-maintained cashflow plan can help you make better financial decisions, reduce uncertainty and protect the long-term future of your farm.
Contact our team
Contact a member of our expert team and find out how we can support you.
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