Resetting our focus on farm budgeting

1. Keep a close eye on cashflow

With average production costs predicted to be around 42c/L for 2025, farms are exposed to greater market risks. The sharp decline in milk price during Q4 2025 is a stark reminder of how quickly things can change.

With uncertainty heading into 2026, up-to-date financial data is crucial for making smart decisions about reseeding, stock sales timing, and stocking rates.

2. Plan ahead with realistic targets

With current price uncertainty, you need to plan for different scenarios.

Use your farm's 3-year historical cost data to set realistic targets while building in contingency plans for various milk prices.

Good budgeting is about:

• Understanding your current financial situation

• Planning for different income scenarios

• Identifying where you can improve efficiency

• Building resilience to handle market ups and downs

3. Focus on profit, not just production

Farm growth isn't simply about increasing herd size. In uncertain times, protecting profitability matters most.

This means:

• Review stocking rates to maximise grass utilisation

• Focusing on cost control and efficiency

• Managing cash within the business – don’t starve your business of cash with capital expenditure or short-term debt.

With milk price under pressure, profitability per ha/ kg MS and overall farm margin are what matter most, not just total litres produced.