History likes to repeat itself. Prior to last year, the last time milk prices were great was in 2014 and we all know what followed—lackluster milk prices that challenged producers. Learning from previous financial hardships, Curtis Gerrits, a senior dairy leading specialist with Compeer Financial, outlines five points explaining why dairy producers are better positioned today vs. 2014.
Utilization of Working Capital: Many dairy producers have recognized the importance of having a strong financial and working capital position for the next turn-down in commodity prices (milk) after going through 2014 and moving into 2016-2018. Going into 2023, dairy businesses have leveraged their working capital by implementing larger amounts of pre-paids ensuring fixed pricing for better financial planning for the upcoming year.
Lines of Credit Availability: With profitability at the forefront for many dairy producers in 2022, lines of credit have been drastically paid down going into 2023. Although similar to that of 2014, indications on a line of credit availability in 2023 have been more significant, which in turn allows for flexibility with cash management for the upcoming/current fiscal year.
By KAREN BOHNERT
April 18, 2023
dairyherd.com
Comments