Evaluating and Reducing Costs to Reduce Risk
The outlook for the remainder of 2026 and into 2027 looks positive. However, into 2027, margins may begin to tighten. Feed costs remain relatively favorable, but milk production is increasing. This rise in production is putting downward pressure on milk prices. Programs such as Dairy Margin Coverage and Dairy Revenue Protection are in place to help farms manage risk. One way to manage risk is to take a deep dive into specific production costs.
Understanding Cash Flow
Regular, consistent reviews of the dairy’s finances are key to managing risk. Income and expenses should be examined not only at the whole-farm level but also per cow or per cwt. Calculating costs and income on a per-cow basis allows for easier comparisons of the farm from season to season or year to year. To keep comparisons accurate, any prepaid or unpaid bills need to be accounted for in the year in which they are used, not when paid.
By Derek Nolan
September 22, 2026 12:17 AM
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