Cash Flow Planning
Calculating Feed Costs to Manage Cash Flow
Why is a cash flow plan important?
At the end of each year, producers need to evaluate and benchmark their dairy operations. After identifying strengths and weaknesses, summarizing and benchmarking cost of production, and identifying production opportunities, the producer is ready to plan a cash flow for the coming year that reflects the expected business climate.
The cash flow provides a guide for both the manager and farm advisors to understand what it takes for the farm to achieve profitable income levels and to experience adequate cash flow. But developing the cash flow plan is only the first step and, since business conditions constantly change, the producer must review the plan against actual performance on a regular basis in order to make the adjustments needed to achieve or improve on planned outcomes. The process is repeated each year as another business cycle begins.
The Penn State Extension Dairy team offers two courses for cash flow planning:
- Managing Your Milk Margin to Improve Your Dairy Cash Flow
One-day workshop for dairy producers to create a cash flow and determine income over feed cost.
- Cropping and Nutritional Strategies to Improve a Dairy Farm's Cash Flow
"Train the trainer" course designed for agribusiness companies and personnel interested in learning how adjustments to cropping strategies can impact their clients' cash flows.
Cash Flow Data Collection Sheet for Producers
Use this checklist to compile all the financial and production records needed to complete a cash flow plan.
Cash Flow Manual Calculations
For use with manual calculations.
Considerations for implementing alternative forages on dairy operations
For More Information
- Agricultural Business Management
- Dairy Nutrition