Industry Expert Anticipates Elevated Production Costs

According to one industry expert, dairy producers should expect an increase in production expenses this year. Gary Sipiorski, of Gary Sipiorski Consulting, LLC, said dairy farmers should look at redoing their cash flows and projections to get a clear picture of 2022.

“Boy, I tell you what it is just tremendous volatility that we're looking at right now, particularly with our inputs and I'm cautioning dairy producers to redo their cash flows and their projections. Probably looking at anywhere from 10%-20% bump in those expenses.”

Sipiorski said while milk prices are good, he says the cost of production will erode some of the gains.

“And we might look at that high milk price and it looks pretty good, but we could probably see that cost of production bumped by two to three dollars a 100, so that's going to melt away some of that milk price.”

And he recommends keeping a close eye on your cash flow and to stay in touch with your lender.

“If you can, cash flow it on a monthly basis, because there are certain times during the year that you're going to need more cash, whether it be custom operating, harvesting, manure hauling, things like that, maybe purchasing. And for goodness sakes, bring that cash flow into your lender now and talk to your lender about it, because they know what's going on, but they are more than happy to sit down with producers and put some numbers to it. So, maybe three, four, six months from now, you anticipate a cash shortage, and you can get that setup with a line of credit.”

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