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Dairy expansion with low milk price has benefits

A consultant says there are benefits to expanding dairy farms during times of low milk prices.

Dairy business consultant John Roach tells Brownfield farmers often expand dairies when milk prices are down.  “Some of the best to expand historically has been when low milk price has been there because there’s not as much demand from the builders because there’s not as much building being planned, so often times you’re able to generate a better price.”

For producers that expand during times of low milk prices, Roach says producers usually get to capitalize on the price rebound.  “Generally, the cycle will give you an upside on the other side, so expand that year when you have low milk prices, and then when the milk price rebounds, your expansion is fully populated and ready to go, but that assumes that you’ve got enough cash flow and ability in your balance sheet to be able to absorb that.”

 

Roach says if the decision to expand is made, don’t present lenders with a request that barely meets construction costs as unexpected expenses usually happen with construction projects.