By David Cuffey
Milk….. poured extravagantly over your cereal, frothing up your cappuccino, or simply a nice cold glass with a bar of chocolate, milk is something we all take for granted… However, do we ever really stop to think about how it makes it to our fridge? A lot of work and business planning goes in to making sure we always have a pint of the white stuff to hand when we need it.
Over recent months and years the price of milk produced by Northern Ireland farmers has fluctuated significantly. The latest release from DARD (Department of Agriculture and Rural Development) shows the monthly information on the average Northern Ireland farm gate milk prices and the volume of raw milk produced. In April 2015 the Northern Ireland average farm gate price of milk (including retrospective bonuses) was 21.95 pence per litre, 10.99 pence per litre lower than April 2014. And as I write this, the price has dropped again to 18 pence!
Northern Ireland has always had a traditional farming background, delivering a greater percentage of its Gross Domestic Product from agriculture than almost any other region in the UK with over 2000 people employed in the dairy industry alone.
So if it’s such a big industry and the product produced is something we all know and love… what’s the reason for the massive fluctuation in Milk prices?
The answer….? Quotas… For many years the EU produced milk quotas in 1984 to regulate the amount of milk produced in Europe and sustain pricing levels. The aim of the quotas was to prevent over-production which had resulted in costly butter mountains. The quota has been a real asset to Northern Ireland farmers, allowing them to buy up quota from other parts in the UK and fulfil their shortage with Northern Ireland’s over production. In fact, according to the Ulster’s farmers Union, the quota transfer ability allowed Northern Ireland to increase production by 50% over the past 15 years.
The end of milk quotas sees challenging times ahead for Northern Irish farmers, requiring real business planning and diversification to ensure that their business survives this newly turbulent market place.
Changes like this can happen in any business and maybe it’s time to consider a diversification and forward planning for your company. At Ross Boyd Limited, we are silver partners for Xero cloud based accounting software (The UK’s leading accounting software) and love specific products to support farmers run their businesses. Moving to Xero can reduce your accountancy fee’s, provide up to date financial projections, change the way you invoice clients and keep better track of your financial information. We would love to hear from you so we could discuss further how Xero could change your business for the better along other services we provide, so please get in touch on 02895 320155 or email info@rossboyd.co.uk