Building resilience when dairy margins are under pressure

Volatility is nothing new to dairy farming, but periods of falling milk prices combined with rapidly rising input costs can place significant pressure on even well-run businesses.

Earlier this year, TIDE consultant Edward Lott contributed to a Farmers Weekly feature exploring practical ways dairy farmers can protect their businesses from sharp price shocks.

At the time, Edward calculated that increases in fuel, fertiliser and feed prices could add around 2.1p/litre to production costs, taking the breakeven cost of milk production to approximately 40–41p/litre*.

Look beyond the immediate pressure

One of the key messages is the importance of avoiding decisions that solve a short-term cash-flow problem but compromise the performance of the business further down the line.

Delaying fertiliser applications, reducing important inputs or changing forage plans may lower expenditure today, but the consequences can continue into future production cycles.

As Edward explained in the original article:

“The current position won’t last forever; no position does”

That makes maintaining a medium and long-term view particularly important. Decisions made during a downturn should, wherever possible, leave the business in a strong position to benefit when market conditions improve.

Know your numbers and communicate early

Robust budgeting becomes even more important when margins tighten. Understanding expected cash requirements, reviewing cost of production and modelling different scenarios gives businesses a clearer picture of where pressure points could arise.

Where additional working capital may be required, Edward also stresses the importance of early communication with lenders. A clear budget and credible plan for how borrowing will subsequently be reduced can make those conversations much more constructive. In some circumstances, reviewing the wider debt structure may also help alleviate short-term cash-flow pressure.

But resilience isn’t simply about cutting costs.

The wider Farmers Weekly feature highlights opportunities around feed efficiency, forage quality, heifer performance, soil health, ration management and culling strategy. The common thread is understanding where money is genuinely generating a return and where improvements can be made without compromising future performance.

Building a business for the long term

Periods of volatility reinforce the value of having accurate information, clear objectives and a plan that considers more than the next milk cheque.

For TIDE, good business consultancy isn’t simply about responding when conditions become difficult. It’s about helping dairy businesses understand their performance, manage risk and make informed decisions that strengthen profitability and resilience for the future.

Edward Lott is a TIDE consultant specialising in dairy business consultancy and strategic planning. Contact Edward on – edward.lott@tideconsultancy.com | 07815 284850.

*This article references a feature originally published by Farmers Weekly, written by Rhian Price, in April 2026. Read the full Farmers Weekly article, including all 10 recommendations:10 ways to help shield dairy herds from sharp price shocks – Farmers Weekly