Break Even Milk Price
Why it’s important
Understanding your Break Even Milk Price is critical in order to grow your profitability, and by association, your Cash Flow. This KPI measures the lowest price you would need to garner per kilogram of Milk sold, in order to turn £0 in net profit. The lower this price point is the more efficiently your farm is being run and the less susceptible you are to market forces such as changes in the price of Milk. Steps should be taken in order to lower this value as much as possible by investing in more efficient processes and by reducing costs and overheads.
Making the KPI
To calculate your Break Even Milk Price you will need to know:
- Your Total Expenses
- Your Current Liabilities
- All Non-Milk related revenue
- Your Milk Production (in Kilograms)
Total Expenses, Current Liabilities and Non-Milk Income are all financial values which should be pulled into FUTRLI from your Accountancy Package of choice or via CSV upload. Milk production is a non-financial value which will need to be imported via CSV.
Once you’ve imported or synced the necessary data, you can calculate your Break Even Milk Price by performing ((Total Expenses + Current Liabilities) – Non-Milk Revenue) / Milk production:
And that’s it!