Prognosis on milk price of € 0.37 cents
The new barn was built based on a forecasted milk price of €0.37 cents. “That is substantially lower than our average price, which fluctuated over the years between €0.40 and €0.43 cents,” says the energetic businesswoman who is keen to divulge all information about the business side of the farm. On top of that they receive €08.5 cents per kilo from the EU GAP.
In the first year post-building, the farmers experienced no problems at all. The milk was worth €0.42 cents, well above the budget, so the upfront costs of enlargement and the partial under-utilisation of the barn could be accomodated. Around mid-2014 the Keisala’s milked the intended 120 cows. The production, although fine, always had room for improvement with more than 10,000 kg per lactation with 3.90% fat and 3.35% protein. Then in August 2014, the Ukraine-crisis began which saw milk prices crash twice with €0.9 cents per kg after the main importer, Russia, stopped buying Finnish milk products. This meant that the farmers currently receive €34.3 cents per litre (April 2015). “We had no time to make a buffer. So we had to go to the bank to negotiate about paying only the interest off the loans for the next couple of years.”
Good results and sufficient collateral
In itself, extra financing should not be a problem. The entrepreneurs have a new stable worth €1.5 million, modern machinery, excellent results and 140 hectares of land that, at an average value of €11,000 per hectare is an easy €1.6 million. “The bank financed and put in some loans for longer repayment periods and lower interest rates. We now have a funding of €2 million with on average 2.2% interest and annual repayments of some €60,000. Precisely that high repayment makes it difficult for the first few years. The liquidity problem was in the end resolved smoothly. But it was hard to swallow as historically we were never funded heavily. We wanted to give our son a good position by growing in production and then it is hard that you end up in a somewhat awkward position.”
Merja is confident that milk prices will recover. “We will first make accelerated repayments then, after that we will continue to grow steadily,” she says optimistically. The first step towards further growth has already been made. A third robot has been placed recently. The robot originates from Lely like the other 2, only this time it is not purchased like the others were, but leased for €1,400 per month. “We have continuously between 120 and 125 cows to milk. The average daily output is now 36.1 kilos per day. The current 2 robots could not handle that. There are hardly any cows that are milked more frequently than twice a day, therefore, the third had to come.”