Farming is a challenging business at the best of times, and current market conditions mean financial planning is more important than ever.

Irish farmers understand perhaps better than anyone how quickly and dramatically a reversal of fortunes can occur. Last year's Teagasc National Farm Survey showed that farm incomes increased by 18 percent in 2007, mostly thanks to higher milk and cereal prices. And there was more good news as 2007 saw the highest annual level of investment in Irish farms ever recorded. But recent turmoil in world financial markets, increased volatility in global food markets, climate change, and rising energy costs are combining to create challenging times ahead for all those in the agriculture and food industries.

The dairy and tillage sectors have consistently generated the highest income levels for full-time farmers over the years, and in 2007 these two sectors remained the most profitable farm enterprises. Both markets experienced turbulence in 2008, however. Issues around milk prices and the imminent abolition of milk quotas are causing concern for dairy farmers, while tillage farmers are dealing with the fallout from bad weather, increased production costs, reduced output and high volatility in prices. Efficiency will be a key watchword if agri-businesses are to flourish in the years ahead.

One notable trend that has emerged among farmers is a move towards non-farm activities, a by-product of the Celtic Tiger boom years. Many have invested in property markets at home and abroad, while others have dabbled in equity markets. These investments will require careful management, especially in light of current conditions, to minimise exposure to risk.

The recent pork crisis showed how crucial it is to be prepared for unexpected events that can disrupt the normal workflow. In times like this, ensuring your business has a solid financial footing will provide the confidence needed to deal with short-term ups and downs, without losing sight of the bigger picture.

The challenges of current market conditions, seasonal demands on finances, and the need to always expect the unexpected mean cashflow management is all-important. Talk to your branch manager today to discuss your options for ensuring a healthy cashflow.

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