Liquidity management in dairy farms in Lower Saxony

Background and Objective

Increasingly fluctuating payment flows for dairy farms have various causes. On the cash in-flow side, volatile milk producer prices have been a clear result of the liberalisation of the milk market since 2006. On the disbursements side, prices for animal feed in particular fluctuate. Here a targeted control of payment flows is required in order to secure the solvency and the liquidity of the farm at all times. Especially in longer periods of low milk producer prices, when expenses for milk production are not covered, liquidity management becomes a focus of farm management.

Approach

A literature search is used to analyse what "optimal" liquidity management should look like on dairy farms. Based on the current state of research, the influence of the individual farm factors is assessed and further developed. Combined with approaches from behavioural science and socio-economic research on the entrepreneurial skills and attitudes of farmers, the influencing factors at the level of farm managers are to be generated in a theoretical context.

 Furthermore, an empirical analysis on liquidity management and its influencing factors at the farm level and at the farm manager level will be carried out.

Data and Methods

Data collection takes place in two steps. First, the influencing factors on the farm are queried in a written questionnaire addressed to all dairy farms in Lower Saxony. In a second step, interviews are conducted with farm managers in order to determine influencing factors in the area of personal attitudes and competences. Following the data evaluation, the results will be presented, discussed and further developed in an expert workshop with representatives from science, agriculture, the dairy industry, dairies, agricultural cooperatives and associations, and banks.

The comparison of the theoretical and empirical results should ultimately lead to the derivation of recommendations for action.

Our Research Questions

What are the main operational factors influencing the liquidity management of dairy farms?

Which entrepreneurial skills and attitudes do current farm managers possess, and are impacts or contexts discernible? How can the current situation be improved?

Preliminary Results

Results are not yet available.