The dairy forecaster is a planning tool that helps predict milk income based on predicted milk solid production. If you supply Fonterra, Westland, or Synlait enter the milk solids you plan to produce each month of the season and Farm Focus will calculate your milk income. Top-up payments are included. The projected milk income feeds through to your cashflow from the dairy forecaster. As the year progresses, your actual milk income will sit on top of your planned milk income.
If you supply another milk company or are a contract milker, you will need to enter additional information.
Set up your dairy forecaster
The dairy forecaster only needs to be set up once, however, if your business model changes, ie if you change from contract milking to share milking you will need to change some of the settings.
Go to your Plan screen and open a current year plan i.e. a draft or the working plan.
Select Dairy Forecaster.
Once in the Dairy Forecaster, go to the Settings cog.
Owner/Operator
Select the Dairy company you supply from the drop-down list
Tick Owner/Operator from the Farming type list
Click Save
Sharemilker
1. Select the Dairy company you supply from the drop-down list.
2. Tick Sharemilker from the Farming type list.
4. Enter the share percentage for your business.
3. Click Save.
Contract milker
1. Select the Dairy company you supply from the drop-down list.
2. Tick Contract Milker from the Farming type list.
3. Click Save.
Owner/Operator who employs a contract milker
Select the Dairy company you supply from the drop-down list.
Tick Owner/Operator from the Farming type list.
Allocate the share percentage as 100%.
Click Save.
Calculate the expected contract milker wage by multiplying the kgMS predicted to be produced each month by the contract milk rate. Enter this information under Wages: Contract Wages.
Owner/Operator who employs a Share milker
Select the Dairy company you supply from the drop-down list.
Tick Sharemilker from the Farming type list.
Enter the share percentage for your business.
Click Save.
TIP: if you track more than one bank account, set the default bank account for your milk income.
Enter planned milk income
In the main body of the Dairy Forecaster enter the milk solids you intend to produce every month.
If you supply to Fonterra, Westland or Synlait, the dairy forecaster automatically calculates the projected milk income.
If you supply any other milk company you will need to enter the projected milk income every month.
If you're a contract milker you will need to enter your contract milk rate.
TIPS:
Retro payments need to be entered manually in the cashflow. We suggest you code this under Income > Milk Production > Last Seasons Deferred.
Fixed Milk Price contract payments come through with the previous season's retro payments, whether there is a positive and negative impact, so this is budgeted for manually as above.
Any dividend or other additional payment or cost (Eg, Winter milk, colostrum, transport costs) needs to be entered manually in the cashflow.
If you are creating a plan and the advance schedule is yet to be published, you will need to manually enter a predicted milk price rate.
You can enter a different base rate or the bank's rates if you want to consider different scenarios.
What happens if the projected milk income changes?
If you supply to Fonterra or Synlait and the advance rate schedule changes, click on the Update Prices token and your projected milk income will be updated (see below for Fonterra example).
If you supply other dairy companies you will need to enter the changed advance rate schedule manually.
Enter actual milk production
Invoice date
It is standard accounting practice for the invoice date to reflect when the work/milk supply occurred. When coding your milk income it is common practice to put the invoice date on the last day of the month the milk was produced and the payment date on the date payment was made.
IRD has granted Fonterra an exemption, and Fonterra's invoice date (Issue date) is for the month of payment and not supply. When coding Fonterra invoices, you can use the invoice date and Farm Focus will automatically align the date of supply in the dairy forecaster (For example if the Issue date is 7th Sept and the payment date is 15th Sept, Farm Focus will infer August supply in the Dairy Forecaster). Some Fonterra clients still prefer to enter the invoice date on the last day of the month the milk was produced and the payment date on the date payment was made. Consult your accountant on what is best for you but always be consistent on the approach you use.
Entering milk produced
Ensure you enter your actual KgMS produced each month in the quantity column. This will feed into your dairy forecaster to calculate your actual income. Actual KgMS produced each month will override any planned KgMS data and the columns will be greyed out.
The Headers for the Increase Adv, Base payment, and Base Adv Increase payment columns will be overwritten with the description you coded on the milk income invoice/transaction. The previous data in these columns become irrelevant once Actual data is entered for the month.
A WORKING PLAN banner identifies the demarcation of where the actuals stop and planned items start within the dairy forecaster.
The Actuals section will be greyed out. You can click on the three vertical dots to view the actual invoice/transaction with your coding information.
If you have income planned for a month and have not yet received the milk income, or you haven't yet coded the transaction, you will have a red alert to notify you to enter your actual data for that particular month.
Only record a quantity on the payment for total monthly production. If you record top-up payments on a separate line, don't record a quantity as this will double up the milk solids.
You can also edit the Management tag directly in the Dairy Forecaster if you wish to change the tag for your milk income. Click here to learn more about management tags.
For Fonterra clients, we recommend you create a +Record (Money in) manual invoice to record milk solids produced each month (include the kgMS produced that month in the quality column) and a separate + Record for the deductions.
Entering deductions
We recommend you create a +Record (Money out) manual invoice for any deductions.
Note: For Fonterra, the deductions are recorded on the invoice as GST inclusive.
Matching for Fonterra
Match the income (bank transaction) with the milk payment, deductions and Farm Source invoices.
Tips and Tricks
The dairy forecaster calculates milk payout for the current season. It does not include retro payments. You will need to calculate your retro payment yourself and include these in the plan. It's a simple calculation - say you produced 150,000kgMS in the season and in June you were paid $7.20/KgMS and in July you have a retro payment of $7.65/KgMS. Your retro payment in July will be: $0.45 /kgMS x 150,000kg = $67,500 (NB: $7.65 - $7.20 = $0.45)
If the Dairy Forecaster is not working, check your code set-up. Go to Settings > Codes > Farm codes > This Seasons. This season's extended code needs to have the type set as Milk Solids.
For Fonterra customers; the capacity adjustment calculation is not included in your dairy forecaster.
The view in the dairy forecaster aligns with your dairy company’s production year, June to May, and will be GST Exclusive. If your financial year doesn’t match this i.e. it runs from July to June, the dairy forecaster and the cashflow screens won’t be 100% aligned.
More information
When you have multiple supply numbers you may want to separate production for each.