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Sensitivity analysis is a strategy you use to understand how different changes can impact your dairy farm's cash situation and overall business. This page explains how using this tool at budget time can help you avoid nasty surprises and seize good opportunities. It shows you how to use DairyNZ's budgeting tools for this analysis, assessing changes in payout, production and farm working expenses. Additionally, it advises you to consider various factors in your analysis, such as milk prices, cow health expenses, and environmental risks. Overall, this page teaches you to plan proactively for unexpected situations.
At budget time, undertaking sensitivity analyses and creating scenarios will aid your decision making, giving you a ‘what if’ picture and reducing chances of any unwelcome surprises.
A sensitivity analysis on your budget helps you:
Use DairyNZ's annual and monthly cashflow budgeting templates in budgeting tools to automatically complete sensitivity analyses.
The sensitivity tables look at the variability of cash surplus/deficit received when exposed to changes in payout, production and farm working expenses.