Milk Price- Please read Mod note in post #1

mf240

frazzledhome wrote: »

But the 50 acres beside you is now gone, do you think you'll get the chance again?

I love those reports and the weight that's put on them. Rabo buy no milk and therefore know nothing about where we are headed. This is some younglad out of college giving his opinion, means nothing.

Milk will rise again and this talk of mid 20's while likely you'd think by lads it was going to last forever. Decisions shouldn't be made on 1 yrs price.

I'm wondering where's the money that must have been made while price was 40c last year?

Yip best time to get on the bandwagon is when it slows down for ya. Great time to do anything as great value around. ( ya might roof the whole yard yet)

But still theres not much point stress testing loans at 30 when it will dip under it for a year every now and again.

In tims case he told us he was only starting out and it didnt suit him and fair play to him for knowing his own mind.

frazzledhome

mf240 wrote: »

Yip best time to get on the bandwagon is when it slows down for ya. Great time to do anything as great value around. ( ya might roof the whole yard yet)

But still theres not much point stress testing loans at 30 when it will dip under it for a year every now and again.

In tims case he told us he was only starting out and it didnt suit him and fair play to him for knowing his own mind.

Jeepers in no way aimed at Tim, he can do his own business.

On price it's not SR single to stress test at lowest price but at 5 yr average. I'd be stress testing any loan in my costs of production.

A big loan is typically 15yrs + so stressing 1 yr is not sensible

mf240

frazzledhome wrote: »

Jeepers in no way aimed at Tim, he can do his own business.

I know that just saying

On price it's not SR single to stress test at lowest price but at 5 yr average. I'd be stress testing any loan in my costs of production.

A big loan is typically 15yrs + so stressing 1 yr is not sensible

Fair enough maybe im overly cautious.

frazzledhome

mf240 wrote: »

I know that just saying



Fair enough maybe im overly cautious.

Caution is very important, helps us all survive

Greengrass1

frazzledhome wrote: »

But the 50 acres beside you is now gone, do you think you'll get the chance again?

I love those reports and the weight that's put on them. Rabo buy no milk and therefore know nothing about where we are headed. This is some younglad out of college giving his opinion, means nothing.

Milk will rise again and this talk of mid 20's while likely you'd think by lads it was going to last forever. Decisions shouldn't be made on 1 yrs price.

I'm wondering where's the money that must have been made while price was 40c last year?

At the walk today in Jim delahuntys they had a graph of his stock numbers for last 10 yrs and the milk price fir those yrs.
It was a clear pattern that milk price had dropped every 3 yrs.
2006
2009
2012
and now we're in 2015 with a lowish milk price.
coincidence?
his average milk price fir last ten yrs was 34c

Timmaay

Main spanner in the works was a the bank refusing to loan for any term over 15years. This mean crippling capital repayments (which are after tax!), and basically a huge cash flow hole in the early years, when I would be expanding hard and not up to production yet, definitely no room for milk price at 26 cent in that plan ha, even for the short term. Another 50 acres might never ever show up beside me again, but equally so still loads of option around, other smaller adjoining blocks which could well either show up for sale or long term lease, equally so if say 200 acres popped up for long term rent afew miles away I wouldn't bat an eyelid about throwing a cheap 20 unit on it, pay a lad to milk 200 cows on it from Feb to Nov and house them back at home during the winter. Plenty of options, all I know is I haven't missed them 50 acres yet which we rented for 15years previously before they were sold.

jaymla627

Greengrass1 wrote: »

At the walk today in Jim delahuntys they had a graph of his stock numbers for last 10 yrs and the milk price fir those yrs.
It was a clear pattern that milk price had dropped every 3 yrs.
2006
2009
2012
and now we're in 2015 with a lowish milk price.
coincidence?
his average milk price fir last ten yrs was 34c

The problem is now with the cost of inputs rising year on year their simply isn't the wriggle room anymore to cut costs enough to make up the shortfalls, all well and good saying milk is a three year cycle you just have to ride out the lows but when your primary inputs like fert/land rental/feed etc keep rising considerably you end up running to standstill

Greengrass1

jaymla627 wrote: »

The problem is now with the cost of inputs rising year on year their simply isn't the wriggle room anymore to cut costs enough to make up the shortfalls, all well and good saying milk is a three year cycle you just have to ride out the lows but when your primary inputs like fert/land rental/feed etc keep rising considerably you end up running to standstill

HIs fert costs were only 1.83c very high p and k so could buy very little and forward buys alot of fert. All the little things like that can help alot in lean times

Dawggone

jaymla627 wrote: »

The problem is now with the cost of inputs rising year on year their simply isn't the wriggle room anymore to cut costs enough to make up the shortfalls, all well and good saying milk is a three year cycle you just have to ride out the lows but when your primary inputs like fert/land rental/feed etc keep rising considerably you end up running to standstill

That sounds familiar....where did I hear that before?

Dawggone

Timmaay wrote: »

Main spanner in the works was a the bank refusing to loan for any term over 15years. This mean crippling capital repayments (which are after tax!), and basically a huge cash flow hole in the early years, when I would be expanding hard and not up to production yet, definitely no room for milk price at 26 cent in that plan ha, even for the short term. Another 50 acres might never ever show up beside me again, but equally so still loads of option around, other smaller adjoining blocks which could well either show up for sale or long term lease, equally so if say 200 acres popped up for long term rent afew miles away I wouldn't bat an eyelid about throwing a cheap 20 unit on it, pay a lad to milk 200 cows on it from Feb to Nov and house them back at home during the winter. Plenty of options, all I know is I haven't missed them 50 acres yet which we rented for 15years previously before they were sold.

I started with 44.5 naked acres. When I say naked, I mean no sheds, machines, nothing.
Not complaining. Parents gave me the best education they could afford. Boarding school at 7 years old etc etc.
Then they handed me an asset worth over half a million in today's value. Not bad!
Now I did what Frazz was on about renting land linked to end product price (wheat in my case) many moons ago.
There are not many new ways to kill a cat.
In fairness Tim, you have a good head on your shoulders, with a broad mind.
Fighting a big fight in a very small corner can make a slave of you.
The world is a big place and there are a whole lot of opportunities out there.
Well played. Play the game you can win.

Buford T. Justice XIX

jaymla627 wrote: »

The problem is now with the cost of inputs rising year on year their simply isn't the wriggle room anymore to cut costs enough to make up the shortfalls, all well and good saying milk is a three year cycle you just have to ride out the lows but when your primary inputs like fert/land rental/feed etc keep rising considerably you end up running to standstill

I just looked up a note on my phone from this spring when an IFA economist gave a presentation on prices for the last decade.

Output prices have risen 25% in the last 10 years.

Input prices have risen 72% in the last 10 years.

jaymla627

Buford T. Justice V wrote: »

I just looked up a note on my phone from this spring when an IFA economist gave a presentation on prices for the last decade.

Output prices have risen 25% in the last 10 years.

Input prices have risen 72% in the last 10 years.

So basically you need to be producing over 40% more milk solids in 2015 using the same level of inputs you used in 2005 to just clear the same profit, increasing herd size is really going to become a given in years to come to try and negate the costs of rising inputs.
Good example here is parlour running costs/esb are halved this year per litre simply because twice the litres are going through the parlour compared to this time last year

mahoney_j

Greengrass1 wrote: »

At the walk today in Jim delahuntys they had a graph of his stock numbers for last 10 yrs and the milk price fir those yrs.
It was a clear pattern that milk price had dropped every 3 yrs.
2006
2009
2012
and now we're in 2015 with a lowish milk price.
coincidence?
his average milk price fir last ten yrs was 34c

Anyone else on here at that walk today and if so impressions .ive been there a few times but not today as I'm away for a few days r&r .never on stand place yet(waiting for the open day!!!)but Jim is a guy I'd have out well in front of the chasing pack with him and lines of frazzled .really like jims operation as it has lots of similarities where I'd like to end up profit wise

Greengrass1

mahoney_j wrote: »

Anyone else on here at that walk today and if so impressions .ive been there a few times but not today as I'm away for a few days r&r .never on stand place yet(waiting for the open day!!!)but Jim is a guy I'd have out well in front of the chasing pack with him and lines of frazzled .really like jims operation as it has lots of similarities where I'd like to end up profit wise

Serious money spent between quota and infastructure. 400 k I think.
Few of us were wondering if we spent to little in the yard

mahoney_j

Greengrass1 wrote: »

Serious money spent between quota and infastructure. 400 k I think.
Few of us were wondering if we spent to little in the yard

Slowish steady expansion with cows plus facilities ,has served him well .long

Dawggone

mahoney_j wrote: »

Slowish steady expansion with cows plus facilities ,has served him well .long

Of course....
What land base?




Acres/hectares (IMHO) are the new quotas.


Quotas have set up many producers to take on the world....IF...they have enough hectares.

Greengrass1

Dawggone wrote: »

Of course....
What land base?




Acres/hectares (IMHO) are the new quotas.


Quotas have set up many producers to take on the world....IF...they have enough hectares.

75 ac around parlour 125 cows
he did say quotas protected everyone. They limited how you high you could stock your milkers. Reckons well all have to get to understand the markets now and trends etc

Dawggone

Greengrass1 wrote: »

75 ac around parlour 125 cows
he did say quotas protected everyone. They limited how you high you could stock your milkers. Reckons well all have to get to understand the markets now and trends etc

The need to understand the markets is a given.
Forgive me in saying that the least informed must be dairy. Not including beef in that!

My prediction is that milk will go the same route as tillage ( maybe because I have experience of both).

SCALE! Acres! Numbers of cows!!


Will I be shouted down?

Greengrass1

Dawggone wrote: »

The need to understand the markets is a given.
Forgive me in saying that the least informed must be dairy. Not including beef in that!

My prediction is that milk will go the same route as tillage ( maybe because I have experience of both).

SCALE! Acres! Numbers of cows!!


Will I be shouted down?

as the lads said there the same costs have increased 72% over last 10 yrs. Where will it be in 10 more yrs.

Dawggone

Greengrass1 wrote: »

as the lads said there the same costs have increased 72% over last 10 yrs. Where will it be in 10 more yrs.

The big will have to get bigger, and the small will go. It is inevitable.


This will happen. I'm willing to bet my farm on it.

What I find a bit confusing is that Teagasc still cling to the mantra of the family, happy, la la land ....bliss.

It is not possible.



Quotas are gone. Forever.

alps

Don't bet the farm on it Dawggone, lots of life left in the Irish family farm system yet. Where else will you get free land and cheap labour? All of the expansion from here on must pay in full for the land and the labour....Even the comment from the farm walk today was that this progressive farmer was willing yo expand to where he is now, but was doubtful he would take the risk of going the next step involving paying staff and renting ground, where others make the money and he takes the risk...
As far as I can see models like the greenfield, shinock in Bandon and their likes are just not throwing off enough profits to justify the risk to the initial capital investment. Gonna be hard to beat a moderately borrowed family farm that keeps it's system simple and efficient like we saw today.

stretch film

Dawggone wrote: »

The big will have to get bigger, and the small will go. It is inevitable.


This will happen. I'm willing to bet my farm on it.

What I find a bit confusing is that Teagasc still cling to the mantra of the family, happy, la la land ....bliss.

It is not possible.



Quotas are gone. Forever.

Dawg you get "shouted down " cos you are deemed to be chief party pooper:)

you've benefitted from what protectionism remained in the quota system and could still satisfy any expansion ambitions ... we couldn't simple as .

its no secret that plenty "small" French dairy farmers are exiting which like most things is prob due to low profit.
so if france is a good bit further down the road than where you see us going I for one would like to hear you expand on the subject esp your opinion on the irish equivalent of where you are/going...

we cant all get there.

Milked out

http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11470922&ref=nzhbiz_tw

darragh_haven

alps wrote: »

Don't bet the farm on it Dawggone, lots of life left in the Irish family farm system yet. Where else will you get free land and cheap labour? All of the expansion from here on must pay in full for the land and the labour....Even the comment from the farm walk today was that this progressive farmer was willing yo expand to where he is now, but was doubtful he would take the risk of going the next step involving paying staff and renting ground, where others make the money and he takes the risk...
As far as I can see models like the greenfield, shinock in Bandon and their likes are just not throwing off enough profits to justify the risk to the initial capital investment. Gonna be hard to beat a moderately borrowed family farm that keeps it's system simple and efficient like we saw today.

The problem I see with the family farm model is that if every hour worked by the farmer or a member of the family was a billable hour, how many would be viable a decade down the road without expansion.

rangler1

Dawggone wrote: »

The need to understand the markets is a given.
Forgive me in saying that the least informed must be dairy. Not including beef in that!

My prediction is that milk will go the same route as tillage ( maybe because I have experience of both).

SCALE! Acres! Numbers of cows!!


Will I be shouted down?

You probably will be, but that doesn't mean you're not right
A lot on here are still living on optimism caused by milk quotas.
An earlier post reckons on one bad year in three...I admire their optimism,

frazzledhome

Dawggone wrote: »

Of course....
What land base?




Acres/hectares (IMHO) are the new quotas.


Quotas have set up many producers to take on the world....IF...they have enough hectares.

+1

keep going

Dawggone wrote: »

The need to understand the markets is a given.
Forgive me in saying that the least informed must be dairy. Not including beef in that!

My prediction is that milk will go the same route as tillage ( maybe because I have experience of both).

SCALE! Acres! Numbers of cows!!


Will I be shouted down?

Yeah you re probaly right but I have to make a living today, what are you going to do give up because you cant see a way to scale up now

Dawggone

alps wrote: »

Don't bet the farm on it Dawggone, lots of life left in the Irish family farm system yet. Where else will you get free land and cheap labour? All of the expansion from here on must pay in full for the land and the labour....Even the comment from the farm walk today was that this progressive farmer was willing yo expand to where he is now, but was doubtful he would take the risk of going the next step involving paying staff and renting ground, where others make the money and he takes the risk...
As far as I can see models like the greenfield, shinock in Bandon and their likes are just not throwing off enough profits to justify the risk to the initial capital investment. Gonna be hard to beat a moderately borrowed family farm that keeps it's system simple and efficient like we saw today.

Good post.
"Free land and cheap labour"...

Nothing free about €750/ha land rental or €25k/ha land purchase. Kowtow has posted extensively on this.

I do agree that there is massive resilience in the family farm unit. Will that be enough in a global market?
When markets are thrown open and all protections lifted it is normal that the small fold and are gobbled up by the big.
That I'm willing to bet on.

jaymla627

Milked out wrote: »

http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11470922&ref=nzhbiz_tw

Crazy thing their is last year 7 dollars a kilo was offered and it was under subscribed very little sympthay for alot of lads out their who didn't lock in at that price and now are crying about going broke

stretch film

jaymla627 wrote: »

Crazy thing their is last year 7 dollars a kilo was offered and it was under subscribed very little sympthay for alot of lads out their who didn't lock in at that price and now are crying about going broke

It seems to be a 12 mth fixed period which would make the rejection of 7 dollars a poor decision alright.

The shorter period is more attractive from a farmer perspective when the it comes to hedging .