A question for livestock farmers

keep going

How many of ye own your cattle.in other words if you sold all your animals tomorrow would you beable to put all the money in the bank without having to pay off farm related bills first

countygorey

thakfully.

1chippy

A couple of culls and the rest would be mine. thankfully.

bob charles

in an ideal world I wouldn't own any of my cattle.

Sharpshooter82

i would

epfff

keep going wrote: »

How many of ye own your cattle.in other words if you sold all your animals tomorrow would you beable to put all the money in the bank without having to pay off farm related bills first

Own them all
but don't ever own the meal they eat in the final push that's all on tic
usually have it cleared once a year at Xmas and Jan kill is my money
all other kills during the year go to keep meal man off my back and replacing

agriman27

I would also:pac:

Juniorhurler

To be perfectly honest it wouldn't scratch the surface of my debts. By the time I pay back for buying land, keep the co-op, the vet contractors and everybody else paid I would have debts left over with all livestock gone. If I ever see my land paid for I may be able to give a more palatable answer.

keep going

There s two trains of thought behind this thread 1is that when people are growing their herds they never seem to factor in how difficult it is to pay forthe extra stock or how much money it soaks up.2 I reckon 20 years ago most farmers owned their owned stock where as now many farmers do not as they are using credit from various sources to run their business, the problem I see is that many farms have been running down their assets unkowen to them selves over the years as many farms are not making a good enough return

delaval

My stock wouldn't cover my debts. I have no borrowings for stock purchased. I would manage debt and cash flow in a very organised and disciplined way so all my running costs would be current.
My debts are for land purchase, quota and machine leases

Farmer Pudsey

My debts are for land and I use a small overdraft to finance farm rather than investing more of my own money.

On most farms even if they own the cattle and they sell them they may if stock value's are at a low level trigger a serious tax bill. This means that neither will they bank all the proceeds. My stock are at fairly realistic values and if I sold all cattle at finishing stage and did not replace I would have to pay the meal bill and hold on to most of the rest,

This is an issue on farms as some farmers have very low stock values on cattle. Some as low as 30-40% of real value. The biggest issue with any business is to be able to release money quickly in a tax efficient form

leg wax

i would , i dont do fancey land or concrete.

bbam

Might have a few hundered in small bills, vet etc.

Having stick loans shouldn't be a problem as in theory sales would cover the loans and leave a profit for you to bank. The variance in prices is a problem though, it must make managing stocking loans tight going.

Sam Kade

bob charles wrote: »

in an ideal world I wouldn't own any of my cattle.

Explain?

bob charles

Sam Kade wrote: »

Explain?

I want some else money to make my money. I have no interest in owning the money side of animals, thats another companies business (bank/investor) my business starts when I buy the animal and the in's and out's before selling it again. Owning the cash to finance the business isnt going to make me money. Whatever I have left over between buying and selling and paying everything in between is my money that I have made out of using someone elses. As a guy said to me around 2007 when Ireland was flying is - the cheapest you can buy is money at the moment;), biggest problem is I didnt buy enough of it:mad:.

what I have just said probably makes absolutely no sense:rolleyes:, no wonder I have a nervous bank:D. I never want to repay capital and constantly want interest only credit even if it comes at a higher price and repay the capital at the end when I no longer want it.

delaval

bob charles wrote: »

I want some else money to make my money. I have no interest in owning the money side of animals, thats another companies business (bank/investor) my business starts when I buy the animal and the in's and out's before selling it again. Owning the cash to finance the business isnt going to make me money. Whatever I have left over between buying and selling and paying everything in between is my money that I have made out of using someone elses. As a guy said to me around 2007 when Ireland was flying is - the cheapest you can buy is money at the moment;), biggest problem is I didnt buy enough of it:mad:.

what I have just said makes absolutely no sense, no wonder I have a nervous bank:D. I never want to repay capital and constantly want interest only credit even if it comes at a higher price and repay the capital at the end when I no longer want it.

Perfect. I was lucky in that I borrowed enough when it was available. Will pay back as slowly as possible.
I wouldn't like to be in a position to be looking for working capital at the moment

Farmer Pudsey

bob charles wrote: »

I want some else money to make my money. I have no interest in owning the money side of animals, thats another companies business (bank/investor) my business starts when I buy the animal and the in's and out's before selling it again. Owning the cash to finance the business isnt going to make me money. Whatever I have left over between buying and selling and paying everything in between is my money that I have made out of using someone elses. As a guy said to me around 2007 when Ireland was flying is - the cheapest you can buy is money at the moment;), biggest problem is I didnt buy enough of it:mad:.

what I have just said makes absolutely no sense, no wonder I have a nervous bank:D. I never want to repay capital and constantly want interest only credit even if it comes at a higher price and repay the capital at the end when I no longer want it.

This can often lead to a situation where you may never build wealth. You cannot keep expanding a business permnamently. Michael O'Leary and Vodafone both taught that. There is a difference between turnover and wealth creation. getting bigger will not mean more profit. It is often the ability to repay capital that make a business create wealth for it owners.

arais

to answer Op

yes I would ,

done the 25 years working for the banks ....never again,


way the farm is run now milk sales cover day to day running and any purchases

sheep ,cattle sales & SFP are lodged or invested

delaval

Farmer Pudsey wrote: »

This can often lead to a situation where you may never build wealth. You cannot keep expanding a business permnamently. Michael O'Leary and Vodafone both taught that. There is a difference between turnover and wealth creation. getting bigger will not mean more profit. It is often the ability to repay capital that make a business create wealth for it owners.

Agreed, it's what you do with the free cash that's thrown off that matters in that situation.

Am I missing something with M OL? I like his way of doing business. Get all assets working for you

bob charles

Farmer Pudsey wrote: »

This can often lead to a situation where you may never build wealth. You cannot keep expanding a business permnamently. Michael O'Leary and Vodafone both taught that. There is a difference between turnover and wealth creation. getting bigger will not mean more profit. It is often the ability to repay capital that make a business create wealth for it owners.

I dont get the obsession with people wanting to be wealthy having iluquid assets, making money is much more important that able to say you are worth X amount, be it land etc. Its all well and good in a rising market to be asset rich but when things take a turn give me cash anyday, as having twine is fastest way to make money. Personally I have no interest in owning anything.

moy83

bob charles wrote: »

I want some else money to make my money. I have no interest in owning the money side of animals, thats another companies business (bank/investor) my business starts when I buy the animal and the in's and out's before selling it again. Owning the cash to finance the business isnt going to make me money. Whatever I have left over between buying and selling and paying everything in between is my money that I have made out of using someone elses. As a guy said to me around 2007 when Ireland was flying is - the cheapest you can buy is money at the moment;), biggest problem is I didnt buy enough of it:mad:.

what I have just said makes absolutely no sense, no wonder I have a nervous bank:D. I never want to repay capital and constantly want interest only credit even if it comes at a higher price and repay the capital at the end when I no longer want it.

There is a story here that my great grandfather went to the bank when he was fifteen looking for money to buy cattle . They told him to come back when he was eighteen with a certain amount of cattle or money to deposit and they would talk to him then . He scraped up enough and went in on is 18 th birthday and they gave him a small loan on the day ! He kept rolling and borrowing more over the years . When he keeled over he had four farms bought between connemara and galway ( our place was the last stop for the cattle before they went to the train or abbatoirs ) , he had seven sons and four of them divided up the farms between them , two of them went to dublin working for the dept of ag and the last lad was a chemist .
So there could be hope for you bob !

Farmer Pudsey

delaval wrote: »

Agreed, it's what you do with the free cash that's thrown off that matters in that situation.

Am I missing something with M OL? I like his way of doing business. Get all assets working for you

Back 5-8 years ago he taught he could expand for ever, as did Vodafone. Both companies were slow to pay dividends. There share price has really climbed as they have started to pay dividends. Both companies reached a stage where it was no longer profitable to reinvest money in the sector they were involved in.

crackcrack30

Money can be called 'cheap' when there is a guaranteed investment/plan. ( but who guarantees the guaranteed plan:rolleyes:)

There is very little guaranteed in agriculture....and almost nothing guaranteed during the past 10 years washed its face to the great loss and devestation of many....not to mention the sovernity of a country.

The banks are gearing up at the moment to reposess homes, houses & farms across the country while at the same time unable support lending to purchase any property...........square that hole.

bob charles

Farmer Pudsey wrote: »

Back 5-8 years ago he taught he could expand for ever, as did Vodafone. Both companies were slow to pay dividends. There share price has really climbed as they have started to pay dividends. Both companies reached a stage where it was no longer profitable to reinvest money in the sector they were involved in.

No wonder shareholders were not happy, they want return on their investments quick, not in decades. Most farmers its the day they sell up or die that they are wealthy. before then they have SFA

pakalasa

I see the point you are making Bob, 'lost opertunity' and all that. Getting cheap money, as in 2007, is one thing, but spending it wisely is another. I always see farming as a very asset rich, income poor business.
Small part time parmers, which 80% of the country are, are different again. They can use off-farm incone to invest in the farm and not have to approach the banks. A lot to be said for it. As far as I know, money was never borrowed here.

Farmer Pudsey

bob charles wrote: »

No wonder shareholders were not happy, they want return on their investments quick, not in decades. Most farmers its the day they sell up or die that they are wealthy. before then they have SFA

I have to disagree bob. In reality most farmers inherit land. Most of these have little or no interest in real farming. They tend to do what there fathers did. Neither did there fathers buy land and the did what there fathers do. In reality most did it badly. Most farms were got either through the land commission or back in the time of the land league.

There is a very good article in the journal this week. It about two lad in England that are dairy farming. The have managed to rent a large land bank. The interesting fact is that the owner seems to have no issue with them making a good return. If that was in Ireland

1 the owner would not longterm lease.
2 If he saw them making a profit he up the rent especially when the lease was up
3 It is unlikely he would give them any hand improving the farm
4 If they were Irish they would not improve the farm and would more than likely try to run it into the ground so that they could get it 20/acre cheaper next time.

delaval

pakalasa wrote: »

I see the point you are making Bob, 'lost opertunity' and all that. Getting cheap money, as in 2007, is one thing, but spending it wisely is another. I always see farming as a very asset rich, income poor business.
Small part time parmers, which 80% of the country are, are different again. They can use off-farm incone to invest in the farm and not have to approach the banks. A lot to be said for it. As far as I know, money was never borrowed here.

Where is the return? Not borrowed but your job I is subsidising the farm. Not a model I'd be happy with

pakalasa

delaval wrote: »

Where is the return? Not borrowed but your job I is subsidising the farm. Not a model I'd be happy with

That's the way small farms work in reality. Who said it's subsidising? Better to borrow from yourself than the bank, cheaper too. Turning a profit - well that's up to the individual, weather, luck etc.

Timmaay

bob charles wrote: »

As a guy said to me around 2007 when Ireland was flying is - the cheapest you can buy is money at the moment;), biggest problem is I didnt buy enough of it:mad:.

what I have just said probably makes absolutely no sense:rolleyes:, no wonder I have a nervous bank:D. I never want to repay capital and constantly want interest only credit even if it comes at a higher price and repay the capital at the end when I no longer want it.

Bob I see where you're coming from with your view on all of this, but if you carried that approach over to the property market in Ireland for the last 15 years (ie remorgage the hell out of every property ya have), you'd be definitely in Nama now ha (probably totally worth it though :P)

moy83

Timmaay wrote: »

Bob I see where you're coming from with your view on all of this, but if you carried that approach over to the property market in Ireland for the last 15 years (ie remorgage the hell out of every property ya have), you'd be definitely in Nama now ha (probably totally worth it though :P)

I wouldnt think the boys in Nama are regretting much now

Farmer Pudsey

pakalasa wrote: »

That's the way small farms work in reality. Who said it's subsidising? Better to borrow from yourself than the bank, cheaper too. Turning a profit - well that's up to the individual, weather, luck etc.

And tax issue's not much point in making a profit on paper and paying 52% tax on it better to reinvest and create wealth.

Dampintheattic

crackcrack30 wrote: »

Money can be called 'cheap' when there is a guaranteed investment/plan. ( but who guarantees the guaranteed plan:rolleyes:)

There is very little guaranteed in agriculture....and almost nothing guaranteed during the past 10 years washed its face to the great loss and devestation of many....not to mention the sovernity of a country.

The banks are gearing up at the moment to reposess homes, houses & farms across the country while at the same time unable support lending to purchase any property...........square that hole.

And in so doing, they will crystallise losses, to the point where they need to recapitalized!!!!!
Remember Cyprus only a few months ago.
Banks shut down overnight and the deposits of the little guy raided to shore up the banks balance sheets.

delaval

pakalasa wrote: »

That's the way small farms work in reality. Who said it's subsidising? Better to borrow from yourself than the bank, cheaper too. Turning a profit - well that's up to the individual, weather, luck etc.

I know what you mean but you said no borrowings. I was only pointing to others that it is actual borrowing

KatyMac

I would. I have (at the moment) only a couple of bills totalling somewhere around €1,500. Have a bullock due to be factory-ed and his name is 'bills', also a heifer with 'christmas' on her back!

nhg

I would also

keep going

I wonder though has there been a slow erosion of peoples assets over the last number of years as some enterprise s have not been generating enough income and have led to people availing of credit now where once they would have been able to finance it themselves.in my coop deptors would always have run at appox 10 % of turnover but over the last few years it has in creased to 30%+ .yes there was a big jump in the last 12 months but it has also been increasing every year with the last 5 and despite good prices for milk and beef has not come down net. I hear of a number of farms in a neighbouring coop which are being run through the coop at the moment.in other words all checks are paid to the coop and all bills are paid by the coop

1chippy

an old lad once told me to never borrow more than the value of your stock and its something i try to loosely follow. i can see bobs point of view and agree to a certain extent. I know personally i work better under pressure. if bills need to be paid it should be done when your able to push the limits a bit. no point in having a massive debt to write down when your 60 but if your in your 20s-30s debt shouldnt be that big of a headache. i nearly have mine all cleared but realistically cant see the banks playing ball for any sort of sizeable amount again. i'll just have to wait and see, if the right bits of ground came up for sale, id be throwing myself in neck deep to get them.

delaval

keep going wrote: »

I wonder though has there been a slow erosion of peoples assets over the last number of years as some enterprise s have not been generating enough income and have led to people availing of credit now where once they would have been able to finance it themselves.in my coop deptors would always have run at appox 10 % of turnover but over the last few years it has in creased to 30%+ .yes there was a big jump in the last 12 months but it has also been increasing every year with the last 5 and despite good prices for milk and beef has not come down net. I hear of a number of farms in a neighbouring coop which are being run through the coop at the moment.in other words all checks are paid to the coop and all bills are paid by the coop

That is a cashflow management problem. Your asset value has no bearing on the picture you painted above. It will help to a degree when raising capital but won't generate any income.
People fail to realise that agricultural inflation is running at close to 5%. That is eating cash and people don't realise 'till what you've described happened. Last years bad weather caught some bad managers off guard nd they only reacted when the harm wa done