Future in farming

Fullback333

Do you thinks a 100 acre farm would be give a sustainable income for a young farmer?( have sucklers and sheep)

_Brian

I'd say even at that you'd need a decent payment and be shrewd business minded type.

Bullocks

Fullback333 wrote: »

Do you thinks a 100 acre farm would be give a sustainable income for a young farmer?( have sucklers and sheep)

How much would a sustainable income be ?

djmc

I think there will be a lot more part time farmers with off farm income in the future especially in the west of Ireland and on farms under 100 acres.
The return isn't there anymore unless dairying and that is going the same way as the rest.
Unless there is inflation or supermarket giants start paying more to the primary producers
I can't see young lads staying at it as the average industrial wage is far higher with handier hours.
A supermarket manager in aldi or lidl is on around 70 to 80k a year a train driver 40 to 50k
Average farm wage last year was around 22 or 23k

Fullback333

We're in Carlow so the land would be good enough, I'll probably end up part time farming it

djmc

Fullback333 wrote: »

We're in Carlow so the land would be good enough, I'll probably end up part time farming it

If it was me starting out I would look at what employment opportunities were in the area that might be of interest and try to get a bachelor degree in an area that interests me.
Let the farm to help fund studying.
The farm will always be there and a degree will help you hedge your bets going forward and will help get better off farm employment as well as something to fall back on.
100 acres and a specialised job would give you a comfortable living.

CloughCasey1

Fullback333 wrote: »

We're in Carlow so the land would be good enough, I'll probably end up part time farming it

If you enjoy farming and can get a part time 3day week number locally you'll be sorted. Wont take a whole pile to sublement the farm if you have it running right.

Capercaillie

In twenty years time the only lads farming will be the large dairy men. The small men will all be gone. IFA will be happy with that.

Timmaay

_Brian wrote: »

I'd say even at that you'd need a decent payment and be shrewd business minded type.

I think for any size or type of farm the utterly only way you can great away without the latter is by having a huge SFP!

farmerjj

Fullback333 wrote: »

Do you thinks a 100 acre farm would be give a sustainable income for a young farmer?( have sucklers and sheep)

That's kinda like asking how long is a piece of string, there are so many variables. Get some adviser in and run through it with him.

kowtow

Capercaillie wrote: »

In twenty years time the only lads farming will be the large dairy men.

Don't count on it!

kowtow

Fullback333 wrote: »

Do you thinks a 100 acre farm would be give a sustainable income for a young farmer?( have sucklers and sheep)

Put another way:

- I have an asset worth in the region of €1 Million, together with working capital in the form of stock in trade.
- I'm prepared to work full time.
- I am aware that there are government subsidies available.

Is this sufficient to make a living?


If we can't answer this question with a resounding Yes, then I'm not sure we have any right to call ourselves "efficient" - at least as far as use of capital is concerned.

Capercaillie

kowtow wrote: »

Don't count on it!

Around my farm (NW mayo) most young lads aren't taking over the farm. Only the old lads left. Most of the farms are small. If subsides went (which they will eventually) I can't see lads working the land. Only basically hobby farmers like myself will be left.

Timmaay

kowtow wrote: »

Put another way:

- I have an asset worth in the region of €1 Million, together with working capital in the form of stock in trade.
- I'm prepared to work full time.
- I am aware that there are government subsidies available.

Is this sufficient to make a living?


If we can't answer this question with a resounding Yes, then I'm not sure we have any right to call ourselves "efficient" - at least as far as use of capital is concerned.

Aside from the emotional (irrational?) attachment to the capital, if one was to liquidise it and invest it elsewhere, how much capital would be left after the taxman gets his slice of the pie? Or is that wayyy too open a question ha?

kowtow

Timmaay wrote: »

Aside from the emotional (irrational?) attachment to the capital, if one was to liquidise it and invest it elsewhere, how much capital would be left after the taxman gets his slice of the pie? Or is that wayyy too open a question ha?

It's not necessary to liquidate capital to derive an income from it - leasing it out not only negates capital gains but makes the income tax free. Although it begs the question, if the owner can't work it and make a living is there really someone else who can (and pay rent) long term?

Assuming that there is no equivalent of rollover relief in this country (although I suspect something could be cobbled together) then I suppose you must allow a chunk for capital gains tax... depends of course on the value on the date it was acquired.

Of course if CGT is unavoidable on disposal then the liquidity of land is impaired - no surprise there - you'd have to ask yourself how the hell we allthink it's worth €10k an acre given the economic return.

One of the temporary consequences of the leasing income tax relief in that sense is to artificially prop up the value of land.

tanko

kowtow wrote: »

Put another way:

- I have an asset worth in the region of €1 Million, together with working capital in the form of stock in trade.
- I'm prepared to work full time.
- I am aware that there are government subsidies available.

Is this sufficient to make a living?


If we can't answer this question with a resounding Yes, then I'm not sure we have any right to call ourselves "efficient" - at least as far as use of capital is concerned.

It all depends on what you mean by "make a living"?

visatorro

Friend of the better half lives in mayo. married four kids. 100 acres. five acre garden. all veg grown and eaten. bee hive, honey goes on everything. the husband goes out on clew bay most evening for mackerel for breakfast. he plays a bit of didily aye in the pub for tourists at night for " diesel money ". have heaps of chickens. eggs a plenty and always a chicken hanging. no tv in the house.
of the 100 acres 35 is in forestry and mountain ewes on most of the rest of it. obviously don't know how much sfp they get. she is a school teacher. have to say they are happy and lead a wonderful life I think, but they will tell you that they haven't a penny. and id believe them.

cute geoge

Any family with FOUR kids nowadays probably have not a penny

grass_grower

kowtow wrote: »

It's not necessary to liquidate capital to derive an income from it - leasing it out not only negates capital gains but makes the income tax free. Although it begs the question, if the owner can't work it and make a living is there really someone else who can (and pay rent) long term?

Assuming that there is no equivalent of rollover relief in this country (although I suspect something could be cobbled together) then I suppose you must allow a chunk for capital gains tax... depends of course on the value on the date it was acquired.

Of course if CGT is unavoidable on disposal then the liquidity of land is impaired - no surprise there - you'd have to ask yourself how the hell we allthink it's worth €10k an acre given the economic return.

One of the temporary consequences of the leasing income tax relief in that sense is to artificially prop up the value of land.

while the new tax free schemes are very welcome , the yield on farm land is pretty terrible when you consider the capital value

were the OP to sell his farm for one million , he could earn a guarenteed forty grand per year by sticking it in the likes of the city of london investment trust fund which has raised dividends every year for more than thirty , 4% yield and the likes of shell , unilever , gsk , bp , vodafone , are likely to appreciate more in value long term than farm land

not at all romantic but much more lucrative

Miname

grass_grower wrote: »

while the new tax free schemes are very welcome , the yield on farm land is pretty terrible when you consider the capital value

were the OP to sell his farm for one million , he could earn a guarenteed forty grand per year by sticking it in the likes of the city of london investment trust fund which has raised dividends every year for more than thirty , 4% yield and the likes of shell , unilever , gsk , bp , vodafone , are likely to appreciate more in value long term than farm land

not at all romantic but much more lucrative

.
My elderly parents got a similar speech in the middle of the boom when they sold a few sites. That money wouldn't buy a springer right now.
Farming isn't all about money it would be great if there was more out of it, but then that's down to us as farmers to an extent to pull the most out of it. Farming a 100 acres won't pay a mortgage but it will rear a family in an environment that's as privileged as it gets. Hopefully some day il have the big bills cleared and semi retire into farming, money isn't everything.

keep going

yes there is a future in farming,just go make it happen

alps

kowtow wrote: »

Put another way:

- I have an asset worth in the region of €1 Million, together with working capital in the form of stock in trade.
- I'm prepared to work full time.
- I am aware that there are government subsidies available.

Is this sufficient to make a living?


If we can't answer this question with a resounding Yes, then I'm not sure we have any right to call ourselves "efficient" - at least as far as use of capital is concerned.

Should you maybe say that the asset is valued at 1million? The problem with farming it is that we fail derive a worth similar to its value.
Capital, labour and subsidy no longer sufficient........more and more operator capability is becoming the most important asset in farming....

alps

Fullback.....you're a secondary teacher aren't you?

Are you trying to make a second full time living out of the farm?

The advise will change dramatically now.....whatever you do...don't give up the day job

kowtow

alps wrote:

Should you maybe say that the asset is valued at 1million? The problem with farming it is that we fail derive a worth similar to its value. Capital, labour and subsidy no longer sufficient........more and more operator capability is becoming the most important asset in farming....

Yes.. I'm surprised I wrote "worth" actually because I was certainly thinking "valued at"... a great deal of this debate goes back to the central question which is "are we farming it wrong, or valuing it wrong".. the fact that this thread exists at all is evidence for one of those hypotheses.

But which?

Base price

Capercaillie wrote: »

In twenty years time the only lads farming will be the large dairy men. The small men will all be gone. IFA will be happy with that.

Capercaillie wrote: »

Around my farm (NW mayo) most young lads aren't taking over the farm. Only the old lads left. Most of the farms are small. If subsides went (which they will eventually) I can't see lads working the land. Only basically hobby farmers like myself will be left.

I don't think that large scale factory dairy farming is ever going to be the norm in Ireland. It may happen in the Southern or South Midland counties where there are already large dairy herds that will probably amalgamate but I doubt it will happen further North and West of the country.
We Irish, as opposed to the rest of the EU, have an apparently unique tie to owing land. I remember seeing a programme on RTE (Primetime ??) about 2 years ago where it stated that only .025% of farmland in Ireland changed hands year on year.
I happened to be in Leitrim during the week dropping off a few bales of straw to 3 farmers. I got chatting to them about this and that especially the fiasco of the non existence of the GLAS notifications. Only 1 of the 3 was in full time employment, all were family men, with children and in all cases their wives had full time jobs. These lads were not farming a 100 acres of prime land or anything near that but the kept a few cows and produced quality weanlings every year. It wasn't their SFP/BPS that paid the bills or kept them farming but the fact that their wives had a steady stream of income and they had no borrowings on their farms.
Employment is the tick to keep rural Ireland tocking and I know that you off all members on this forum are more that aware of it.

Capercaillie

Base price wrote: »

Employment is the tick to keep rural Ireland tocking and I know that you off all members on this forum are more that aware of it.

I agree with that. Youth unemployment a big problem in my area. One of the major causes of young lads leaving the area and not taking up farming. Can't survive on farming alone.

Base price

Capercaillie wrote: »

I agree with that. Youth unemployment a big problem in my area. One of the major causes of young lads leaving the area and not taking up farming. Can't survive on farming alone.

Traditionally in Ireland emigration along with younger siblings entering a religious order reduced claims on farm holdings. That is the way it was years ago and it seems that still is the status quo.
Unless the State can ensure a reasonable standard of living and that there are equitable employment opportunities for all its Citizens irrespective of location, then it is remiss to say the least.
In my opinion the State has been very remiss, favouring city/urban area's such as Dublin, Cork, Limerick etc against the majority (population) of rural dwellers.

Timmaay

kowtow wrote: »

Yes.. I'm surprised I wrote "worth" actually because I was certainly thinking "valued at"... a great deal of this debate goes back to the central question which is "are we farming it wrong, or valuing it wrong".. the fact that this thread exists at all is evidence for one of those hypotheses.

But which?

Hmmm depends on valued at against what? If you purely consider its economic return potential, ie farm use, then yes, at say 10k an acre it's horribly horrible overvalued, but you consider it in the light of say a precious metal like gold etc, simple as is land in Ireland, that is perfect for "low cost" grass based dairying/beef etc, this is a very limited commodity and no more of it can be produced, and moving forward, if we all continue to have this gra for the land then we'll happily pay a premium for the land over it's pure agricultural economic value. And throw in one or two external factors like the ability to flog off a few sites if necessary, selling some development land etc, then yes, land is worth what it is worth today and probably won't drop hugely.

Miname

There's loads of arguments here, youth unemployment is a load of horse sh1t. I went looking for a couple of young lads for a few days recently and most just didn't want to go. Most have expectectations of grandeur and believe unless the job requires a bachelors in some ****e or other that it is beneath them. It's more likely their parents were too p.c, and didn't want to force the farm on them and they just ended up lazy. Land prices were always dear and will always seem dear but like timmay said its all relative land prices in general have risen from year to year enough to not allow it devalue with inflation and still be able to provide a return from it. People are asking is there a future in farming, well a lot of people think so or land prices would be dropping, banks wouldn't lend and no one would be signing up for Ag courses, or all the negativity on here is what we can listen to and just not bother trying cause it's too hard.

barnaman

Doing up a budget yet to cost out fully but taking land costs into consideration I am probably losing €40,000 a year farming; if 20c drop in beef price; and thats as likely to happen as a 20c rise. Not takening BFP into account at does not exist in 5 years what if anything replaces it. Land not always great investment calucated what we paid for ours in 19th c and what cost bits added on and land purchased in early 80s worth less now by long way. even orginal purchase cost more than land is worth now.

we alawys had workmen fully paid and stamped and going back accommodation as well. Difficult to get now use FRS when have to. Cousin has a workman again full PRSI holidays etc and he is Eastern European; apparently best workman ever on the farm.

Not sure how many full time farmers on this forum but can gaurentee is not simple at and not on big scale wither costs are huge as are loans I have €250k borrowed and need to borrow at least the same. I have no clue as to what the future holds as to whether this borrowing justified if BFP continies I am ok if not its NAMA time.

barnaman

Meant to add this myth of low cost grass is biggest BS out there in my opnion. Look at what it costs to lime fertilise and spray fields to get quality grass add in your reseeding costs which you need to do reguarly and its not low cost.

kowtow

Timmaay wrote: »

Hmmm depends on valued at against what?

Paper money.

If you purely consider its economic return potential, ie farm use, then yes, at say 10k an acre it's horribly horrible overvalued, but you consider it in the light of say a precious metal like gold etc, simple as is land in Ireland, that is perfect for "low cost" grass based dairying/beef etc, this is a very limited commodity and no more of it can be produced, and moving forward, if we all continue to have this gra for the land then we'll happily pay a premium for the land over it's pure agricultural economic value. And throw in one or two external factors like the ability to flog off a few sites if necessary, selling some development land etc, then yes, land is worth what it is worth today and probably won't drop hugely.

I think there is a lot of pragmatic truth in that, or at least there has been up until now. We're a young nation yet, and whether lax and sometimes non-existent planning controls can continue to provide a safety blanket for the children & grandchildren of the "we never lost money on land" generation I just don't know...


there have been plenty of times in history all over the world where agricultural land has lost value sharply, the last of which was probably the 1930's -

If we are to assume that a big chunk of the value of land is amenity value beyond any economic rationale, then is it also fair to say that the OP needs twice as much of it as he(?) has to sustain a moderate standard of living?

Markcheese

visatorro wrote:

Friend of the better half lives in mayo. married four kids. 100 acres. five acre garden. all veg grown and eaten. bee hive, honey goes on everything. the husband goes out on clew bay most evening for mackerel for breakfast. he plays a bit of didily aye in the pub for tourists at night for " diesel money ". have heaps of chickens. eggs a plenty and always a chicken hanging. no tv in the house. of the 100 acres 35 is in forestry and mountain ewes on most of the rest of it. obviously don't know how much sfp they get. she is a school teacher. have to say they are happy and lead a wonderful life I think, but they will tell you that they haven't a penny. and id believe them.

If she's a working teacher then they're very comfortable- ( in saying that i've no idea of their debts-commitments outgoings) . But if you dont have a huge mortgage and produce most of your own food as well as sfp, disadvantaged area payments , reps ( or its successor) oh and a forestry payment and you havent a bean then pity about you .

kowtow

over_leveraged wrote: »

im talking about investing in a diversified fund which covers a hundred different companies who provider completely different services , its a much more conservative investment than buying a BTL apartment , no properly diversified fund is worth less than it was pre crash , thats why i find it amusing when some say they lost their pension because of the irish banks , investing in a few banks in one country is not a pension to begin with by any definition of the term

not disagreeing and this is not the place to debate fund management diversified or not - but the interesting thing about long term lease incentives is that the gap is narrowed, particularly where significant CGT payable on disposal of the land.

compare 100 acres @ €1Million yielding say €25,000 p.a. tax free leased

with ? €700,000 (same 100 acres post CGT?) yielding say 3.3% - €23,000 odd fully taxable.

Haven't had to tangle with Irish CGT so might have missed something here and also there may be a practical cap on the leasing income but you get my point...

barnaman

Lads being over optomestic with lease prices. In 2015 I could rent top quality land at €200/acre; this is land that sells for €12,000 an acre again beggars belief that some lads pay that (Dairy lads!). Heard lads further down near cork were paying up to €300 for same as in dairying area with high competion and this was a reference year. I am in mixed tillage/beef/dairy area so that means 100 acres would get you €20,000. You have to pay USC and PRSI on that its just income tax free. Pay solicitor to draw up lease and pay stamp duty on it so leasing 100 acres in my ares will not get you €25,000. If subsides go after 2019 land prices and leases will drop massively. Rember if I buy a bunch of flats and rent to the rent allowance lads via the council I am guarennted income. giarentted property back in same state and have 100% mortgage interest relief.

barnaman

Meant to add that in this area the fencing is provided by the "landlord" so that nees to be taken from the lease/or added to the costs. Fencing a permanent fixture and noone is going to rent land not fenced and lads not goinf to spend a fortune fencing a farm to hand it back in 5 years.

frazzledhome

Capercaillie wrote: »

In twenty years time the only lads farming will be the large dairy men. The small men will all be gone. IFA will be happy with that.

That's a fairly broad brush. A lot of dairy farms started as small farms that need the full time income of cows.

pedigree 6

Future in farming - It's down to labour and as the years go by it gets increasingly harder for people to do any manual labour. Years ago everything was done by hand. If you handed a young college educated chap a sprong now they'd tell you to shove it where the sun doesn't shine.
It also comes down to quality of life and you can throw income into that aswell. There's sons of dairy farmers here who their father's have built the finest of facilities that anyone would kill to have and their sons have seen the 365 day a year slog that their fathers have and said no thanks, I'm getting a proper job with paid time off, decent income and quality family time.
I'm not saying some farmers can't achieve this but the future is the sons and daughters of existing farmers and maybe share farmers who can try and get into the business that way. There's dairy farmers near me who are racing each other now that quotas are gone and they have literally aged 5 years in 1 year. They have hips and knees gone before they're 40 and their kids are looking at them wondering is this something I want to be involved in. So the future maybe it's corporate farming with time off for everyone but who knows.

barnaman

Are the Mods setting land! See Over is now banned!

Plenty in this weeks Farming Indpendent on all this. Jusr saw it!

Tell you one thing Pedigree you are right about the hardship. I I think did the discs in on my back out on farm on Friday cannot bend and awake 2 nights with the pain. Farming is not handy at all plenty of good bits I like but as happens I have college education and had a good job and havin seen both you realise that the regualar job is actually far easier. I think you could be spot on about corporate farming shrewdist insight on this post.

kowtow

Although it's an interesting subject I'm not sure that the central theme of this thread is about investment risk and reward of land, purchase price, or rents & performance compared to other asset classes; or indeed the tax treatment of either - suffice to say that there are other things to do with the land or the capital which it represents which appear to offer more obvious returns than farming it.

Which leaves the question, what does it take to make a living of any sort from 100 acres and why is it so damned difficult given the capital involved, or alternatively are the non-monetary rewards of farming so great that they make up for the missing income....

barnaman

The problem is we know nothing about the OPs 100 acres, his exsisting entitlements; the quality of the land, his stock, his machinery etc. The OP needs to engage an agri consultant and an agri accountant to advise him. Also we know nothing about his ability to avail of credit or his credit capacity. To be honest except for broad banter what we can tell him here is of limited use. All I can say is 100 acres will definitely not support him as a full time farmer.

Cassidy2

barnaman wrote: »

The problem is we know nothing about the OPs 100 acres, his exsisting entitlements; the quality of the land, his stock, his machinery etc. The OP needs to engage an agri consultant and an agri accountant to advise him. Also we know nothing about his ability to avail of credit or his credit capacity. To be honest except for broad banter what we can tell him here is of limited use. All I can say is 100 acres will definitely not support him as a full time farmer.

Farm with money not for money.it would take 100000 to stock That farm.rent it if you can get 250 a acre

Muckit

Cassidy2 wrote: »

Farm with money not for money.it would take 100000 to stock That farm.

This is something many naive lads forget. Especially lads talking about buying land. No point having it and paying on it if you haven't budgeted to stock it. €100k is no pocket money.

Miname

Muckit wrote: »

This is something many naive lads forget. Especially lads talking about buying land. No point having it and paying on it if you haven't budgeted to stock it. €100k is no pocket money.

The first bits I bought left me without the price of a calf to stock it. It's stocked now however but it won't be on the market again.

Timmaay

kowtow wrote: »

Which leaves the question, what does it take to make a living of any sort from 100 acres and why is it so damned difficult given the capital involved, or alternatively are the non-monetary rewards of farming so great that they make up for the missing income....

One for me certainly is a free site, and the ability to oversee building myown house.

Deepsouthwest

Can't believe some of the neagativity on this thread, I'm right down on the coast in west cork, and I and plenty more guys like me would give their left arm for 100 acres of good land, and u can be sure they'd make a go of it too.
We're talking about 100 acres of top land in Ireland, if I was to believe some of the posts here, then farming would be finished on this country, it's not.

Deepsouthwest

Capercaillie wrote: »

Around my farm (NW mayo) most young lads aren't taking over the farm. Only the old lads left. Most of the farms are small. If subsides went (which they will eventually) I can't see lads working the land. Only basically hobby farmers like myself will be left.

If ur saying that totally unprofitable systems of farming need to be supported more by EU money to keep more young lads around, then that's a v sad state of affairs. If my kids decided to stay at home to live off subsidies I'd be disappointed.

Cassidy2

Deepsouthwest wrote: »

If ur saying that totally unprofitable systems of farming need to be supported more by EU money to keep more young lads around, then that's a v sad state of affairs. If my kids decided to stay at home to live off subsidies I'd be disappointed.

That's the reality.we can't all live in cork

Capercaillie

Deepsouthwest wrote: »

If ur saying that totally unprofitable systems of farming need to be supported more by EU money to keep more young lads around, then that's a v sad state of affairs. If my kids decided to stay at home to live off subsidies I'd be disappointed.

Subsidies keep most of Irish agriculture afloat. Subsidies biased towards larger intensive farmers.

Miname

Capercaillie wrote: »

Subsidies keep most of Irish agriculture afloat. Subsidies biased towards larger intensive farmers.

That's untrue for starters. Glas isone of the simplest examples, sfp is being reduced back, anc is capped low too. Every scheme or other has various levels with the lower ones being the most profitable. Grants are great to get but everyone should be trying to farm as if they weren't there. Too many are farming the grants and not their farms, this is the scenario I see as unsustainable.

Grueller

Muckit wrote: »

This is something many naive lads forget. Especially lads talking about buying land. No point having it and paying on it if you haven't budgeted to stock it. €100k is no pocket money.

You can buy stock any Saturday in my local mart. Land to suit you doesn't come up too often. A year or two of struggle is a small price to pay to get it stocked after.