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Leasing a dairy farm

  • 21-11-2016 12:04pm
    #1
    Registered Users, Registered Users 2 Posts: 103 ✭✭


    Just wondering what peoples opinions are on leasing dairy farms. My thinking is that following on from other threads on here talking about debt levels from investment in farms, would it not make sense to lease a farm that has the facilities already in place as opposed to investing in a new set up.

    I know the availability of such farms and the cost of rent are major issues with the plan but lets say for example a 100 acre farm with all the facilities to milk 120 cows. Would it be a runner if you could rent it for we'll say around 200 an acre?


Comments

  • Closed Accounts Posts: 49 Jexbullcalf


    Corkfarmer wrote: »
    Just wondering what peoples opinions are on leasing dairy farms. My thinking is that following on from other threads on here talking about debt levels from investment in farms, would it not make sense to lease a farm that has the facilities already in place as opposed to investing in a new set up.

    I know the availability of such farms and the cost of rent are major issues with the plan but lets say for example a 100 acre farm with all the facilities to milk 120 cows. Would it be a runner if you could rent it for we'll say around 200 an acre?

    €200/ acre is low if your getting milking equipment and sheds


  • Registered Users, Registered Users 2 Posts: 103 ✭✭Corkfarmer


    It is but if the owner is keeping his/her SFP on top its not bad. By this I mean leasing them and giving them back to the owner. What would a suitable price per acre be?


  • Registered Users, Registered Users 2 Posts: 8,611 ✭✭✭Mooooo


    Do your figures at various rents and see. You may also have to take into account maintenance costs with the buildings. IF you can find a set up dairy farm for 200 more power to u. One issue you may have if no land you may have trouble getting finance


  • Registered Users, Registered Users 2 Posts: 103 ✭✭Corkfarmer


    Mooooo wrote: »
    Do your figures at various rents and see. You may also have to take into account maintenance costs with the buildings. IF you can find a set up dairy farm for 200 more power to u. One issue you may have if no land you may have trouble getting finance
    I agree 200 is low, if we said 300. My point is would a person be any better off to lease as opposed to borrow money for a conversion if you had to borrow 2 to 3k per cow to get going.


  • Registered Users, Registered Users 2 Posts: 8,611 ✭✭✭Mooooo


    Corkfarmer wrote: »
    I agree 200 is low, if we said 300. My point is would a person be any better off to lease as opposed to borrow money for a conversion if you had to borrow 2 to 3k per cow to get going.

    I guess there is no straight forward answer. IF you can lease the whole place all well and good. Are you talking of converting an existing holding or renting and converting? Rent will have to be paid every year, repayments will end eventually. A lot of it is down to opportunity and personal circumstances


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  • Registered Users, Registered Users 2 Posts: 11,396 ✭✭✭✭Timmaay


    Mooooo wrote: »
    I guess there is no straight forward answer. IF you can lease the whole place all well and good. Are you talking of converting an existing holding or renting and converting? Rent will have to be paid every year, repayments will end eventually. A lot of it is down to opportunity and personal circumstances

    Agreed here, 200e/ac sounds like a reasonable starting point, but definitely don't let that put the blinkers on you, and make sure the personal circumstances suit fully.


  • Registered Users, Registered Users 2 Posts: 103 ✭✭Corkfarmer


    Mooooo wrote: »
    I guess there is no straight forward answer. IF you can lease the whole place all well and good. Are you talking of converting an existing holding or renting and converting? Rent will have to be paid every year, repayments will end eventually. A lot of it is down to opportunity and personal circumstances
    Im talking about rather than converting your own land. Lease a farm with the infrastructure already in place. My question really is at 120 cows is it sustainable to be paying 20 to 30k of a rent.
    My own situation is that I have a small fragmented farm, I want to farm full time but at the moment I'm working full time while trying to farm aswel. The only show in town is dairying as far as making a sustainable income is concerned hence the leasing idea.


  • Registered Users, Registered Users 2 Posts: 106 ✭✭johnny122


    Corkfarmer wrote: »
    Im talking about rather than converting your own land. Lease a farm with the infrastructure already in place. My question really is at 120 cows is it sustainable to be paying 20 to 30k of a rent.
    My own situation is that I have a small fragmented farm, I want to farm full time but at the moment I'm working full time while trying to farm aswel. The only show in town is dairying as far as making a sustainable income is concerned hence the leasing idea.

    Be careful you don't put all your eggs in one basket. Ie the milk basket


  • Registered Users, Registered Users 2 Posts: 8,611 ✭✭✭Mooooo


    Corkfarmer wrote: »
    Im talking about rather than converting your own land. Lease a farm with the infrastructure already in place. My question really is at 120 cows is it sustainable to be paying 20 to 30k of a rent.
    My own situation is that I have a small fragmented farm, I want to farm full time but at the moment I'm working full time while trying to farm aswel. The only show in town is dairying as far as making a sustainable income is concerned hence the leasing idea.

    In that case it would I reckon as your existing ground could be used for young stock, depending on where you lease it it may be too far for silage but bales can be easily moved if needed. And the leased block can pump out the milk. Good option once you find the right place and have the right attitude


  • Registered Users, Registered Users 2 Posts: 12,313 ✭✭✭✭Sam Kade


    Corkfarmer wrote: »
    It is but if the owner is keeping his/her SFP on top its not bad. By this I mean leasing them and giving them back to the owner. What would a suitable price per acre be?
    So because you give him back the money he's entitled to means he can lease it out cheaper :confused:


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  • Registered Users, Registered Users 2 Posts: 103 ✭✭Corkfarmer


    Sam Kade wrote: »
    So because you give him back the money he's entitled to means he can lease it out cheaper :confused:
    No I just mean that land with maps is worth more than without. Generally when land rent is talked about it is with maps so my 200 an acre looks poor but in effect the maps would be worth possibly another 100 if you understand me. I can't give a price with entitlements as I dont know the value of entitlements the person might have so I'm saying 200 plus the landowner keeps entitlements.


  • Registered Users, Registered Users 2 Posts: 19,581 ✭✭✭✭Bass Reeves


    Sam Kade wrote: »
    So because you give him back the money he's entitled to means he can lease it out cheaper :confused:

    No he is not entitleed to it. He is supposed to farm it with work and costs attached. If you rent land trhat has no BPS on it you can as a youn farmer apply for BPS on it and you end up with payment that is yous. If the lad has BPS on it then you cannot. The story with payments now AFAIK is that onlt 50% is going back to leasor as leasee has costs as well. In theory this means that a farm with a BPS of 250/HA with a local rental of 200/acre would rent at 325/HA. However it is all down to rate of payment. A higher rate/HA mightget a higher return ie

    BPS 450/HA normal rent 200 rent might be 450/HA
    BPS 250/HA rent 200 and with bps 325/HA
    BPS 150/HA rent might be 220-250/HA

    Slava Ukrainii



  • Registered Users, Registered Users 2 Posts: 12,313 ✭✭✭✭Sam Kade


    No he is not entitleed to it. He is supposed to farm it with work and costs attached. If you rent land trhat has no BPS on it you can as a youn farmer apply for BPS on it and you end up with payment that is yous. If the lad has BPS on it then you cannot. The story with payments now AFAIK is that onlt 50% is going back to leasor as leasee has costs as well. In theory this means that a farm with a BPS of 250/HA with a local rental of 200/acre would rent at 325/HA. However it is all down to rate of payment. A higher rate/HA mightget a higher return ie

    BPS 450/HA normal rent 200 rent might be 450/HA
    BPS 250/HA rent 200 and with bps 325/HA
    BPS 150/HA rent might be 220-250/HA
    Surely you mean acre for rental cost?


  • Registered Users, Registered Users 2 Posts: 817 ✭✭✭Mulumpy


    BPS 450/HA normal rent 200 rent might be 450/HA BPS 250/HA rent 200 and with bps 325/HA BPS 150/HA rent might be 220-250/HA


    Don't think this is accurate, full value of entitlements must be returned to landlord on top of rent.


  • Closed Accounts Posts: 2,471 ✭✭✭Panch18


    Mulumpy wrote: »
    BPS 450/HA normal rent 200 rent might be 450/HA BPS 250/HA rent 200 and with bps 325/HA BPS 150/HA rent might be 220-250/HA


    Don't think this is accurate, full value of entitlements must be returned to landlord on top of rent.
    Why must it be returned to landlord??


  • Closed Accounts Posts: 3,433 ✭✭✭darragh_haven


    Panch18 wrote: »
    Why must it be returned to landlord??

    Well, if you dont return them to the landlord. You sure as hell aren't going to rent the place.


  • Closed Accounts Posts: 2,471 ✭✭✭Panch18


    Panch18 wrote: »
    Why must it be returned to landlord??

    Well, if you dont return them to the landlord. You sure as hell aren't going to rent the place.
    Oh I know, I'm just questioning the mentality of it, they have no risk and no work

    Things are stacked way way too much in favour of landlords at the moment

    They are cleaning up, tax free


  • Registered Users, Registered Users 2 Posts: 2,485 ✭✭✭Keepgrowing


    Panch18 wrote: »
    Oh I know, I'm just questioning the mentality of it, they have no risk and no work

    Things are stacked way way too much in favour of landlords at the moment

    They are cleaning up, tax free

    They've got the land and the farming community has the tools prepared to pay over the odds.


  • Closed Accounts Posts: 4,559 ✭✭✭pedigree 6


    Surely if you're renting a whole farm land and buildings and the owner is keeping the bps (which the point was that it was to go to active/working farmers in the first place ) the landlord has to pay for maintenance, fencing, sheds, etc.

    Actually how does this thing of the owner keeping the bps work? It's not attatched to land anymore is it?

    Another thing there's some people reading this and I'm afraid they're going to get themselves in awful trouble.
    There's no safety net in dairying now.
    It's not a guarrentteed income.


  • Closed Accounts Posts: 4,559 ✭✭✭pedigree 6


    They've got the land and the farming community are the tools prepared to pay over the odds.

    FYP.


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  • Closed Accounts Posts: 4,237 ✭✭✭Username John


    Panch18 wrote: »
    Oh I know, I'm just questioning the mentality of it, they have no risk and no work

    Things are stacked way way too much in favour of landlords at the moment

    They are cleaning up, tax free

    I heard it 75% of the entitlements, but I imagine it's all down to the deal that's struck. Some people might change a high rent and then lower % of entitlement...

    I would agree with you that land owners for the most part have no risk, as most land that's rented is owned / inherited... But I don't think the fact they own the land means they shouldn't get (well) paid.
    If you don't agree with renting, buy the land, if you can't afford it, don't do either...

    The entitlements are the land owners, they either worked for them in the reference years or bought them since - either way, they should be paid for them...

    But - like everything, it's supply and demand. As long as lads are willing to pay it, people will charge it...


  • Registered Users, Registered Users 2 Posts: 126 ✭✭Fixture


    I'd recommend you talk to Austin Finn from the Land Mobility Service - he'll have figures and real life case studies. Full page advert in the Journal each week or contactable through Macra


  • Registered Users, Registered Users 2 Posts: 2,485 ✭✭✭Keepgrowing


    Fixture wrote: »
    I'd recommend you talk to Austin Finn from the Land Mobility Service - he'll have figures and real life case studies. Full page advert in the Journal each week or contactable through Macra

    Would you recommend him? Have you any experience dealing with Land Mobility?


  • Registered Users, Registered Users 2 Posts: 4,242 ✭✭✭GrasstoMilk


    Would you recommend him? Have you any experience dealing with Land Mobility?

    50e fee to access info about farms, really cuts out the messers.
    You're dealing with lads who actually want to do something more with there land and willing to take that leap


  • Registered Users, Registered Users 2 Posts: 3,554 ✭✭✭visatorro


    There was an interesting model in the journal a while ago. I think land owner paid for sheds, parlour, roadways. Kept single farm and one third of profits. Two other farmers provided cows and done all the work. Split the two thirds between them. I forget how many cows were involved. Couple of hundred I think. Feel free to correct me if any details are wrong.


  • Registered Users, Registered Users 2 Posts: 1,208 ✭✭✭MIKEKC


    No he is not entitleed to it. He is supposed to farm it with work and costs attached. If you rent land trhat has no BPS on it you can as a youn farmer apply for BPS on it and you end up with payment that is yous. If the lad has BPS on it then you cannot. The story with payments now AFAIK is that onlt 50% is going back to leasor as leasee has costs as well. In theory this means that a farm with a BPS of 250/HA with a local rental of 200/acre would rent at 325/HA. However it is all down to rate of payment. A higher rate/HA mightget a higher return ie

    BPS 450/HA normal rent 200 rent might be 450/HA
    BPS 250/HA rent 200 and with bps 325/HA
    BPS 150/HA rent might be 220-250/HA
    There was no national reserve this year, how do you know you will get a basic payment next year? I wouldn't be counting my chickens


  • Registered Users, Registered Users 2 Posts: 19,581 ✭✭✭✭Bass Reeves


    Sam Kade wrote: »
    Surely you mean acre for rental cost?
    Sorry ment acre for rental cost would have to adjust rest.
    Mulumpy wrote: »
    Don't think this is accurate, full value of entitlements must be returned to landlord on top of rent.

    No this is changing fast why would you give full value of entitlements and pay same rental as for entitlement free land that you can put entitlements on. But then some lads are busy fools. I think this is where the mentality about land charges come from where lads are trying to justify there own stupidity.
    Well, if you dont return them to the landlord. You sure as hell aren't going to rent the place.

    Then let the F@@Ker work it himself. Expanding for the sake of expansion is stupid. However it great in the pub Friday night to put you chest ut and tell every you are milking 250 cows but 150 of them are leaving you SFA.
    They've got the land and the farming community has the tools prepared to pay over the odds.

    No it is called being a busy fool. I see a load of beef farmers renting land and most would be as well off not renting it, same with tillage lads and sure the milking are following them down that dark alley.
    pedigree 6 wrote: »
    Surely if you're renting a whole farm land and buildings and the owner is keeping the bps (which the point was that it was to go to active/working farmers in the first place ) the landlord has to pay for maintenance, fencing, sheds, etc.

    Actually how does this thing of the owner keeping the bps work? It's not attatched to land anymore is it?

    Another thing there's some people reading this and I'm afraid they're going to get themselves in awful trouble.
    There's no safety net in dairying now.
    It's not a guarrentteed income.

    This is the real issue some lads think that turnover equates to profit. You now see where own labour costs and land charge come from.

    I heard it 75% of the entitlements, but I imagine it's all down to the deal that's struck. Some people might change a high rent and then lower % of entitlement...

    I would agree with you that land owners for the most part have no risk, as most land that's rented is owned / inherited... But I don't think the fact they own the land means they shouldn't get (well) paid.
    If you don't agree with renting, buy the land, if you can't afford it, don't do either...

    The entitlements are the land owners, they either worked for them in the reference years or bought them since - either way, they should be paid for them...

    But - like everything, it's supply and demand. As long as lads are willing to pay it, people will charge it...

    No they are entitled to get as much as they can from idiots that want to be busy fools. If a dairy farmer wants to give you 250/acre and all you SFP well and good. It is just hard to see a profit for him if he has to pay labour, install farm structures etc and end up with a decent return at the end of the day.

    The entitlements are the land owners but if I am paying the same rental charge for naked land I know which i would be renting even if I had no entitlements. I see it at present with the renting of entitlements lads giving 200/HA more for extra value entitlements to make an extra 6-8 euro/HA at the end of the year,

    Slava Ukrainii



  • Registered Users, Registered Users 2 Posts: 8,611 ✭✭✭Mooooo


    50e fee to access info about farms, really cuts out the messers.
    You're dealing with lads who actually want to do something more with there land and willing to take that leap

    I know of one or two who didn't think the service provided was great. The fee only covers a set time from first enquiries and when enquired about certain adds heard nothing back with same adds still in paper a month later. Have noticed two adds with one looking for and another offering the same thing in more or less the same part of the country with both adds on the page a while.


  • Closed Accounts Posts: 49 Jexbullcalf


    Fixture wrote: »
    I'd recommend you talk to Austin Finn from the Land Mobility Service - he'll have figures and real life case studies. Full page advert in the Journal each week or contactable through Macra

    Definitely wouldn't recommend. Have that t-shirt. Another money pit


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  • Registered Users, Registered Users 2 Posts: 2,485 ✭✭✭Keepgrowing


    Definitely wouldn't recommend. Have that t-shirt. Another money pit

    I concur


  • Registered Users, Registered Users 2 Posts: 6,135 ✭✭✭kowtow


    It's been obvious to me since I came to farming that bps.. particularly as area aid, had simply been capitalised into land values and compressed the yield of farms to a point where many have too little scale to justify a full time living. There are at least two if not three threads busy here at the moment discussing this exact problem.

    The commodity mentality may stem from this, or it may simply feed on it, but whichever way no farmer is thriving as a result.

    And yet of all the things we complain about none of us seem to be screaming for an end to area aid?


  • Registered Users, Registered Users 2 Posts: 817 ✭✭✭Mulumpy


    No this is changing fast why would you give full value of entitlements and pay same rental as for entitlement free land that you can put entitlements on. But then some lads are busy fools. I think this is where the mentality about land charges come from where lads are trying to justify there own stupidity.


    Must be only a new thing, as the part of the land I've rented out the tenant payed up full bps as per lease.


  • Registered Users, Registered Users 2 Posts: 103 ✭✭Corkfarmer


    I concur
    Have no experience with Austin himself but when you ring up its the Farmers journal advertising section that handles the information and they aren't very helpful to say the least. I know for a fact that at least one of the adds wasnt't current as I knew the person that had made an agreement with the advertiser and the ad kept running for months so that did it for me however it worked for the two that did a deal to be fair.


  • Registered Users, Registered Users 2 Posts: 103 ✭✭Corkfarmer


    Having read the replys it is clear that there are a lot of issues to be resolved with regard to SFP/BPS Land rental/owned land etc.
    From my point of view I have to look at things inside my control i.e. if I pay X in rent is there still a margin for my labour and money left over to build the business. My original idea is that if you can get a farm to lease with reasonable facilities perhaps you would be better off than the man on owned ground borrowed highly, basically instead of bank repayments you would have rent. I've done the figures and they seem to stack up ok. I think in farming that there are a lot of people including myself who always think the worst case scenario that prevents you from taking a chance and just doing it. I know its not an easy road but having researched it and playing with the idea for a few years I feel it is the only option for someone who wants to farm full time.


  • Closed Accounts Posts: 4,237 ✭✭✭Username John


    What about a farm manager job - do such jobs exist?

    If you don't own the ground, then surely a manager job is better. No risk, you know the pay packet walking in...

    Am sure I'm missing something here...


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  • Registered Users, Registered Users 2 Posts: 103 ✭✭Corkfarmer


    What about a farm manager job - do such jobs exist?

    If you don't own the ground, then surely a manager job is better. No risk, you know the pay packet walking in...

    Am sure I'm missing something here...

    I suppose I'm typical of one of the problems in modern dairying in that everyone wants to be the boss. I've been gearing up for it building stock and hoping to get going now.


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