profit for dairy leased land

degetme

trixi2011 wrote: »

No trying to get my feet on the ladder in Ireland . Have been sharefarming abroad for the last few years. Young family now so trying to be closer to family etc

What part of the country are you looking for

alps

Cavanjack wrote: »

I’m surprised reading this thread. I thought a dairy cow was leaving €800 + profit a year.

100 cow herd could leave 800€..

On an owned farm, that would be the return for your capital employed and your labour.

Where the fancy figures turn sour is where you have to incur a land lease and a labour cost.

Fully fitted out unit (no immediate R&M, grazing infrastructure cost) for above 100 cows will cost you the bones of 40k..add in the wage, and there is nothing left.

trixi2011

degetme wrote: »

What part of the country are you looking for

All of it

mahoney_j

Cavanjack wrote: »

I’m surprised reading this thread. I thought a dairy cow was leaving €800 + profit a year.

That’s the problem ......tegasc/profit monitors etc feed this scutter

Bass Reeves

Looney1 wrote: »

If anyone had 10 mins could they give me an idea of fixed costs and variable costs associated with running 90 crossbred cows on 120 acres of good/ middling land. facilities very good. aiming for 450kgms per cow per year . estimating gross output of 180 thousand. im trying to work out if a lease is viable. Really appreciate help

Looney1 wrote: »

I agree. average turnout is 10th of march with on off before that. p and k are index 2. ph ok. needs about 40 acres reseeded. roadways good. im thinking around 230- 240 an acre. forgot to say doesnt have a bulk tank

just one thing OP I really get worried when lads look at any business and cannot do the figures themselves. I remember in one job I was in there was a redundancy package in play and a lad decided he take it and open a convenience shop in the middle of the town.

He got the accountant to do the figures just as he was about to sign the lease he was ringing around to sort stock, cigarette supplier(in the days before the machines came into play) wanted 10K of a stock deposit. Whole project fell through but he had taken the deal.

At cup of tea one morning a lad was blaming the accountant I made the point he had no business trying to set up a business where he had no idea of the costs involved. This was similar to the noughties where builders were building hotels or holiday home resorts to hide profits. In one case I heard one builder asked the accountant what prices he should charge for food. Accountant told him look at local restaurant prices and charge them prices.

kevthegaff

Bass Reeves wrote: »

I know nothing about milking it costs involved. But working back on a per head basis and it is cross bred cows OP is using. In your costs
Feet and ration is 610/ cow
Contracting/ machinery is 270/ cow
Vet&meds 220/ cow
Sundries&maintenance 220/ cow
Borrowings just saw recently CU are now giving loans of over 40 k for 4.5%. so for that amount of money you should now be able to shave a bit off 25k/year.
Rent is 233 net/ acre probably allowing for ANC and BPS.
It costs me 350/year to finish bullocks, a n general the ration bill is low on crossbred cows often sub 500kg/year. But If could not keep CB cows for 6-700/year net cost I would give up. TBH I expect that a tight run ship could even squeeze on that for CB cows

Vet meds per cow sounds very high

wrangler

mahoney_j wrote: »

That’s the problem ......tegasc/profit monitors etc feed this scutter

And dairy farmers, that's who I hear it from anyway ........ why do they form companies if it's not because of massive profits, not too many drystock farmers forming companies

Timmaay

jaymla627 wrote: »

Teagasc/Glanbia had the exact same train of thought as the above when they set up Greenfields and look at the sh**show that turned out to be

Greenfield was a big success in terms of economics, it nicely paid back the most of its loans, and a very hefty land lease, and had built up a nice cash reserve, all while not having access to the Glanbia topup bonus which was worth up to 2c/l in some milk cheques. Where it fell down hugely was having very poor fodder reserves, especially in 2018 when the ex tillage low organic matter soil got absolutely hammered in the drought, the meal bill alone ate into all the cash reserves which was criminal consideration bales of silage were easily got for less than 20e the previous winter. The out wintering pad and exposed outdoor cubicles were both mistakes also, but to call it a sh1t show is wrong, most certainly in terms of economics.

alps

wrangler wrote: »

And dairy farmers, that's who I hear it from anyway ........ why do they form companies if it's not because of massive profits, not too many drystock farmers forming companies

Not too many beef farmers farm full time. If you've no capital allowances left and earning 80k on a dairy farm needing to pull out 70k for repayments and living...you'll have to go into a company.

There is a massive misunderstanding, maybe lack of appreciation, of the capital expenditure and requirements on a dairy farm.. Cost comparisons and profit monitors rarely show this.

alps

Timmaay wrote: »

Greenfield was a big success in terms of economics, it nicely paid back the most of its loans, and a very hefty land lease, and had built up a nice cash reserve, all while not having access to the Glanbia topup bonus which was worth up to 2c/l in some milk cheques. Where it fell down hugely was having very poor fodder reserves, especially in 2018 when the ex tillage low organic matter soil got absolutely hammered in the drought, the meal bill alone ate into all the cash reserves which was criminal consideration bales of silage were easily got for less than 20e the previous winter. The out wintering pad and exposed outdoor cubicles were both mistakes also, but to call it a sh1t show is wrong, most certainly in terms of economics.

You cant surely call something a big success when it is able to pay back "most of its loans" . Its land rent cost was only 180€/acre.

What it proved for me, is that if you have a bank of land, the most efficient way to turn it into a dairy farm is to lease it out for 15 years (initially).

You'll have 180/acre plus your single farm payment plus the contractor costs if you supply that machinery service and end up with a fully set up fully functioning dairy farm debt free at the end of the term..

You couldn't manage it yourself from day one.


As a matter of interest...if hugely successful economically, did the investors give a return on their investment figure?

Grueller

alps wrote: »

You cant surely call something a big success when it is able to pay back "most of its loans" . Its land rent cost was only 180€/acre.

What it proved for me, is that if you have a bank of land, the most efficient way to turn it into a dairy farm is to lease it out for 15 years (initially).

You'll have 180/acre plus your single farm payment plus the contractor costs if you supply that machinery service and end up with a fully set up fully functioning dairy farm debt free at the end of the term..

You couldn't manage it yourself from day one.


As a matter of interest...if hugely successful economically, did the investors give a return on their investment figure?

But does it not show the OP that their plan can work as the repayments on facilities on Greenfield were crippling, while the farm in question here has the facilities in place. Plus the OP is talking about 90 cows on 120 acres. That should not leave any dearth of fodder, in fact there should be a big surplus for any year like 2018 occurring again?
Shoot me down if you like as I am as green as the grass yet this game and might be missing something obvious.

Bass Reeves

alps wrote: »

Not too many beef farmers farm full time. If you've no capital allowances left and earning 80k on a dairy farm needing to pull out 70k for repayments and living...you'll have to go into a company.

There is a massive misunderstanding, maybe lack of appreciation, of the capital expenditure and requirements on a dairy farm.. Cost comparisons and profit monitors rarely show this.

The only repayments that are not allowable against tax are land repayments. The reason dairy farmers go into a company structure is that they are extremely profitable especially in years where there is a strong milk price.

Second units/land rental are really dependent on farm structure and farmer renting. However from the indications and willingness of some farmers to follow that path it must be fairly profitable. However it is only a choice for some farmers it takes a structure and attitude to develop it. Looking from the outside I think more should diversify outside of farming. However it again comes to understanding the business

Mooooo

Bass Reeves wrote: »

The only repayments that are not allowable against tax are land repayments. The reason dairy farmers go into a company structure is that they are extremely profitable especially in years where there is a strong milk price.

Second units/land rental are really dependent on farm structure and farmer renting. However from the indications and willingness of some farmers to follow that path it must be fairly profitable. However it is only a choice for some farmers it takes a structure and attitude to develop it. Looking from the outside I think more should diversify outside of farming. However it again comes to understanding the business

It's the write down period is the issue bass, if you've heavily invested in the yard 8 yrs is the write down period, whereas the loan would be over 15, it's the last 7 years of repayments along with tax can put the farm under pressure. With land loans it's the second half of the loan period as the interest on the l9an drops the capital portion increases and can again put the show under pressure

alps

Grueller wrote: »

But does it not show the OP that their plan can work as the repayments on facilities on Greenfield were crippling, while the farm in question here has the facilities in place. Plus the OP is talking about 90 cows on 120 acres. That should not leave any dearth of fodder, in fact there should be a big surplus for any year like 2018 occurring again?
Shoot me down if you like as I am as green as the grass yet this game and might be missing something obvious.

The OP's proposition makes far more sense than the Greenfield project, and the rent he proposes leaves room for a reasonable profit.

Critical is his reasonable rent level and that he be secure in having no further capital or substantial R&M costs during the term.

jaymla627

Timmaay wrote: »

Greenfield was a big success in terms of economics, it nicely paid back the most of its loans, and a very hefty land lease, and had built up a nice cash reserve, all while not having access to the Glanbia topup bonus which was worth up to 2c/l in some milk cheques. Where it fell down hugely was having very poor fodder reserves, especially in 2018 when the ex tillage low organic matter soil got absolutely hammered in the drought, the meal bill alone ate into all the cash reserves which was criminal consideration bales of silage were easily got for less than 20e the previous winter. The out wintering pad and exposed outdoor cubicles were both mistakes also, but to call it a sh1t show is wrong, most certainly in terms of economics.

Financial side of it had become non-transparent the last few years of it with no accounts publicly made available, it's still unknown what agreement was reached in the end of the winding up of the experiment and who settled outstanding debts

Panch18

this is gas - Beef lads telling dairy farmers (some top class dairy farmers on here i might add) how much money they are making and how much their costs should be

I don't think any dairy farmer should be completing a profit monitor - this information is being thrown around the place and used by a) coops to keep the price of milk in check and b) non dairy farmers as a stick to beat dairy farmers with.

You be amazed at the amount of resentment there is towards dairy farmers from non dairy farmers - particular what sprung out of these beef factory protests.

Now we have never completed a profit monitor and never will - and i firmly believe it would be in dairy farmers interests if they pulled back from it a bit.

There is never anything gained by everybody knowing your business

mahoney_j

Panch18 wrote: »

this is gas - Beef lads telling dairy farmers (some top class dairy farmers on here i might add) how much money they are making and how much their costs should be

I don't think any dairy farmer should be completing a profit monitor - this information is being thrown around the place and used by a) coops to keep the price of milk in check and b) non dairy farmers as a stick to beat dairy farmers with.

You be amazed at the amount of resentment there is towards dairy farmers from non dairy farmers - particular what sprung out of these beef factory protests.

Now we have never completed a profit monitor and never will - and i firmly believe it would be in dairy farmers interests if they pulled back from it a bit.

There is never anything gained by everybody knowing your business

Belter of a post lots of common sense .dont do profit monitors and never will don’t see the need or the point see lads tripping over themselves wanting to do them and compare with others .....what for every farm is different and then there is costs left out ,u could have a lad stocked at 4/he and another at 2 one would gave higher feed and Fertliser costs than the other pointless exercise with the info gathered thrown around like confetti by tegasc

Gman1987

Panch18 wrote: »

this is gas - Beef lads telling dairy farmers (some top class dairy farmers on here i might add) how much money they are making and how much their costs should be

I don't think any dairy farmer should be completing a profit monitor - this information is being thrown around the place and used by a) coops to keep the price of milk in check and b) non dairy farmers as a stick to beat dairy farmers with.

You be amazed at the amount of resentment there is towards dairy farmers from non dairy farmers - particular what sprung out of these beef factory protests.

Now we have never completed a profit monitor and never will - and i firmly believe it would be in dairy farmers interests if they pulled back from it a bit.

There is never anything gained by everybody knowing your business

Good post - I see it from both sides. I'm part-time beef farming keeping anywhere between 40 to 80 cattle depending on the time of the year. During the grazing season I see them every second day, dosing or spreading of any Fert required done on a Saturday, and that is it apart from when I need to take out the odd surplus paddocks. On the other hand, my father in law is dairying, seven days a week he is on the move early to get the cows. He has a person gives him a hand with the milking during the week and I give him a hand with milking and any other jobs that need to be done at the weekends. You might make more money dairy farming but its a big time commitment and a lot of manual labour involved so you work hard for it. You certainly wont be able to part time dairy farm and work off farm also if you want any sort of work/life balance, you can work off farm with beef farming (depending on scale of farm).

Timmaay

alps wrote: »

You cant surely call something a big success when it is able to pay back "most of its loans" . Its land rent cost was only 180€/acre.

What it proved for me, is that if you have a bank of land, the most efficient way to turn it into a dairy farm is to lease it out for 15 years (initially).

You'll have 180/acre plus your single farm payment plus the contractor costs if you supply that machinery service and end up with a fully set up fully functioning dairy farm debt free at the end of the term..

You couldn't manage it yourself from day one.


As a matter of interest...if hugely successful economically, did the investors give a return on their investment figure?

180e but the landowner keeps the sfp? I said "most the loans" because as Jay said very little financial details were released as to how the project wrapped up, who paid off the loans? And that's where your final point is interesting, the initial business plan always stated that the early years of the project there would be significant capital repayments (and paying back at like double/triple the interest rate of most other European countries), and the substantial profitability wouldn't be until the last few years of the project. If I had been say a silent investor taking a yearly cut of the profits I'd most certainly of been asking big questions when the project was wrapping up.

And don't get me wrong I'm far from a fan of the whole project, it failed hugely on the original aim to "showcase" a large greenfield dairy setup in Ireland, the economic and business potential was certainly there, that wasn't the problem, instead it showed the significant hurdles in Ireland with 1stly weather extremes, we are not NZ and cannot expect to get away with almost no winter accommodation or fodder reserves, and by God 2018 hammered that point home on the Greenfield farm, and the 2nd point which is yours, land cost is too high, the landowner getting a large tax free yearly rent is always going to be a big winner. I'm happy that the whole project failed because as a farmer I don't need Glanbia using it as a stick to hammer down the milk price, but if managed differently the outcome could of been alot more successful.

Say my name

In keeping with the thread theme.

Panch18

Timmaay wrote: »

180e but the landowner keeps the sfp? I said "most the loans" because as Jay said very little financial details were released as to how the project wrapped up, who paid off the loans? And that's where your final point is interesting, the initial business plan always stated that the early years of the project there would be significant capital repayments (and paying back at like double/triple the interest rate of most other European countries), and the substantial profitability wouldn't be until the last few years of the project. If I had been say a silent investor taking a yearly cut of the profits I'd most certainly of been asking big questions when the project was wrapping up.

And don't get me wrong I'm far from a fan of the whole project, it failed hugely on the original aim to "showcase" a large greenfield dairy setup in Ireland, the economic and business potential was certainly there, that wasn't the problem, instead it showed the significant hurdles in Ireland with 1stly weather extremes, we are not NZ and cannot expect to get away with almost no winter accommodation or fodder reserves, and by God 2018 hammered that point home on the Greenfield farm, and the 2nd point which is yours, land cost is too high, the landowner getting a large tax free yearly rent is always going to be a big winner. I'm happy that the whole project failed because as a farmer I don't need Glanbia using it as a stick to hammer down the milk price, but if managed differently the outcome could of been alot more successful.

Managed differently??

There was more "brains" and "consulting" time spent on that project than any other farm in Ireland, ever.

And the lads actually doing the work were good operators as well

Simple fact is that when a dairy farm has to stand on its own 2 feet there isn't nearly the money in it that a) fellas think there is or b) that Teagasc et al keep throwing around

K.G.

Panch18 wrote: »

Managed differently??

There was more "brains" and "consulting" time spent on that project than any other farm in Ireland, ever.

And the lads actually doing the work were good operators as well

Simple fact is that when a dairy farm has to stand on its own 2 feet there isn't nearly the money in it that a) fellas think there is or b) that Teagasc et al keep throwing around

Theres money in it alright but not half as much as people think and for alot more work than people realise.

Bass Reeves

K.G. wrote: »

Theres money in it alright but not half as much as people think and for alot more work than people realise.

Over the years and working in many different area's I always found that people within the area always taught the work was harder and less profitable/well paid than it actually was. They always taught people on the other side of the fence had it easier and were better paid more profitable.

The truth is usually somewhere in between

Timmaay

Panch18 wrote: »

Managed differently??

There was more "brains" and "consulting" time spent on that project than any other farm in Ireland, ever.

And the lads actually doing the work were good operators as well

Simple fact is that when a dairy farm has to stand on its own 2 feet there isn't nearly the money in it that a) fellas think there is or b) that Teagasc et al keep throwing around

All the brains and consulting in the world couldn't overcome the initial biases that the farm had to be a low input low cost Nz style no matter what, that's why bucket loads of money was spent on an out wintering pad which got ripped out after few yrs, that's why parlour feeders weren't installed until like 5yrs into the project, with countless litres and late lactation bonuses left behind, that's why only enough fodder for the bare 90 day winter was ever kept. Change them preconceptions which were high level management decisions early on, and the whole outcome of the project could of been completely different. I still maintain the basic economics of a greenfield dairy setup in Ireland are solid if done correctly, which is why you see them popping up all over the country since the quotas went.

K.G.

Timmaay wrote: »

Greenfield was a big success in terms of economics, it nicely paid back the most of its loans, and a very hefty land lease, and had built up a nice cash reserve, all while not having access to the Glanbia topup bonus which was worth up to 2c/l in some milk cheques. Where it fell down hugely was having very poor fodder reserves, especially in 2018 when the ex tillage low organic matter soil got absolutely hammered in the drought, the meal bill alone ate into all the cash reserves which was criminal consideration bales of silage were easily got for less than 20e the previous winter. The out wintering pad and exposed outdoor cubicles were both mistakes also, but to call it a sh1t show is wrong, most certainly in terms of economics.

I think the biggest thing to learn from greenfield is when things go wrong with big numbers the s##t really hits the fan

cosatron

K.G. wrote: »

I think the biggest thing to learn from greenfield is when the weather gets bad and you don't have proper facilities the s##t really hits the fan

fixed that for you

Tonynewholland

Bass Reeves wrote: »

Over the years and working in many different area's I always found that people within the area always taught the work was harder and less profitable/well paid than it actually was. They always taught people on the other side of the fence had it easier and were better paid more profitable.

The truth is usually somewhere in between

Aside from the financial The truth is there are not many jobs now that are as physically demanding as dairy farming nowadays. 7 days a week takes a toll on the body unlike most other jobs.

GrasstoMilk

Say my name wrote: »

In keeping with the thread theme.

Owner wants 300e an acre plus sfp
It's all reclaimed from the sea

When its wet its very wet and when its dry its like the Sahara

K.G.

cosatron wrote: »

fixed that for you

Happens everyone

Siamsa Sessions

GrasstoMilk wrote: »

Owner wants 300e an acre plus sfp
It's all reclaimed from the sea

When its wet its very wet and when its dry its like the Sahara

Is that the same Brady Group where Mike Brady is a head honcho? The same Mike Brady who was writing in the Farming Indo last week saying there was still loads of room for new entrants in the dairy sector?

Re investing in rented land: we have 40 acres leased out to a dairy neighbour here at the moment. He's 2 years into a 6-year lease. The place was in good repair with roadways, hedges, water, etc. But he has spent weeks if not months now tidying up, clearing drains, putting up new electric fences, resurfacing the roadways, etc. I can see why someone would reseed some of the ground and spread lime but most of what he's at is not exactly necessary.

I'm not going to stop him, but I do wonder at times if he has too much money or time on his hands.

Edit: it’s an out farm for him. He only cuts silage off it and grazes heifers in the summer. The only point I’m making is that some lads like things neat and spend on that but others don’t. We’re all different and invest in different things