Farmer Ed wrote: » In most cases you are correct, but if you remortgaged your hose to put up a milking parlour then that's a different story. Also regardless of what you make a living doing, if you can no longer make an income doing it it's going to cause you problems with your mortgage. What is happening to dairy farmers incomes at the moment could be potentially just as serious to farmers with mortgages as losing someones job is to a non farmer with a mortgage.
Bass Reeves wrote: » If you remortgaged you house for 100K to put up a milking parlor the money and the loan will appear in the accounts and will appear in Teagasc figure. Or else some of you are dealing with bad accountants. This is a farm loan. If you borrow 100K and the money is put into a house then it cannot appear in the accounts.
Farmer Ed wrote: » Fair point but does teagasc have access to people's bank statements? Or do they just take an average figure based on an overall farm borrowing figure given to them by the banks? I still go back to my point of regardless what the money was borrowed for. If the farmer has no income to make the repayments it still becomes a very real issue for the farm business
OverRide wrote: » To be honest,I think you have too much faith in what farmers tell teagasc or what they're willing to share with their neighbours,there are limits with most There is no penalty to keep certain things private from Teagasc that obviously are declared to the taxman At any rate,the home loans have to be financed by the farm and to suggest that farmers finding it tight wouldn't cut back on farm expenses in such situations in order to prioritise food on the table and the home loan isn't being realistic That latter point is the main reason for my view that the profit monitor being used to compare farm incomes to non farmers incomes is misleading
Bass Reeves wrote: » Teagasc look at profit monitors which show borrowings, I imagine that they also access figures through other means ie with business plans and and maybe helping with loan applications. The thing about mortgages and personnel loans is that no farmers should borrow such money if possible. It is much more tax efficient to borrow for stock than for a house extension, for a tractor than a car as the interest on these loans is 100% tax deductible. However your point about what ever money is borrowed that it should be taken into account in stasticial information for is irrelevant. If I work as a postman and cannot pay back my mortgage is that relevant to my job as a postman.
Water John wrote: » Hope no bank lent money for farming with the house as collatoral.
If I work as a postman and cannot pay back my mortgage is that relevant to my job as a postman.
OverRide wrote: » The postman isn't self employed so not a valid comparison in that respect as he/she does not for example have the option of cutting back on the costs of delivering the post in order to put food on the table or to ensure the mortgage is paid If he could,then yes it would be This is the sad road we're all now on if milk prices stay this low and its way more mainstream a problem already than is let on thanks to fudging the stats It is a time for calm heads and considered decisions
whelan2 wrote: » See Glanbia shares were at a 12 month low yesterday of 15.61, a long way off the high of 19.55 during that time
Farmer Ed wrote: » Fall in the levels of milk powder being offered into intervention @agrilandIreland http://www.agriland.ie/farming-news/fall-levels-milk-powder-sold-intervention/ Surely with this slim bit of hope pressure can be put on co ops here to at least hold the June price
Farmer Ed wrote: » Where it becomes relevant 'is if you don't get paid from your job as a postman and to add insult to injury you are losing money by being a postman. Not alone could your future career as a postman be in doubt but the mortgage on your home would also be in arrears. Maybe I understood my accountant wrong but his comment of farmers having mortgages of 200k sounds to me like money was secured from the value of the family home. If you take in to account most farmers own their own site 200k would build a fair size of a house and I doubt if they have 100% loan to value. You could be correct in saying it is not tax efficient but it sounds to me as if people have gone down that road regardless for whatever reason.
Farmer Ed wrote: » True the postman is not self employed and can't cut his costs to improve his income. But I would suggest many farmers are at the point that even if they are self employed, there is nothing more to cut. Also it is very unlikely that the postmans mortgage was used to build the post office. Either way the consequences of not being able to pay the mortgage would be the same for the postman as the farmer. Let's face it it's a horrible situation to be
Bass Reeves wrote: » Maybe there is nothing more to cut but in reality irresponsible borrowing by some people cannot be avoided whether farmer or postmen. At the end of the day if the farmer or the post man have borrowed irresponsibe for a mortgage they will more than likely have other borrowing as well that are the real issue.
yosemitesam1 wrote: » http://www.wcds.ca/proc/2006/Manuscripts/Eicker.pdf few good points made in this, worth considering both from potential of other countries to outcompete us and whether intensive grass production makes sense
atlantic mist wrote: » http://www.agriland.ie/farming-news/hogan-warns-continuing-to-increase-milk-production-not-sustainable-in-the-current-market-conditions/ not looking good, them Europeans and their cosy home markets...a selectively protected union it should be called, once it it voluntary i dont mind forward we want to go not backwards land cost, we rent 70% of farm hard for me to compare against another operators if they dont put some value on it but each to their ownmortgage in accounts, cant say i have ever seen it, revenue dont allow mortgage interest to be written against farm profits, it can be included in balance sheet but most dont have house included in balance sheet.
Farmer Ed wrote: » I think the big question regarding the competitiveness of grass is what value you put on the land that grass is grown on. Obviously if you are paying €300 an acre then it becomes obvious that it is a cost that can't be ignored. But even if you own the land should we be including it as a cost?
atlantic mist wrote: » why do we borrow at business loan rates then maybe you dont but i do and i could have mortgaged like your saying but got refused point blank, the tracker interest rate at the time outweight the tax relief lost on interest (as it was a mortgage not a farm/business loan, loans are paid from your drawings/personal money not the farm for tax purposes) banks dont give out farm loans through mortgages they wouldnt be in business if they did and wed all be on tracker mortgages:) i dont they like to give out money on the home house anymore (harder to take off you) that being said if they know your going under they might as well have the house as the farm
kowtow wrote: » I was thinking the other day that there is a much more pragmatic realisation among the press in Ireland that cost of labour is missing (and shouldn't be) from dairy figures, while at the same time there is a big current emphasis on cashflow planning, and yet there is still a tendency to confuse ourselves (and confuse others, deliberately or otherwise) by substituting P&L figures for Cashflow and vice versa. I wonder if we are being patronised, or patronising ourselves, by attempting to make things too simple. A Profit monitor, which is unique to farming, is of course a strange hybrid of P&L and cash figures, which confuses everything further, although for comparison between farms as a set of KPI's it makes perfect sense. A P&L should, almost beyond doubt, include actual wages and a land opportunity cost for owned land. There is a case for both of these being standardised because when wages are actually drawn they are more akin to partners drawings and usually meet the precise requirements of the farming family (this is not totally unique to farming, it's what small solicitors practices would have done for many years for example). You still need a standard figure of some description in there or your farm will appear profitable with the cows eating 9kg of nuts every day just because you didn't take any cash that year - and that is obviously misleading from an accounting point of view. The same goes for inherited land... including standardised figures for both (without agonising too much over them) would be the best way of getting a month to month idea of whether a farm is profitable. Cashflow, on the other hand, is specific to a particular farming family and a particular time. You can say with some certainty that your future cashflow is all you have to rely on once your monthly P&L goes negative, and also that once your monthly P&L goes positive things will get no worse than your future cashflow already shows... but that is the extent of the relationship between them. Both are essential to any business (and neither are exactly the same as end of year accounts for tax purposes). It strikes me that producing an online profit monitor which allowed for both of these essential elements of business planning would not be difficult, even if it was a little more complex than the current model.
