Debt level per cow

keep going · 11-01-2015 07:42PM

Greengrass1 wrote: »

Is that gross or net?

I assume thats taxable income after deprecation etc

stanflt · 11-01-2015 08:45PM

Timmaay wrote: »

Stan you must love the tractor if you spent that much on the engine!

It was a FRIEND

And only getting the tractor back tomorrow after nearly 3 months

Original estimate was 4k but when it was opened up it needed to be bored on 6 cylinders- needed 6 new pistons- 3 new conrods- injectors needed overhauling- needed a new head as slight crack- new water pump and the part that did all the damage was the oil pump that a chip came in and scored all the liners

At least the crankshaft was salvageable

Still 1/2 the price of a new engine and everything is new

Couldn't afford a new tractor- sure what would the neighbours say

Icelandicseige · 14-09-2016 04:36PM

Interesting reading this thread. Any of you's change your mind towards debt level per cow 2 years on?

Sam Kade · 14-09-2016 07:20PM

Icelandicseige wrote: »

Interesting reading this thread. Any of you's change your mind towards debt level per cow 2 years on?

Any fella with 5k/cow must be sweating this year.

Mooooo · 14-09-2016 07:38PM

Sam Kade wrote: »

Icelandicseige wrote: »

Interesting reading this thread. Any of you's change your mind towards debt level per cow 2 years on?

Any fella with 5k/cow must be sweating this year.

Changed to Sure deodorant tis the job

Mooooo · 14-09-2016 07:47PM

Seriously tho, it's a case of having it over a manageable time frame is the most important part. If you are in trouble go to bank with a plan, interest only etc, before they come to you. They will be more willing to play ball that way

Sam Kade · 14-09-2016 08:44PM

Mooooo wrote: »

Seriously tho, it's a case of having it over a manageable time frame is the most important part. If you are in trouble go to bank with a plan, interest only etc, before they come to you. They will be more willing to play ball that way

Remember the man that said he did just that at the start of this year? Sure didn't save him either.

Icelandicseige · 14-09-2016 08:47PM

Sam Kade wrote: »

Remember the man that said he did just that at the start of this year? Sure didn't save him either.

Be nosey now

but who is that. Is it the big man in Cork you speak of.

Sam Kade · 14-09-2016 08:48PM

Icelandicseige wrote: »

Be nosey now but who is that

I wonder

mahoney_j · 14-09-2016 08:55PM

Sam Kade wrote: »

Any fella with 5k/cow must be sweating this year.

Why ?????,could have it very well structured ,a plan b ,cut costs

pjmn · 14-09-2016 09:03PM

I would have thought E3k per cow as a long term average should be the outer limit - at that level would give some breathing space in times of lower milk prices.

Mooooo · 14-09-2016 09:10PM

Outer limit I think should be what can be managed over a 5 yr average milk price, that way theoretically anyway once you don't go mad spending out of cash flow the good year you should be able to.get thru the bad one

99nsr125 · 15-09-2016 06:43AM

Feckthis wrote: »

There was a thread on this before but can't find it. Whats an acceptable debt level per cow on dairy farms?

This is flawed
With the protection of quotas over the past 30 years there should be no debt per cow.

5k per cow is 400,000 on the typical dairy farm
That's ALOT of money

Milk price recovery now looks set to be delayed till Autumn 2017
So unless those high debt farms are new conversions I'd be very worried

Sam Kade · 15-09-2016 08:37AM

mahoney_j wrote: »

Why ?????,could have it very well structured ,a plan b ,cut costs

Plan b would want to be good in a year like this with most farmers lucky to break even or having a loss. How many cows would you want to be milking to justify 5k?

Mooooo · 15-09-2016 09:32AM

99nsr125 wrote: »

Feckthis wrote: »

There was a thread on this before but can't find it. Whats an acceptable debt level per cow on dairy farms?

This is flawed
With the protection of quotas over the past 30 years there should be no debt per cow.

5k per cow is 400,000 on the typical dairy farm
That's ALOT of money

Milk price recovery now looks set to be delayed till Autumn 2017
So unless those high debt farms are new conversions I'd be very worried

I'm afraid it seems your argument is more flawed. The "protection" of qoutas may have kept prices up but has nothing to do with having no debt. A lot of cases money had to be borrowed to buy qouta, indeed for a lot of that time land had to be bought to get it. Having qouta didn't stop the need for the investment in facilities etc. Also the new conversions are the if with that debt are the ones who would want to be more on the ball as they will be less likely to have a find built up or may yet to meet maximum output whereas established lads may have more backup

GrasstoMilk · 15-09-2016 09:52AM

99nsr125 wrote: »

This is flawed
With the protection of quotas over the past 30 years there should be no debt per cow.

5k per cow is 400,000 on the typical dairy farm
That's ALOT of money

Milk price recovery now looks set to be delayed till Autumn 2017
So unless those high debt farms are new conversions I'd be very worried

Quotas had nothing to do with debt level per cow.

I'm afraid if you want to move on with your business you'll have to borrowed.

There's a big difference between 5k/cow over 5 yrs vs 25yrs.
No man would be silly enough to take it over 5yrs. Nor would a bank

5k/cow over 25yrs is no different than 2k/cow over 10 years

Buford T. Justice XIX · 15-09-2016 09:57AM

GrasstoMilk wrote: »

Quotas had nothing to do with debt level per cow.

I'm afraid if you want to move on with your business you'll have to borrowed.

There's a big difference between 5k/cow over 5 yrs vs 25yrs.
No man would be silly enough to take it over 5yrs. Nor would a bank

5k/cow over 25yrs is no different than 2k/cow over 10 years

In terms of repayments to the bank, no.

But, once the capital allowances are gone, the capital repayments part of the loan will be taxed at the marginal rate which will most likely be 52%.

That will add another 2k+ average per year onto the total repayments over 17+ years onto the longer term loan.

jaymla627 · 15-09-2016 10:43AM

GrasstoMilk wrote: »

Quotas had nothing to do with debt level per cow.

I'm afraid if you want to move on with your business you'll have to borrowed.

There's a big difference between 5k/cow over 5 yrs vs 25yrs.
No man would be silly enough to take it over 5yrs. Nor would a bank

5k/cow over 25yrs is no different than 2k/cow over 10 years

The thing about long term loans is given the massive time frames their is no guarantees in 20 years time said farmer will be even around/ could be a marriage breakup/serious illness....
Your ability to make repayments in today's circumstances could be a totally different animal in 20 years time.....
Even age comes into account say a 40 year old farmers takes a 25 year loan out he's banking on one his sons/daughters coming on the scene and taking the reins, if this doesn't happen said farmer is forcing himself into fulltime farming into his sixties just to keep the bank payed and meet repayments

Mooooo · 15-09-2016 11:03AM

jaymla627 wrote: »

GrasstoMilk wrote: »

Quotas had nothing to do with debt level per cow.

I'm afraid if you want to move on with your business you'll have to borrowed.

There's a big difference between 5k/cow over 5 yrs vs 25yrs.
No man would be silly enough to take it over 5yrs. Nor would a bank

5k/cow over 25yrs is no different than 2k/cow over 10 years

The thing about long term loans is given the massive time frames their is no guarantees in 20 years time said farmer will be even around/ could be a marriage breakup/serious illness....
Your ability to make repayments in today's circumstances could be a totally different animal in 20 years time.....
Even age comes into account say a 40 year old farmers takes a 25 year loan out he's banking on one his sons/daughters coming on the scene and taking the reins, if this doesn't happen said farmer is forcing himself into fulltime farming into his sixties just to keep the bank payed and meet repayments

No one forces anyone into debt, it's each persons own call, everyone has their own circumstances. Nobody knows what'll happen in 20 years and tbh if everyone thought like that the world would be in a sorry state. Also I would say 20 years is the max you'd get a loan over twas for us anyway

jaymla627 · 15-09-2016 11:12AM

Mooooo wrote: »

No one forces anyone into debt, it's each persons own call, everyone has their own circumstances. Nobody knows what'll happen in 20 years and tbh if everyone thought like that the world would be in a sorry state. Also I would say 20 years is the max you'd get a loan over twas for us anyway

In terms of agricultural debt, the said reality is the debts not been took on because it makes finincial sense and a good return on investment is predicted, it's simply been done to generate more litres/more output so the farmer can hope to generate a living wage off a increasingly smaller slice of the pie that's left after everyone else has been payed....

Timmaay · 15-09-2016 11:21AM

jaymla627 wrote: »

In terms of agricultural debt, the said reality is the debts not been took on because it makes finincial sense and a good return on investment is predicted, it's simply been done to generate more litres/more output so the farmer can hope to generate a living wage off a increasingly smaller slice of the pie that's left after everyone else has been payed....

And the reality of it is from a European point of view 5k/cow is nothing.

yewtree · 15-09-2016 11:41AM

Agreed with what has been said regarding structure, if things go better than expected you can pay off quicker than planned. its in years like this that get really tough when your repayments are too high due to loans over too short a period.
when your debt level is going towards 5000/cow, its probably time to look at the company route, the 12.5% tax rate will leave a lot more cash around to pay debt down

mahoney_j · 15-09-2016 11:45AM

Timmaay wrote: »

And the reality of it is from a European point of view 5k/cow is nothing.

Agreed ,in Holland ,debt per cow is 40/45 k don't see many of them going under ,and there running mostly hi input/output systems .im all for grass to milk but grass is a variable feed and only capable of so much .worldwide milk production will go more the intensive route than the grass route

blue5000 · 15-09-2016 12:15PM

mahoney_j wrote: »

Agreed ,in Holland ,debt per cow is 40/45 k don't see many of them going under ,and there running mostly hi input/output systems .im all for grass to milk but grass is a variable feed and only capable of so much .worldwide milk production will go more the intensive route than the grass route

But what is their interest rate? Ours could be 4 or 5 times higher.

jaymla627 · 15-09-2016 12:48PM

blue5000 wrote: »

But what is their interest rate? Ours could be 4 or 5 times higher.

In our around 1% I'd say, that's what the rate being charged in the UK was by banks accessing the eu agri loan fund to farmers, some serious profits being made by banks here on agri lending that accessed this fund

RightTurnClyde · 15-09-2016 12:48PM

blue5000 wrote: »

But what is their interest rate? Ours could be 4 or 5 times higher.

mahoney_j wrote: »

Agreed ,in Holland ,debt per cow is 40/45 k don't see many of them going under ,and there running mostly hi input/output systems .im all for grass to milk but grass is a variable feed and only capable of so much .worldwide milk production will go more the intensive route than the grass route

And there are major inheritance tax benefits to carrying high levels of debt. Agri relief on inheritance doesn't exist over there, so high levels of debt are used to offset the value of the farms. Special low interest loans and multi generational loans, make the loans affordable. Afaik

GrasstoMilk · 15-09-2016 01:04PM

jaymla627 wrote: »

The thing about long term loans is given the massive time frames their is no guarantees in 20 years time said farmer will be even around/ could be a marriage breakup/serious illness....
Your ability to make repayments in today's circumstances could be a totally different animal in 20 years time.....
Even age comes into account say a 40 year old farmers takes a 25 year loan out he's banking on one his sons/daughters coming on the scene and taking the reins, if this doesn't happen said farmer is forcing himself into fulltime farming into his sixties just to keep the bank payed and meet repayments

That's a load of baloney.
It's no different than someone buying a house over 25 yrs.

No one would ever do anything if they took that attitude

jaymla627 · 15-09-2016 01:29PM

GrasstoMilk wrote: »

That's a load of baloney.
It's no different than someone buying a house over 25 yrs.

No one would ever do anything if they took that attitude

How many mortgages are in arrears again in this country over 100000 I think, anyone that bought property in the boom years hasn't had it to easy, was great value to be got though the last few years though and lads are making a killing now that bought cheap with increased rents/house prices, brother is sitting on 3 properties yielding over 10% roi at the minute can't say I'm doing a fraction of that and have the same money give our take he's invested spent here on the farm

GrasstoMilk · 15-09-2016 01:42PM

jaymla627 wrote: »

How many mortgages are in arrears again in this country over 100000 I think, anyone that bought property in the boom years hasn't had it to easy, was great value to be got though the last few years though and lads are making a killing now that bought cheap with increased rents/house prices, brother is sitting on 3 properties yielding over 10% roi at the minute can't say I'm doing a fraction of 5 hat and have the same money give our take he's put in

Yes but 90% of the money that was given out in the boom was pure reckless. If you were sensible about it and didn't get carried away you were fine

99nsr125 · 15-09-2016 01:44PM

Mooooo wrote: »

I'm afraid it seems your argument is more flawed. The "protection" of qoutas may have kept prices up but has nothing to do with having no debt. A lot of cases money had to be borrowed to buy qouta, indeed for a lot of that time land had to be bought to get it. Having qouta didn't stop the need for the investment in facilities etc. Also the new conversions are the if with that debt are the ones who would want to be more on the ball as they will be less likely to have a find built up or may yet to meet maximum output whereas established lads may have more backup

Alright,
Quota kept prices up, keeps profitability up and is directly related to borrowing requirements. Fundamentally you borrow if you can't finance from free cash flow.

Debt per cow is now being sold as mf240 has said as being under-borrowed.
Not just for new entrants but for everyone.

This is dangerous, debt is being sold as the solution to lower prices, you will find
that if this is accepted the processors will use it to pay poor prices and shift the burden onto farmers shoulders creating a trap of debt servitude.

After a period of very high prices debt should be extremely low, infrastructure in a good state of repair and a down cycle expected.

If you are not in this position and are neither a new entrant or increased your milk platform by 40% or more you should be concerned.

Debt level per cow

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