Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie

Vulture Fund Selling Farm

24

Comments

  • #32
    Wanderer78
    Registered Users, Registered Users 2 Posts: 30,985 ✭✭✭✭Wanderer78


    Je_suis_Jean wrote:
    You are misinterpreting how I'm talking. I absolutely know that there have been bubbles and busts which affected whole economies from the Tulip Bubble in 1637 to the great depression in the 1920's to the most recent great recession starting in 2008.....


    Interesting post alright, but I think booms and busts are a lot more complicated than issues such as greed, a lot of it is more to do about power and control, particularly by financial institutions. I actually think the farming community are possible one of the best suited to create their own public banking system, even though these systems have their own limitations, I think the ifa should look into such a possibility


  • #33
    freedominacup
    Registered Users, Registered Users 2 Posts: 7,920 ✭✭✭freedominacup


    _Brian wrote: »

    What’s the point if they can’t use it to recover the monies owed as per the deal ??

    It's used by banks to pad their loan books. They generally have multiples of the loan value as cover on agri loans. This gives them the scope to give out large numbers of 90%+ mortgages on residential and commercial property and keep within regulatory parameters. That's the point.


  • #34
    _Brian
    Registered Users, Registered Users 2 Posts: 18,947 ✭✭✭✭_Brian


    Have to say if I was operating the loanbook in a lender I’d be looking at this carry on and thinking there is too much risk involved in taking land as collateral against a loan if it can’t be sold to cover a bad debt.


  • #35
    Turnipman
    Closed Accounts Posts: 789 ✭✭✭Turnipman


    _Brian wrote: »
    Have to say if I was operating the loanbook in a lender I’d be looking at this carry on and thinking there is too much risk involved in taking land as collateral against a loan if it can’t be sold to cover a bad debt.


    Exactly. And one solution would be for the banks is to increase the interest rate charged to farmers because of the high risk of defaulting borrowers getting away with it, supported by the farmers' very own trade union, the IFA!

    Just imagine the squealing from IFA members when they discovered that their Association has played a significant role in forcing the banks to increase the interest rates payable on farm loans!


  • #36
    croot
    Registered Users, Registered Users 2 Posts: 571 ✭✭✭croot


    _Brian wrote: »
    This is a general point as I’m not familiar with this situation.

    If land can never be sold to recover a debt will the banks not stop taking it as collateral against loans ??

    Yes its already happening. My brother in law was pretty much told as much when looking for a loan to buy land. He had half of the amount himself but after jumping through the usual hoops when it came down to it BOI no longer interested in land loans he was told. He is full time employed in the Civil Service with a profitable farm and proven loan repayment capacity. Never in arrears or missed a payment.

    He was told he'd get the amount for home renovations but not for land purchase
    _Brian wrote: »
    What’s the point if they can’t use it to recover the monies owed as per the deal ??

    Exactly. It going to cut of leading full stop if they cant recover anything.


  • Advertisement
  • #37
    freedominacup
    Registered Users, Registered Users 2 Posts: 7,920 ✭✭✭freedominacup


    _Brian wrote: »
    Have to say if I was operating the loanbook in a lender I’d be looking at this carry on and thinking there is too much risk involved in taking land as collateral against a loan if it can’t be sold to cover a bad debt.

    This would be a good thing tbh. Might lead to a more realistic valuation on land based on it's ability to repay rather than a banks willingness to shovel cash out to pay artificially inflated prices. Plenty of businesses raise finance with very little in the line of assets to recover the debt from in the event things don't go as planned.


  • #38
    54and56
    Registered Users, Registered Users 2 Posts: 7,854 ✭✭✭54and56


    Je_suis_Jean wrote: »
    Can I ask (as a completely ignorant city dweller) what profit an acre of land actually produces on average after all costs (labour, materials etc) are paid? I know there are different crops and options such as dairy farming etc so I'd be interested to see what the average historical profit per acre is for the most popular options:-

    - Growing wheat/corn
    - Dairy farming
    - Rearing dry/beef stock (showing my ignorance of terminology here!!)
    - Rearing sheep
    - Etc etc

    In the absence of any answers I called a family member who has a farm in the midlands and quizzed him. He reckons that on average (he has some sheep, some tillage etc) he earns about €200 an acre after all his operating costs and allowing a wage for himself of €32,000 or so to reflect what he'd have to pay someone else to work the same time he does on the farm.

    I don't know how close to the average €200 an acre is but I do know one thing, it doesn't justify paying anywhere near €20,000 (nevermind €30,000) an acre. How can a 1% yield justify such an investment in any business plan? It would take 100 years of profits just to repay the principle and that ignores interest and the time value of money etc.

    Borrowing €20,000 over 10 years at 6.95% interest rate would require repayments of €232 per month i.e. €2,784 per annum.

    Loan-Repayment1536842328.png

    How can you gillie gillie up €2,784 per annum when you're only producing €200 in cashflow per annum to make repayments with????

    How are farmers justifying this sort of mad economics to themselves?

    The certain beef baron must be laughing his <snip> off at the fact he gets to make all the profits while farmers outbid themselves to get into positions where they can't possibly make any money.

    Mad Ted.


  • #39
    coolshannagh28
    Registered Users, Registered Users 2 Posts: 1,488 ✭✭✭coolshannagh28


    The return on capital in farming outside of dairying is very low.
    The vulture funds are essentially doing what they were brought in to do by Michael Noonan ie purchase large tranches of distressed assets from banks at steep discounts and sell them at a small profit generally while doing some sort of deal with the borrower thereby removing the banks from the messy issue of moral hazard.
    This model does not favour businesses which wish to hold onto the asset.


  • #40
    greysides
    Moderators, Society & Culture Moderators, Sports Moderators Posts: 9,046 Mod ✭✭✭✭greysides


    I've endeavoured to split this thread into it's original discussion and the extraneous IFA-Beef discussion, which you can find here.
    Please stay on topic now.

    The aim of argument, or of discussion, should not be victory, but progress. Joseph Joubert

    The ultimate purpose of debate is not to produce consensus. It's to promote critical thinking.

    Adam Grant



  • #41
    20silkcut
    Registered Users, Registered Users 2 Posts: 2,734 ✭✭✭20silkcut


    Je_suis_Jean wrote: »
    Apparently changes have been made to reduce the risk of future bank collapses that will require public intervention to rescue them but only time will tell. The longer we go without a rescue the better the changes are working I guess. Isn't it over 10 years since a bank had to be rescued with public money?



    I'm not an expert but I think the new bank capital requirements were implemented to prevent big banks from becoming overly leveraged and thus overly risky.

    Regulations may flip flop as governments of different flavours win elections but that's the way we choose to organise ourselves. If there is a better option which most people would support (communism? dictatorship?) then why aren't we all clambering for it? Is democracy perfect? Absolutely not.

    Churchill-Democracy1536828141.jpg



    Sounds like you have a platform to get yourself elected so you can go change the system!!


    Communism has been proved in many examples around the world to lead to the most abject of poverty and piled dead bodies higher than any other political system.


  • Advertisement
  • #42
    54and56
    Registered Users, Registered Users 2 Posts: 7,854 ✭✭✭54and56


    20silkcut wrote: »
    Communism has been proved in many examples around the world to lead to the most abject of poverty and piled dead bodies higher than any other political system.

    I was being sarcastic!!


  • #43
    20silkcut
    Registered Users, Registered Users 2 Posts: 2,734 ✭✭✭20silkcut


    Je_suis_Jean wrote: »
    I was being sarcastic!!

    Am..... ok sound


  • #44
    lalababa
    Registered Users, Registered Users 2 Posts: 1,761 ✭✭✭lalababa


    Je_suis_Jean wrote: »
    Can I ask (as a completely ignorant city dweller) what profit an acre of land actually produces on average after all costs (labour, materials etc) are paid? I know there are different crops and options such as dairy farming etc so I'd be interested to see what the average historical profit per acre is for the most popular options:-

    - Growing wheat/corn
    - Dairy farming
    - Rearing dry/beef stock (showing my ignorance of terminology here!!)
    - Rearing sheep
    - Etc etc

    PS I put figures in the middle of your post be accident.


  • #45
    lalababa
    Registered Users, Registered Users 2 Posts: 1,761 ✭✭✭lalababa


    lalababa wrote: »
    PS I put figures in the middle of your post be accident.

    Bugger they disappeared! Well here they are again
    From an teagasc. Average Net profit per acre Including labour! Not including any payments such as SFP/BPS/glas etc.
    Dairy (alot of labour) :385
    Single suckler : -38
    Cattle Finnish: -21
    Sheep:50
    Spring barley:53
    Winter wheat:127
    These are from a few years ago so beef would be worse, tillage alot worst, and dairy slightly better.


  • #46
    _Brian
    Registered Users, Registered Users 2 Posts: 18,947 ✭✭✭✭_Brian


    lalababa wrote: »
    Bugger they disappeared! Well here they are again
    From an teagasc. Average Net profit per acre Including labour! Not including any payments such as SFP/BPS/glas etc.
    Dairy (alot of labour) :385
    Single suckler : -38
    Cattle Finnish: -21
    Sheep:50
    Spring barley:53
    Winter wheat:127
    These are from a few years ago so beef would be worse, tillage alot worst, and dairy slightly better.

    Is tue Labour charge what the farmer earns or external labour??


  • #47
    lalababa
    Registered Users, Registered Users 2 Posts: 1,761 ✭✭✭lalababa


    _Brian wrote: »
    Is tue Labour charge what the farmer earns or external labour??

    As far as I surmise these figures are net profit, ie income minus expenditure. External labour (contractor/helpers etc.) Would be expenditure.
    A farmers own labour/wage is not accounted for. So the farmer would have to pay themselfs out of net profit figure.

    Most farmers especially the older crowd wouldn't really think of profit in relation to hourly wage. They would do the work that is needed to be done and look at their end of year profit, then make decisions whether to change things up to either raise profit or cut back on work/intensity if they think it's not worth the work/hassel.
    Rember these figures do not include BPS or scheme payments!
    For Example: A farmer such as a relatively intensive suckler setup may be making a loss of E20 per acre. With an average of 15hrs of weekly labour. But with an average of E15,000 in payments.
    They may decide to change their system to extensive dry cattle with a average 4 hrs of weekly labour. With no or little change to profit or loss. Now they have the 15,000 but with an extra 11hrs weekly to earn money elsewhere.


  • #48
    Starchasers
    Registered Users, Registered Users 2 Posts: 26 ✭Starchasers


    My sister who is a financial advisor gave me the following advice for free- “Get in now, the earlier you get in the more money you make, every fool can make money”. Obviously being the natural cynic I am I didn’t, I kept my head above water and have 50% equity in the house now. If I took her advice I would be out on the street now, unfortunately these people took similar bad advice and it turned out badly


  • #49
    Grueller
    Registered Users, Registered Users 2 Posts: 5,436 ✭✭✭Grueller


    Starchasers wrote: »
    My sister who is a financial advisor gave me the following advice for free- “Get in now, the earlier you get in the more money you make, every fool can make money”. Obviously being the natural cynic I am I didn’t, I kept my head above water and have 50% equity in the house now. If I took her advice I would be out on the street now, unfortunately these people took similar bad advice and it turned out badly

    A lot of that is luck too. I was lucky enough to be turned down a loan on a piece of dear land in 2006. I ran it to €18k an acre and had I got the finance I would have pushed to €20k and been crippled since. In the recession I bought land at less than half of that €20k/ac. Not cuteness or being shrewd, just blessed with luck.


  • #50
    54and56
    Registered Users, Registered Users 2 Posts: 7,854 ✭✭✭54and56


    Grueller wrote: »
    A lot of that is luck too. I was lucky enough to be turned down a loan on a piece of dear land in 2006. I ran it to €18k an acre and had I got the finance I would have pushed to €20k and been crippled since. In the recession I bought land at less than half of that €20k/ac. Not cuteness or being shrewd, just blessed with luck.

    Always remember, bad loans get made in good times!!

    Warren Buffett once famously said, “The difference between successful people and really successful people is that really successful people say no to almost everything.”


  • #51
    whelan2
    Registered Users, Registered Users 2 Posts: 30,669 ✭✭✭✭whelan2


    I think the farm has been withdrawn from the Internet auction


  • Advertisement
  • #52
    Attie
    Closed Accounts Posts: 495 ✭✭Attie


    whelan2 wrote: »
    I think the farm has been withdrawn from the Internet auction


    https://www.lmfm.ie/news/ifa-welcomes-removal-of-local-family-farm-from-auc/#.W59WQuxSmiU.facebook

    Good news wish them well.


  • #53
    54and56
    Registered Users, Registered Users 2 Posts: 7,854 ✭✭✭54and56


    whelan2 wrote: »
    I think the farm has been withdrawn from the Internet auction

    Does that mean Promontoria have decided not to sell the farm to recover the money that's overdue or just that they have (belatedly) copped on that doing so in such a public manner is counter productive and after the dust settles they'll conduct a private sale?


  • #54
    hometruths
    Registered Users, Subscribers, Registered Users 2 Posts: 6,657 ✭✭✭hometruths


    Headlines in Farming Independent:

    Screen_Shot_2018_09_18_at_19_43_31.png

    Maybe if a few folk spent as much time worrying about the consequences of using land as collateral as they do about gold diggers chasing their offspring there would be a few less farm repossessions!


  • #55
    the_syco
    Registered Users, Registered Users 2 Posts: 37,316 ✭✭✭✭the_syco


    https://www.beat102103.com/news/removal-of-family-farm-from-online-auction-welcomed/
    IFA Farm Business Chairman Martin Stapleton says farmers have to be given a fairer period of time to repay their debts.

    “Inside in the banks now, the attitude is to sell these bad loans and you end up dealing with what we all know as vulture funds.
    If the bank can't get it's money back when you default, it won't lend. I'm sure the requirements for getting any sort of farm related loan will be a lot tougher shortly due to this.


  • #56
    54and56
    Registered Users, Registered Users 2 Posts: 7,854 ✭✭✭54and56


    the_syco wrote: »
    If the bank can't get it's money back when you default, it won't lend. I'm sure the requirements for getting any sort of farm related loan will be a lot tougher shortly due to this.

    Which would probably be a god thing, a bit like banning drugs to protect those who don't have the capacity to stay away from them!!!

    Sad really.


  • #57
    Loves_lorries
    Site Banned Posts: 272 ✭✭Loves_lorries


    I'd never air my views in public but I can't really understand the ifa position on this, it's bull mc cabe stuff, as far as I'm concerned, if you invest in risk assets ( which includes property), there is a chance you may loose.

    Like I said though, I keep those views private.


  • #58
    lalababa
    Registered Users, Registered Users 2 Posts: 1,761 ✭✭✭lalababa


    The set up of the loan doesn't make sense. 1.05 million for 40 acres to milk goats? With 800k loan? WTF? And something about remorgaging 3 homes to match repayments? and losing one already?
    26k ish per acre to milk goats ? And then pay more I assume for speciaised housing and milking parlour? In what world would that make sense?
    Would have liked to see the business plan submitted to the bank. If there was one.
    The whole thing makes no sense , the loan, the banks to sell it ( probably well below market value to the fund) , the IFA position.
    Do and if the farmers have a recourse to keep the loan from foreclosure can and why not go in front of a judge and let them decide if they can make payments?


  • #59
    wrangler
    Registered Users, Registered Users 2 Posts: 11,494 ✭✭✭✭wrangler


    Loves_lorries wrote: »
    I'd never air my views in public but I can't really understand the ifa position on this, it's bull mc cabe stuff, as far as I'm concerned, if you invest in risk assets ( which includes property), there is a chance you may loose.

    Like I said though, I keep those views private.

    There have been a lot of deals done over the years for farmer that got farms back on track. .....Not exactly Bull Mc Cabe stuff either
    IFA won't be wasting time on hopeless cases.
    A solution such as a farmer sell some land and the bank write off some of the loan and then restructure the remainder of the loan is fair more preferable for everyone than an eviction. Loads of these were done in the eighties
    It'll be harder now as those vulture funds are faceless


  • #60
    gerryirl
    Registered Users, Registered Users 2 Posts: 577 ✭✭✭gerryirl


    I feel for the people that could lose there land and property no one wants to see that but we have all borrowed money with the intention of paying it back. We have all put assets against big loans knowing what will happen if you dont pay the money back . Thats how you get big loans in the first place.. 38K an acre though .. I mean WTF. All sides have to take responsibility. Anyone that would give that for land and the people that gave them the money for it too.

    So the IFA are fighting hard for this case. Have they happened to notice that the beef industry is fooked big time and gonna get worse. Pity they couldnt fight a bit harder for that


  • Advertisement
  • #61
    wrangler
    Registered Users, Registered Users 2 Posts: 11,494 ✭✭✭✭wrangler


    gerryirl wrote: »
    I feel for the people that could lose there land and property no one wants to see that but we have all borrowed money with the intention of paying it back. We have all put assets against big loans knowing what will happen if you dont pay the money back . Thats how you get big loans in the first place.. 38K an acre though .. I mean WTF. All sides have to take responsibility. Anyone that would give that for land and the people that gave them the money for it too.

    So the IFA are fighting hard for this case. Have they happened to notice that the beef industry is fooked big time and gonna get worse. Pity they couldnt fight a bit harder for that

    Have you any ideas how to fight harder apart from not throwing cattle at the processors, time to cop on, price is the same this time every year. People can't keep doing the same thing every year and expect a different result and then blame someone else if they don't get it.....time to treat it as a business now not a hobby
    Plenty of opportunities out there apart from feeding beef


Advertisement