frazzledhome wrote: » Well that's not what I meant. One question what do you use to pay the tax on the capital repayments on the new loan? What I mean is rent land set up parlour, load with cows pay landlord and use profit along with home farm profit to buy new land
Greengrass1 wrote: » Ive heard you say this before but I dont understand what you mean? Maybe im stupid:)
kowtow wrote: » From a purely financial perspective leased land is a way better deal than purchased land as long as land prices are anywhere near ours. Take a rent of €350 per €12,000 acre, is a yield of less than 3% - if I put my hedge fund hat on that is far too rich a price (too small a yield) for a long term illiquid asset with high transaction costs. Take that off me for five years and you are getting the better end of the bargain. If you buy land expecting it to appreciate in value - of course - the picture is different. Our parents and grandparents experience of land purchase (not to mention other property) was that the value growth far outweighed the interest costs primarily because for the last century or so we have lived in inflationary times. Look back further however and you will see that fifty or a hundred years of land price growth have often been followed by deflation and depression - the US in the 30's is the best example in living memory. You could hardly give land away. And look at Japan. We live in interesting times, unfortunately.
kowtow wrote: » From a purely financial perspective leased land is a way better deal than purchased land as long as land prices are anywhere near ours. Take a rent of €350 per €12,000 acre, is a yield of less than 3% - if I put my hedge fund hat on that is far too rich a price (too small a yield) for a long term illiquid asset without high transaction costs. Take that off me for five years and you are getting the better end of the bargain. If you buy land expecting it to appreciate in value - of course - the picture is different. Our parents and grandparents experience of land purchase (not to mention other property) was that the value growth far outweighed the interest costs primarily because for the last century or so we have lived in inflationary times. Look back further however and you will see that fifty or a hundred years of land price growth have often been followed by deflation and depression - the US in the 30's is the best example in living memory. You could hardly give land away. And look at Japan. We live in interesting times, unfortunately.
Brown Podzol wrote: » Different dynamic in Ireland as regards land though. Deposit interest rates are too low and other asset classes haven't been performing and need a lot of hands on management.
kowtow wrote: » Deposit rates are negative, as a matter of fact, in real terms. But that sort of deflation is extreme; and always short term. If low interest rates continue, it is because we are in a deflationary spiral - and a deflationary spiral must sooner or later begin to hit both incomes (which are way over the top in Ireland), high street prices (also way over the top) and - through a combination of de-leveraging and/or radical government action - the usual stores of wealth, which in Ireland is land & property. If you think of land as a 20 year purchase, it is a fairly safe bet that while you are paying for it interest rates will either revert to the mean and beyond (i.e. 5-10%) or we will enter a period of acute deflation with all the social & financial upheaval that entails. Either one of these situations adds significant downside risk to land purchases made at high prices when interest rates are compressed, as they are now. Land bought at €15,000 an acre is not "expensive" at all, if everything else is yielding zero or worse. But when interest rates rise or real deflation sets in, it may begin to look very expensive and damned hard to get rid of.
Brown Podzol wrote: » I've read your post a few times and I must go and think and study it. Fixing interest rates is one hedge and if the land is used for dairying it is a good bet that the yield would be around 7/8% at 12k an acre and swing with the inflation/deflation. It's what we know and while it won't blow the lights out its a steady, if low yielding,investment. Would land prices be linked to food price?, every one is telling us that demand is going to increase and so should increase the demand for land.
kowtow wrote: » Fixing interest rates is definitely a hedge if you can do it that far out ... easy for a few years as the yield curve is flat in the short term. And land prices certainly have some link to food price .. question is, what sort of link, and what sort of food price? will we continue to see food inflation? If we get a true deflationary spiral then food prices can drop like everything else. There is an awful lot of fiat money circulating in the world, and eventually it must be absorbed by either inflation, or deflation - and whatever they say Governments always prefer inflation because the odd food riot is preferable to mass unemployment, starvation, and looting. Either bad inflation or deflation tend to bring strong social measures to re-distribute wealth, from which agricultural wealth is unlikely to escape indefinitely. Inflation, of course, will bring back interest rates with all the associated issues for asset prices. In this context a long term lease has it's attractions - someone elses capital is at risk - but owned or rented, always always always, positive cash flow & profitability. One of the dangers of the grass only mantra is the lack of flexibility (i.e. the grazing platform required)... at least the nuts can be driven past your greedy neighbour in a lorry.
Brown Podzol wrote: » 20 year euribor swap rate is 1.72 so fixing long term is not prohibitively expensive.
mahoney_j wrote: » 39.654 cent per litre for September ,3.82 p 4.23 fat .base price 33.87.arrabawns top 10% got 41.229 with solids of 4.72 fat and 3.93 p.thought I was a great lad till I saw that bit!!!.still happy enough cows averaged over 23 ltrs for the month and I reckon top 10% were well off that
Deepsouthwest wrote: » Top 10% are probably milking crossbreds OAD getting half those litres, like me!
mahoney_j wrote: » Yep your right with half the running costs of parlour ,evening free and proab minimum meal Whereas I'm slaving morning and evening and feeding 3 kg😄
RightTurnClyde wrote: » You'd have to wonder alright. Have to say its a completely different days work when you're milking OAD. Lots of jobs getting done here once the milking is done in the morning. Great not having to face them in the evening. The two biggest problems I would see with it is, SCC obviously, and the other is the wrong cow type getting fat. A few of the ladies here have some BFr in them and they are the first to start drying them selves off and putting the pounds on their backs. The very milky Ho, seems to be taking to it like a duck to water. You'd have to wonder if expanding meant having to get help in, would going OAD be a better option instead.
mahoney_j wrote: » Bil and his dad switched to oad a few years ago and have finally got the correct cow for it.they go for very milky Holstein with 35 kg solids and good fertility figures.they had mostly br fr at start but they would be practically dry come mid September.the Holstein will peak at around 22/23 ltrs and is fed no more than 3.5 kg meal and grass.bil has off farm business and dad wanted to take things easy so it worked out very well.there was initial cc issues but now well under control.think they averaged 110 last year and fertility and cow condition is excellent
RightTurnClyde wrote: » Mj, they must be doing 4500-5000litres, do you know what kind of solids are they getting. I assume if the litres/cow is down, their grass intake is down aswell. If going OAD meant carrying an extra 10 or so % to make up the kgms/ha it wouldn't be the end of the world. I've been thinking for the last few weeks, if you were only milking every morning, you could face into ALOT of cows. I'll bet they're saving on replacement rates too.
Deepsouthwest wrote: » Milking OAD here as well for the last few wks and it's the business. Inside putting the kids to bed every evening reminds me there's more to life than milking cows. Wonder has anyone got any results on maybe milking twice a day until mid August or 1st sept, then switching to OAD. Have 40 acres of silage ground over a mile from the parlour, but could prob get cows there after peak yield and peak growth have tailed off. Would help to keep a higher stocking rate through the earlier part of the yr
mahoney_j wrote: » Off hand think there doing about 5300 ltrs ,calving starts in mid January and usually wrapped up by early April.solids last year was 4.54 fat and 3.57 p.calving is compact and cow condition is excellent.its working extremely well.busy mornings but evenings are pretty leasuirly
whelan2 wrote: » http://www.agriland.ie/news/glanbias-poor-milk-price-opening-gate-strathroy/
freedominacup wrote: » Looks like frazzledhome will be getting a call soon according to that article.
frazzledhome wrote: » Without opening a can of worms, I'd need to know price per kgms. Around here its the liquid guys with low solid milk that have moved.
