Milk Price- Please read Mod note in post #1

WheatenBriar · 02-11-2015 07:05PM

RightTurnClyde wrote: »

Okay take the student rental example (not the TV.)
Say you had a house, say in Cork and you were renting it out to students for €1000 a
month. So your making 12k from the house
Then your kids come of age and they go to college in Cork and the tenants get turfed out so your kids can stay in the house. And you don't charge them rent. Are they staying there for free....No, they're costing you €12k because you've lost that €12k income.

No, you are not comparing like with like again
For heavens sake too,I'd have to pay the kids accommodation anyway, so not a clear cut example there either

This land charge argument is inventing a charge that does not exist
Something that is a charge,you are not supposed to have the benefit of the butter on both sides of the bread from
Its a very very basic concept
If you are being charged for something, the moneys gone as a bill full stop

I'll agree with ye if this land charge on an asset ye own is donated to charity but I'll be calling the people in white coats

What is being propegated here as a land charge is academia gone wild and it seems to have been indoctrinated well in some of ye

RightTurnClyde · 02-11-2015 07:07PM

kowtow wrote: »

They need to add that to the house rental, unless the landlord is providing it

Or the €1000 they spent on the Tv could have been invested returning a divident of 5%. And they could have used that 5% return to rent a TV. And after 10years they'd still have their €1000 instead of a crappy out of date 40 inch led tv

WheatenBriar · 02-11-2015 07:07PM

kowtow wrote: »

They need to add that to the house rental, unless the landlord is providing it

Its not my house,Im saying its their tv,its an asset so someone must charge for it,ie deduct it from the rental,oh and that oil electric heater
My the opportunity cost of that

kowtow · 02-11-2015 07:09PM

WheatenBriar wrote: »

I honestly don't know where you're getting that from
All I'm saying is creating an imaginary monetary cost (if you're fortunate to not be renting)as an added cost is a farce,because the money, the earned income usually appled to furnish any cost never leaves you,its there to enjoy on anything else as you see fit

I'm saying all other things being equal, producing milk on rented land is not as effecient as on owned,non leveraged land

I think if you look back up the thread this issue came up (on this occasion) in the context of price signals and over-production. In other words, in terms of assessing the profitability of an individual farm of which you are the owner (and, by implication, the main Full Time Employee).

It's certainly relevant to an individual running a business whether or not his asset is providing a return (in addition to a fee for labour), to continue to produce indefinitely (if it isn't) suggests that he is farming as a hobby.

If we accept that in low milk price years we will be loss making (labour included) then surely we want to know what that loss is, so that we can be certain that our own systems are productive enough to make up for it, and more, in the high price years. If volatility is going to be a part of the future, knowing the real underlying profitability across multiple years, rather than just counting the cash in the bank, is going to be absolutely essential. It might well be the thing that saves you when there isn't cash in the bank but the milk price is rising.

I wasn't thinking so much here of public figures - although I don't think we are doing ourselves any service by missing out these things when touting our low cost of production - but that is a different issue.

And as others have said, if expansion is contemplated, understanding the true profitability of the business you are starting with is essential. In this respect land is no different to any other asset, if I inherit ten brand new tractors, a cheese factory, and a feed mill my home farm might well look profitable on the basis that I ignore those investments and include their return in my farming margin, and indeed as a whole it would most certainly be cash generative, but to understand whether or not the farm and it's system bears expansion I need to know where those profits properly belong and what non cash costs are being masked when I calculate my margin.

kowtow · 02-11-2015 07:12PM

WheatenBriar wrote: »

This land charge argument is inventing a charge that does not exist
Something that is a charge,you are not supposed to have the benefit of the butter on both sides of the bread from
Its a very very basic concept
If you are being charged for something, the moneys gone as a bill full stop

That's simply not the case.

When you farm your own farm you are doing so both as landlord and farmer, whether you like the concept or not.

If you go to prison for disrupting an IFA meeting, you won't be able to milk the cows, but you'll still be a landlord.

For certain purposes - including business planning (but not including taxable P&L) - it's important to isolate these two roles.

WheatenBriar · 02-11-2015 07:13PM

Oh I do accept that the opportunity cost of the land is relevant if the owner thinks they are not getting a return from it
But that has absolutely nothing to do withthe cost of milk production
Its a life question as are all opportunity costs

Putting them in a profit monitor or in accounts (where they definitely arent acceptable) is ridiculous

WheatenBriar · 02-11-2015 07:17PM

kowtow wrote: »

That's simply not the case.

When you farm your own farm you are doing so both as landlord and farmer, whether you like the concept or not.

If you go to prison for disrupting an IFA meeting, you won't be able to milk the cows, but you'll still be a landlord.

For certain purposes - including business planning (but not including taxable P&L) - it's important to isolate these two roles.

If I go to prison or get ill,I incur another cost whether the farm is owned or rented,so thats another non like for like comparison I'm afraid, it does not add to the land charge case

Buford T. Justice XIX · 02-11-2015 08:06PM

RightTurnClyde wrote: »

Or the €1000 they spent on the Tv could have been invested returning a divident of 5%. And they could have used that 5% return to rent a TV. And after 10years they'd still have their €1000 instead of a crappy out of date 40 inch led tv

Jaysus, you'ld be a hard taskmaster.

Do you really expect your sons to watch 'Debbie does Dallas' on a laptop screen?:eek:

Buford T. Justice XIX · 02-11-2015 08:13PM

WheatenBriar wrote: »

Oh I do accept that the opportunity cost of the land is relevant if the owner thinks they are not getting a return from it
But that has absolutely nothing to do with the cost of milk production
Its a life question as are all opportunity costs

Putting them in a profit monitor or in accounts (where they definitely arent acceptable) is ridiculous

As kowtow said above, the context of including a land charge and labour charge came about because of the incorrect use of profit monitor figures by purchasers to drive product prices lower.

You are right in saying that profit monitor figures should be used in comparing farms but their use in assessing the profitability of farms by purchasers should only be accepted with at least a labour charge included.

24c a liter in milk price is nothing but a baseline figure, a minimum target if you will, to cover cost of production.

There simply HAS to be at least a labour charge included if those figures are to be used by anybody other than farmers comparing their common costs.

mf240 · 02-11-2015 08:15PM

Been reading the last few post and now i m hugely confused.

I think i owe myself money.

alps · 02-11-2015 08:29PM

RightTurnClyde wrote: »

Okay take the student rental example (not the TV.)
Say you had a house, say in Cork and you were renting it out to students for €1000 a
month. So your making 12k from the house
Then your kids come of age and they go to college in Cork and the tenants get turfed out so your kids can stay in the house. And you don't charge them rent. Are they staying there for free....No, they're costing you €12k because you've lost that €12k income.

A pint for that man please! !!! €€€€

kevthegaff · 02-11-2015 08:49PM

If the johnnys down the road inherits a fully finished 250 acre dairy farm while the neighbour has the same but all rented and buildings to catch up on production. Johnnys auld lads COP would be much higher, therefore a land charge has to be incorporated for first farm monitors and secondly processors. How can we compare our COP and farm methods to the dutch etc if we're excluding labour/land charge??

WheatenBriar · 02-11-2015 08:56PM

Buford T. Justice V wrote: »

As kowtow said above, the context of including a land charge and labour charge came about because of the incorrect use of profit monitor figures by purchasers to drive product prices lower.

You are right in saying that profit monitor figures should be used in comparing farms but their use in assessing the profitability of farms by purchasers should only be accepted with at least a labour charge included.

24c a liter in milk price is nothing but a baseline figure, a minimum target if you will, to cover cost of production.

There simply HAS to be at least a labour charge included if those figures are to be used by anybody other than farmers comparing their common costs.

Labour charge yes because its an allowable expense in any P and L

Hookers no,even if they do carry buckets of milk across the yard

Lads we've reached an impasse,We dont appear to be convincing each other so lets leave it at that, this thread is supposed to be on the price of milk anyway not profitability other than the price is too low now for to give a commensurate with the duties wage

Buford T. Justice XIX · 02-11-2015 09:04PM

alps wrote: »

A pint for that man please! !!! €€€€

Done!

kowtow · 02-11-2015 09:04PM

WheatenBriar wrote:

Lads we've reached an impasse,We dont appear to be convincing each other so lets leave it at that, this thread is supposed to be on the price of milk anyway not profitability other than the price is too low now for to give a commensurate with the duties wage

Agreed, at least we're all thinking about it which is half the battle.

Now if you'll all excuse me I must go and interview some milk bucket carriers.

Buford T. Justice XIX · 02-11-2015 09:18PM

Expect a price fall in GDT.

http://www.agriland.ie/farming-news/futures-markets-signal-another-fall-in-global-dairy-trade/

frazzledhome · 02-11-2015 09:21PM

Buford T. Justice V wrote: »

Expect a price fall in GDT.

http://www.agriland.ie/farming-news/futures-markets-signal-another-fall-in-global-dairy-trade/

All Blacks win just might negate it

milkprofit · 02-11-2015 10:00PM

whelan2 wrote: »

Are there any other meetings planned?

Inch in wexford on 5 th

atlantic mist · 02-11-2015 11:04PM

ireland put more cheese in storage last week under Private storage aid scheme, is it that hard to sell? dont

who is putting this into storage, who owns the private storage?

keep going · 02-11-2015 11:07PM

atlantic mist wrote: »

ireland put more cheese in storage last week under Private storage aid scheme, is it that hard to sell? dont

who is putting this into storage, who owns the private storage?

its bollocked,industry inicitive to reduce production next year

freedominacup · 03-11-2015 10:46AM

mf240 wrote: »

Been reading the last few post and now i m hugely confused.

I think i owe myself money.

There's a guy farms around here and the oul boy always said of him he was so tight he owed himself drinks of water.

whelan2 · 03-11-2015 10:48AM

milkprofit wrote: »

Inch in wexford on 5 th

Will this be the same as the Navan one

mf240 · 03-11-2015 10:53AM

freedominacup wrote: »

There's a guy farms around here and the oul boy always said of him he was so tight he owed himself drinks of water.

Around here they say " hes so tight that he squeaks when walking."

WheatenBriar · 03-11-2015 11:07AM

whelan2 wrote: »

Will this be the same as the Navan one

Rowdyer I'd say

visatorro · 03-11-2015 01:09PM

freedominacup wrote: »

There's a guy farms around here and the oul boy always said of him he was so tight he owed himself drinks of water.

better to be mean than out of pocket!

kowtow · 03-11-2015 01:15PM

mf240 wrote: »

Been reading the last few post and now i m hugely confused.

I think i owe myself money.

Write it off as a bad debt and claim it as an expense in your accounts.

Clear the air, like.

keep going · 03-11-2015 02:23PM

At the end of the day it only matters what yourcost of production is, two lads including all land at rent cost in their pms with the same cost ofproduction, in apoor milk price year the lad paying rent goes broke whereas the lad owninghis ground is fine . Even with individual categories in a pm there can be variations due to particular circumstances of the individual. Being facetious is every guy to put a charge for having a second hand if their is one guy with one hand, its only a comparison tool

Sacrolyte · 03-11-2015 02:49PM

frazzledhome wrote: »

Buford T. Justice V wrote: »

Expect a price fall in GDT.

http://www.agriland.ie/farming-news/futures-markets-signal-another-fall-in-global-dairy-trade/

All Blacks win just might negate it

Afraid not. GDT down 7.4%

whelan2 · 03-11-2015 03:48PM

Sacrolyte wrote: »

Afraid not. GDT down 7.4%

was there much product put on sale at the auction?

Buford T. Justice XIX · 03-11-2015 04:02PM

whelan2 wrote: »

was there much product put on sale at the auction?

34 thousand tonnes, down from 46k tonnes last year and 52k tonnes in 2013.

Milk Price- Please read Mod note in post #1

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