Buford T. Justice V wrote: » The true return would have to be compared to what you would receive if you rented the land out. I would get a higher return if I had let my farm out for the last few years. But next year I will be making more than the rental price so it's a moot comparison for me. But I have been aware that better returns were there if I wanted/needed them but the farm is now beyond that development stage. Tbh, it's an important figure to keep in mind. If you are consistently getting lower returns from the system you're farming than you would from renting, there is a huge opportunity cost in not letting it and finding other work, if that's what you want to do. But some people (like me) choose not to rent at times.
WheatenBriar wrote: That with respect is a ridiculous comparison Not relevant to imaginary land charges as the land owned by the farmer is the tool used to make new income The farmer isn't selling a perch a day I may aswell say a wellington charge to myself is appropriate as I'm wearing Daddies wellies even though I own them
kowtow wrote: » It wasn't intended to be a direct analogy, but if it was, the land would be the shop - not the diamonds. I'm astonished that anyone would not want to have an accurate idea of return on capital ... which requires a reasonable provision for land and labour. If we value our land at nothing and our time at less it's no wonder that others are so quick to pay us accordingly.
mf240 wrote: » What effect would a brexit have on milk price do ye think??
kowtow wrote: » The means of finance (i.e. mortgage, lottery win etc, theft by ancestor) is irrelevant, as is the purchase price. You base the land cost on a sensible rental value and the labour cost on some standardised wage - it actually doesn't need endless discussion, it just needs to be there. I've seen the average industrial wage mentioned in Teagasc figures, no reason not to use that. Very good point about New Zealand - keep expanding based on cheap (notional) variable costs and when things get tough you find labour has to be paid & fixed costs & capital have to be serviced....[/ Average industrial wage is €44,101 for 36 hour week, €23/hour not including paid holidays etc. Dairy farmers work on average 64 hours/week. Works out about €13 an hour. Fcuk that.
WheatenBriar wrote: » That's a complete mis understanding and misrepresentation of my point though Of course there's a measure of a return on capital Of course there's a measure of opportunity cost Of course there's a value on land If you want a measure of those,they are there But owned unencumbered land is not a cost against the enterprise farmed on it,never was,never can be and never will be,because it's not tangible without impacting the enterprise you're wanting to charge it to You could probably vary its value in the books over a life time alright but you'll find that a neutral or more than likely a positive impact on profit is not a costRent it out or sell and you don't have the enterprise you farmed on it,you are no longer a farmer
Sam Kade wrote: » A farmer near me who was dairying rented out his land this year for €290:acre and his single payment on top. He keeps and feeds heifers belonging to the lessor for the winter for extra money. It beats milking cows for a living.
Jaysus Christ wrote: » So none of ye know the wage yer on. How much income tax did ye pay last year would be a rough idea. That's if ye pay tax.
Bass Reeves wrote: » This sounds great in theory however it is incumbent on farmers not overpaying for rent or being those that have pushed the price of land harder than any other sector.
WheatenBriar wrote: » Methinks the poster most of who's post's I dont see thanks to the ignore function is still trolling if he doesnt know most farmers use drawings from their farm current account to live on up to the point they cant due to passing their overdraft limit,then its just obvious his lack of knowledge of this proves hes never run a farm Why he continues to waste bandwith with 9 out of 10 troll posts is a mystery Last time I was generous and thought he should go to the pub instead if hes old enough and daddy and mammy has given him enough pocket money But todayhe can clean out a few calf houses wearing a wooly jumper tbh Yawn Goodbye everyone by the way
kowtow wrote: » Absolutely. In fact, not accounting for the notional land cost in COP might well contribute to farmers overpaying for land. For example.. If I inherit 100 acres FOC, and in my private reckoning of COP I count nothing for land (because I inherited it)... and then I decide to rent an additional 100 acres.. The 2nd 100 acres will figure in my COP, but it will be diluted by the effect of the first 100 acres Free of Cost. In effect, I am only reckoning half the land charge I might be if I attempted a realistic COP. I might well be tempted to pay a little more for the 100 acres because of this, and I'd be tempted to think I had an inherently profitable business when in fact the profitability depended on the "free" land. This is something which would hit home quickly if I expanded to 500 paid for acres, because the original land would be a much smaller factor. I can't stress enough that this is not tax accounting - nor yet profit monitors for comparing with other farms - it's simply a realistic approach to reckoning the true cost of production. As someone points out above, you need several sets of figures to understand your business properly - they don't have to be 100% accurate, but they have to be there somewhere. (As my Father in Law used to say, for tax purposes it helps if two of the three sets of figures are written in pencil) If - and most of us thankfully can - you can work at a lower cash cost of production in the bad years then thank your lucky stars, because you'll be able to last longer and build a business which is hopefully capable of standing on it's own feet through good times and bad..
Bass Reeves wrote: » I said I would quote both of these together. I highlighted the first. IMO if the above case is true the lessor is away with the fairies. No matter how accessible the land is and what is cost base is, it is hard to imagine that this lad is making making money on this land. Along with that he is pushing up rents locally on other farmers. Yet dairy farmers at present are the biggest offenders, historically it was tillage and potato men. TBH this idea of including a land cost in a cost of production senario solves nothing. rather you have to look at each individual area rented see what it cost and the value it adds to the operation. But at present dairy farmers tend to lump all costs together. Adding an unrealistic rental price and a labour cost for yourself solves nothing. Rather you have to look at each individual part of the operation and see if it makes sense and if it is washing it face. This is best business practice this is what decide's if you are a busy fool. There is no point in costing your labour at 15/hour for an 80 hour week and saying add this to my COP. When you may still have the same profit by reducing o/p by 30% and not taking up leases in the example above. This then lends to the situation where a farmer with a 100 acre farm thinks the real rental value is 28K+SFP when in reality this is not sustainable
Buford T. Justice V wrote: » That's fine as long as your aspiration is to be a farmer. If your aspiration is to make as good a living for your family as possible then you have to compare farming to what the land would make from rental and follow which course suits your aspirations better.
Sam Kade wrote: » Bass Reeves wrote: » I said I would quote both of these together. I highlighted the first. IMO if the above case is true the lessor is away with the fairies. No matter how accessible the land is and what is cost base is, it is hard to imagine that this lad is making making money on this land. Along with that he is pushing up rents locally on other farmers. Yet dairy farmers at present are the biggest offenders, historically it was tillage and potato men. TBH this idea of including a land cost in a cost of production senario solves nothing. rather you have to look at each individual area rented see what it cost and the value it adds to the operation. But at present dairy farmers tend to lump all costs together. Adding an unrealistic rental price and a labour cost for yourself solves nothing. Rather you have to look at each individual part of the operation and see if it makes sense and if it is washing it face. This is best business practice this is what decide's if you are a busy fool. There is no point in costing your labour at 15/hour for an 80 hour week and saying add this to my COP. When you may still have the same profit by reducing o/p by 30% and not taking up leases in the example above. This then lends to the situation where a farmer with a 100 acre farm thinks the real rental value is 28K+SFP when in reality this is not sustainable It is true, prime dairy land on cork. I've heard prices of up to 500/acre.
Milked out wrote: » Tbh when I hear figures like that I'd have to call bs. Again the furthest I've 'heard' is two lads bidding up to 350/acre dairy and tillage with tillage man winning out. Unless someone says theyre paying it or receiving it I couldn't believe the 500/acre
Waffletraktor wrote: » I hope mr tillage man grows veg or drugs as that's just shy of what a wheat crop will cost him.
kowtow wrote: » From what I can see part of the problem is an unnaturally illiquid land rental market - with it's origins in conacre, no doubt - where people pay up even for 11 months, for fear of "losing" the ground to someone else when prices turn for the better. All this despite the fact that they know they are only burning diesel working the ground for the coming season. Not sure what the solution is to this - it will take many years to work itself out, for certain, arguably big shocks like a true farming recession, a land price crash, or sharp interest rate rises are the only events that will shake it up.
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