Walk slowly in the opposite direction......they will catch up

Bass Reeves · 19-01-2021 12:26am #1

It the old story about not following the crowd. Is it my imagination but is there a second rush starting now that is drawing lads into dairying. While I have not really seen it near me there seems to be a second white gold rush starting. While I have for a while posted on the non viability of sucklers there now seem to be a rush starting from this area into dairying.

While I can understand it in cases where there is a decent milking platform and maybe more land available as well either from outside land parcels or historical rental parcels you wonder about proposals for what in my opinion maybe unviable parcels. The other issue is that about what is viable as well as change of lifestyle. You have to factor in investment at 1.5-2k/ cow maybe more in some changeover situations,

The technical ability on the drystock side of farming is very mixed. With sucklers you vary from lads producing weanlings from an average of 500-1100 euro. Most finishers depend on there skill around the ring to turn a profit and often that includes 20-30 hours around those rings.

As well you have the hinted at regulation coming down the road. We are heading towards a 100kg of N/ cow and a platform stocking rate of 3.5 cows/HA. It EPA may be put in charge of intensive dairy farms( those in derogations) similar to pig and poultry units. As well lagoons and outside cubicle days seem to be numbered.

Then you have the calf as more lads exit drystock and calf number climb what will the solution be. The co-ops and our larger customers will not want a non viable calf what will be put in place to manage that. Calf export days are numbered and beef prices are a serious issue at present.

Basic payments are being split with probably green by defination gone especially for those in derogations. Generic enviormental schemes are gone and I think a lot of payments will be targeted at Wranglers pet hate of so called rubbish land. Land with Reed, scrub, wetlands and wooded will see pay ents target at them even rushy land will not be an issue because of MCPA.

For a lad entering dairying what is a viable minimum land area.. IMO you would want a milking platform of near 100 acres 60-80 might suffice if you have outside parcels not too far away. 60-80 minimum cow numbers with an option to push on by another 20-30. This is working on the assumption that a certain amount of investment is needed 1.5-2k/cow to set up roadways, paddocks and parlour

lalababa · 19-01-2021 8:00am

Afa i'm concerned , apart from those with good bps ,if you want to get close to an average industrial wage from a farm then Dairy is the only game in town. I don't think you have to go mad with loans for tech and numbers either as milk price may drop. But on a non big loan scale and in the near future it's not a bad gamble.
What's the profit roughly on a cow without a loan? 1000 p.a.? X 35 cows...and there's your average industrial wage.

DBK1 · 19-01-2021 11:12am

lalababa wrote: »

Afa i'm concerned , apart from those with good bps ,if you want to get close to an average industrial wage from a farm then Dairy is the only game in town. I don't think you have to go mad with loans for tech and numbers either as milk price may drop. But on a non big loan scale and in the near future it's not a bad gamble.
What's the profit roughly on a cow without a loan? 1000 p.a.? X 35 cows...and there's your average industrial wage.

The top performing dairy herds in the country would be aiming for €1,000 per cow per year profit excluding BPS. I’d imagine the majority of dairy farms would be somewhere in the region of €500 to €700 per cow. I’m open to correction on any of them figures as there are lads on here a lot better qualified than me to quote such figures! If there’s any sort of a reasonable BPS to go with that then I’d view a €1.5 to €2k investment per cow as reasonable and should be very manageable to be paid off over 10 to 15 years and still have a decent income.

It would be a lot easier to pay back than a €500 per head investment on a beef farm would be so for anyone with the land bank to do it, and a bit of youth on their side I’d agree with lalababa, it’s the only game in town.

Jjameson · 19-01-2021 11:12am

My sheep scanner man was out last week. A great character and I alway use him as measuring stick each year as to trends in the country. He travels extensively around Leinster and into parts of Munster.
I could be a bit off here but the jist this year (I was keeping sheep up to him and a headstrong brother under control)

Last season he scanned more herds over 450 cows than under 45 cows.
New entrants may be getting a lot of talk and he is scanning only a handful of herds that changed colours! And he is of the opinion that this makes nothing but sense. Very pro new entrants.
Also picked up a few new entrants to sheep farming and a lot of ewe lambs tipped this time. One sheep farm moved to milk.

K.G. · 19-01-2021 11:17am

Bass Reeves wrote: »

It the old story about not following the crowd. Is it my imagination but is there a second rush starting now that is drawing lads into dairying. While I have not really seen it near me there seems to be a second white gold rush starting. While I have for a while posted on the non viability of sucklers there now seem to be a rush starting from this area into dairying.

While I can understand it in cases where there is a decent milking platform and maybe more land available as well either from outside land parcels or historical rental parcels you wonder about proposals for what in my opinion maybe unviable parcels. The other issue is that about what is viable as well as change of lifestyle. You have to factor in investment at 1.5-2k/ cow maybe more in some changeover situations,

The technical ability on the drystock side of farming is very mixed. With sucklers you vary from lads producing weanlings from an average of 500-1100 euro. Most finishers depend on there skill around the ring to turn a profit and often that includes 20-30 hours around those rings.

As well you have the hinted at regulation coming down the road. We are heading towards a 100kg of N/ cow and a platform stocking rate of 3.5 cows/HA. It EPA may be put in charge of intensive dairy farms( those in derogations) similar to pig and poultry units. As well lagoons and outside cubicle days seem to be numbered.

Then you have the calf as more lads exit drystock and calf number climb what will the solution be. The co-ops and our larger customers will not want a non viable calf what will be put in place to manage that. Calf export days are numbered and beef prices are a serious issue at present.

Basic payments are being split with probably green by defination gone especially for those in derogations. Generic enviormental schemes are gone and I think a lot of payments will be targeted at Wranglers pet hate of so called rubbish land. Land with Reed, scrub, wetlands and wooded will see pay ents target at them even rushy land will not be an issue because of MCPA.

For a lad entering dairying what is a viable minimum land area.. IMO you would want a milking platform of near 100 acres 60-80 might suffice if you have outside parcels not too far away. 60-80 minimum cow numbers with an option to push on by another 20-30. This is working on the assumption that a certain amount of investment is needed 1.5-2k/cow to set up roadways, paddocks and parlour

Dairy s best days are behind it and the margin will continue to fall as it has done already.i think many people see dairy s farmers investing and see it as a sign of profit whereas its realy just trying to stay in the game .the level of investment versus return is cat

Mooooo · 19-01-2021 11:25am

Avg supplier age is between 55 and 60, with many having no or uninterested successors. So there are as many exciting as joining just due to retirements. While some have let out the farm others has switched to dry stock. The mp cap is unlikely to come in, but if it does and farms having an avg of 3 blocks it will mean some may keep young stock to use outside blocks or land swap or movement of some kind. With people able to buy 3 dairy cows for the price of 2 or even 1 sicker in some cases the investment needed can be less than those already in dairy expanding

DBK1 · 19-01-2021 11:34am

Jjameson wrote: »

My sheep scanner man was out last week. A great character and I alway use him as measuring stick each year as to trends in the country. He travels extensively around Leinster and into parts of Munster.
I could be a bit off here but the jist this year (I was keeping sheep up to him and a headstrong brother under control)

Last season he scanned more herds over 450 cows than under 45 cows.
New entrants may be getting a lot of talk and he is scanning only a handful of herds that changed colours! And he is of the opinion that this makes nothing but sense. Very pro new entrants.
Also picked up a few new entrants to sheep farming and a lot of ewe lambs tipped this time. One sheep farm moved to milk.

Same as that around here (midlands). A lot of lads increasing herd sizes. There are new entrants around here popping up all the time as well although I don’t think it’s a second wave as Bass said above, for 6 or 8 years now it’s fairly steady every year.

K.G. · 19-01-2021 11:55am

DBK1 wrote: »

Same as that around here (midlands). A lot of lads increasing herd sizes. There are new entrants around here popping up all the time as well although I don’t think it’s a second wave as Bass said above, for 6 or 8 years now it’s fairly steady every year.

There seems to be stronger demand for dairy stock this year wheter it driven by less use of fr in herds or by new entrants but ancedotal evidence suggests alot of dairy stock going from west cork to the south leinster/ tipp area.

Siamsa Sessions · 19-01-2021 12:34pm

I've spent the last 6 months looking into dairy and I don't think I'll go ahead with it.

The decision was easy enough in the end: I'd end up working 55-60 hours/week between the cows and the off-farm job for pretty much the same money as the 35-40 hours/week I'm currently doing. I've no big personal expenses and an extra few quid for a bigger car would never be a goal for me.

I have 30 acres to play around with at the moment, so unless I went into derogation straight away, I'd be stuck with 30 cows. I looked into derogation but decided it would be too much pressure starting off and I'm not experienced enough with cows at this stage.

30 cows would not allow me to leave my off-farm job which is 25 hours/week. I started tracking my time on the farm back in Sept and the hours/week has varied from 12-20. I have 60 ewes and 20 weanlings at the moment. Before this I had no idea how much time I was spending "doing the jobs".

Whatever way I looked at it, it'd take 90 mins to milk 30 cows: starting from the time I leave our house, walk to the parlour, walk the cows in, milk them, wash everything down, lock the cows into the paddock again, and walk back to the house. This was the first insight - milking an extra 10 cows would probably only take another 5 mins. So, scale was against me straight away.

90 mins twice a day would be 20-ish hours/week before any other work. I won't list out all the other jobs that'd have to be done, but I reckoned it'd average another 10 hours/week depending on the time of year. That'd be 30 hours/week.

Money-wise, it's all an estimate. I spoke to several farmers around me and online, plus an advisor from Teagasc (who reverted to type almost immediately and spoke about €100k investments and 100 cows within 5 mins). The profit after all costs seems to vary from 500-1000. Starting off, I assumed the heifers would be closer to 500 than 1000 in their first year, and it'd take a few years before the 1000 would be hit - assuming you would eventually get there.

That's €15k before tax for the first few years. This may not be the correct figures for others, but it's what I worked from to "stress test" the idea.

The money side was not the be-all and end-all though. It's the hours worked and the fact that I'd be starting up a new enterprise with plenty mistakes to make that were the ultimate considerations. I've young kids and don't want to spend the next few years pre-occupied with getting the cows right and becoming a "top performer" on some co-op or IFJ report.

Every situation is different. I had options. Other people might not if they want to stay farming. All I'm saying is that the switch wasn't right for me at this moment in time.

I'll have 80 acres when our current tenant is gone in 2024 so I'll look closer then. That'd mean I'd have enough scale to give up the off-farm job and concentrate on the cows, rather than trying to balance the two. Most of the homework and sums I've done will probably still be of use then, so I'll be keeping my various spreadsheets and notes until then. Hopefully, we'll have some clarity on the various other issues outlined by Bass above by that stage.

blue5000 · 19-01-2021 1:40pm

Big dairy farms seem to be going from strength to strength around here anyway, but they are still a family farm, with some hired in labour too. I think the smaller dairy farms, limited by milking platform mainly, are only hanging in there. Much simpler life with beef/drystock and an off farm job IMHO.

Those smaller dairy lads who can't afford extra labour are like hamsters on a wheel. They are facing more environmental restrictions, nitrates/cow increasing, derogation rules tightening etc. I think they will be squeezed out whereas the bigger operators have the financial muscle to overcome new rules.

Take slurry for example, bigger operators can buy a new vac tank to avoid spreading with a splash plate, the only option smaller lads have is to hire a contractor. So a job that they used to do themselves for the diesel, repairs and time cost is now going to cost 3-4k a year ballpark. That could be 2 cents per litre on a small dairy farm.

davidk1394 · 19-01-2021 2:23pm

blue5000 wrote: »

Big dairy farms seem to be going from strength to strength around here anyway, but they are still a family farm, with some hired in labour too. I think the smaller dairy farms, limited by milking platform mainly, are only hanging in there. Much simpler life with beef/drystock and an off farm job IMHO.

Those smaller dairy lads who can't afford extra labour are like hamsters on a wheel. They are facing more environmental restrictions, nitrates/cow increasing, derogation rules tightening etc. I think they will be squeezed out whereas the bigger operators have the financial muscle to overcome new rules.

Take slurry for example, bigger operators can buy a new vac tank to avoid spreading with a splash plate, the only option smaller lads have is to hire a contractor. So a job that they used to do themselves for the diesel, repairs and time cost is now going to cost 3-4k a year ballpark. That could be 2 cents per litre on a small dairy farm.

Thats what I'm seeing here. A lot of the smaller operators can't justify upgrading the parlor or putting in more slurry storage. Derogation and new restrictions will end up pushing them out. The big guys are getting big and are land hungry. Their biggest issue is labour. From my experience they won't pay enough to keep a good worker.

TooOldBoots · 19-01-2021 2:31pm

I'm old style, I don't believe in spending a fortune on those slatted houses. I've seen the state of the cattle especially cows inside in them, it's no life for an animal

some of the happiest cows in the country, outside in the fresh air, clean and dry

DBK1 · 19-01-2021 2:36pm

Siamsa Sessions wrote: »

I've spent the last 6 months looking into dairy and I don't think I'll go ahead with it.

The decision was easy enough in the end: I'd end up working 55-60 hours/week between the cows and the off-farm job for pretty much the same money as the 35-40 hours/week I'm currently doing. I've no big personal expenses and an extra few quid for a bigger car would never be a goal for me.

I have 30 acres to play around with at the moment, so unless I went into derogation straight away, I'd be stuck with 30 cows. I looked into derogation but decided it would be too much pressure starting off and I'm not experienced enough with cows at this stage.

30 cows would not allow me to leave my off-farm job which is 25 hours/week. I started tracking my time on the farm back in Sept and the hours/week has varied from 12-20. I have 60 ewes and 20 weanlings at the moment. Before this I had no idea how much time I was spending "doing the jobs".

Whatever way I looked at it, it'd take 90 mins to milk 30 cows: starting from the time I leave our house, walk to the parlour, walk the cows in, milk them, wash everything down, lock the cows into the paddock again, and walk back to the house. This was the first insight - milking an extra 10 cows would probably only take another 5 mins. So, scale was against me straight away.

90 mins twice a day would be 20-ish hours/week before any other work. I won't list out all the other jobs that'd have to be done, but I reckoned it'd average another 10 hours/week depending on the time of year. That'd be 30 hours/week.

Money-wise, it's all an estimate. I spoke to several farmers around me and online, plus an advisor from Teagasc (who reverted to type almost immediately and spoke about €100k investments and 100 cows within 5 mins). The profit after all costs seems to vary from 500-1000. Starting off, I assumed the heifers would be closer to 500 than 1000 in their first year, and it'd take a few years before the 1000 would be hit - assuming you would eventually get there.

That's €15k before tax for the first few years. This may not be the correct figures for others, but it's what I worked from to "stress test" the idea.

The money side was not the be-all and end-all though. It's the hours worked and the fact that I'd be starting up a new enterprise with plenty mistakes to make that were the ultimate considerations. I've young kids and don't want to spend the next few years pre-occupied with getting the cows right and becoming a "top performer" on some co-op or IFJ report.

Every situation is different. I had options. Other people might not if they want to stay farming. All I'm saying is that the switch wasn't right for me at this moment in time.

I'll have 80 acres when our current tenant is gone in 2024 so I'll look closer then. That'd mean I'd have enough scale to give up the off-farm job and concentrate on the cows, rather than trying to balance the two. Most of the homework and sums I've done will probably still be of use then, so I'll be keeping my various spreadsheets and notes until then. Hopefully, we'll have some clarity on the various other issues outlined by Bass above by that stage.

Excellent post and a post that anyone thinking of getting into milking should read. The best research anyone can do is to first of all accurately research yourself. Then being realistic with figures is the next part. Also ,while Teagaac can give excellent advice, people need to remember that it’s easy to give advice on spending money that’s not your own.

kevthegaff · 19-01-2021 3:48pm

I have a few friends on whatsapp working in dublin. One guy asked me how many cows milked and googled profit per cow at 1000 euros x my number. Everyone away from dairy are looking at lads milking cows obviously reckoning it's a gold mine. The penny drops I'd say into the second spring:-)

_Brian · 19-01-2021 4:27pm

TooOldBoots wrote: »

I'm old style, I don't believe in spending a fortune on those slatted houses. I've seen the state of the cattle especially cows inside in them, it's no life for an animal

some of the happiest cows in the country, outside in the fresh air, clean and dry

I mostly agree but remember the majority of land in Ireland cant put winter cows like that. It’s just not possible.

Siamsa Sessions · 19-01-2021 4:29pm

DBK1 wrote: »

Excellent post and a post that anyone thinking of getting into milking should read. The best research anyone can do is to first of all accurately research yourself. Then being realistic with figures is the next part. Also ,while Teagaac can give excellent advice, people need to remember that it’s easy to give advice on spending money that’s not your own.

Thanks. I'm far from any type of expert but I would offer two pieces of advice: (1) Do the sums and see if it's possible first. Set up costs, loan repayments, no. of cows you can milk on the fields around the yard, profit per cow, etc.

(2) If the sums add up and you have stress-tested them in a worst-case scenario, then walk a mile in the wellies of you as a dairy farmer. Leave the spreadsheet behind and put yourself there, in the parlour, with X no. of cows, so-much grass growing (or not growing!), so-much silage needed, etc. What time will you start in the morning? What time will you finish? If you get a dose of flu and need to stay in bed for a day, who will step in for you? Will you get a holiday away with family or friends?

I have a greater respect now for dairy farmers (established lads and new entrants) than I did before I started the research.

Mooooo · 19-01-2021 4:34pm

Siamsa Sessions wrote: »

Thanks. I'm far from any type of expert but I would offer two pieces of advice: (1) Do the sums and see if it's possible first. Set up costs, loan repayments, no. of cows you can milk on the fields around the yard, profit per cow, etc.

(2) If the sums add up and you have stress-tested them in a worst-case scenario, then walk a mile in the wellies of you as a dairy farmer. Leave the spreadsheet behind and put yourself there, in the parlour, with X no. of cows, so-much grass growing (or not growing!), so-much silage needed, etc. What time will you start in the morning? What time will you finish? If you get a dose of flu and need to stay in bed for a day, who will step in for you? Will you get a holiday away with family or friends?

I have a greater respect now for dairy farmers (established lads and new entrants) than I did before I started the research.

In doing the business plan, a figure should be included for relief/ farm labour regardless of scale.

DBK1 · 19-01-2021 4:42pm

TooOldBoots wrote: »

I'm old style, I don't believe in spending a fortune on those slatted houses. I've seen the state of the cattle especially cows inside in them, it's no life for an animal

some of the happiest cows in the country, outside in the fresh air, clean and dry

Lovely looking stock but as Brian said the majority of land in Ireland wouldn’t be fit to outwinter them.

I find the next best thing to out wintering for both cleanliness and happy stock is peat bedding. I try keep most of the fattening stock on peat. 3 or 4 days after they come off the slats you see the dirt just falling off them the same as cattle let out to grass in Spring.

Unfortunately, with the BNM decision to stop harvesting, peat bedding probably won’t be around much longer.

davidk1394 · 19-01-2021 7:47pm

Siamsa Sessions wrote: »

If you get a dose of flu and need to stay in bed for a day, who will step in for you? Will you get a holiday away with family or friends?

This is the biggest one for me if I get sick. While my parents are here, my father flat out refuses to milk cows. He will do everything else but that which is fine by me. Getting a relief milker could be difficult.

TooOldBoots · 19-01-2021 8:17pm

DBK1 wrote: »

Lovely looking stock but as Brian said the majority of land in Ireland wouldn’t be fit to outwinter them.

I find the next best thing to out wintering for both cleanliness and happy stock is peat bedding. I try keep most of the fattening stock on peat. 3 or 4 days after they come off the slats you see the dirt just falling off them the same as cattle let out to grass in Spring.

Unfortunately, with the BNM decision to stop harvesting, peat bedding probably won’t be around much longer.

I have some of the poorest land in Europe, its trees, turf and Wind turbines country. Every other farming family around me has either planted or sold up to Coillte. One farm even had a slatted house in it and the ape of a Son went off and planted the farm after one wet summer.
The one thing you must not do and it doesn't matter if you are farming on the side of a mountain or in the Boyne valley and that's overstock your farm

Birdnuts · 19-01-2021 9:22pm

blue5000 wrote: »

Big dairy farms seem to be going from strength to strength around here anyway, but they are still a family farm, with some hired in labour too. I think the smaller dairy farms, limited by milking platform mainly, are only hanging in there. Much simpler life with beef/drystock and an off farm job IMHO.

Those smaller dairy lads who can't afford extra labour are like hamsters on a wheel. They are facing more environmental restrictions, nitrates/cow increasing, derogation rules tightening etc. I think they will be squeezed out whereas the bigger operators have the financial muscle to overcome new rules.

Take slurry for example, bigger operators can buy a new vac tank to avoid spreading with a splash plate, the only option smaller lads have is to hire a contractor. So a job that they used to do themselves for the diesel, repairs and time cost is now going to cost 3-4k a year ballpark. That could be 2 cents per litre on a small dairy farm.

Yes - big dairy is now firmly set on the road that pig and poultry went down decades ago with ever more intensification and ever fewer/larger operators. Will be interesting to see will they do better than those latter industries in terms of ever smaller margins and rising costs/issues with animal health/environmental pressures that invariably follow such a path.

Bass Reeves · 19-01-2021 9:50pm

lalababa wrote: »

Afa i'm concerned , apart from those with good bps ,if you want to get close to an average industrial wage from a farm then Dairy is the only game in town. I don't think you have to go mad with loans for tech and numbers either as milk price may drop. But on a non big loan scale and in the near future it's not a bad gamble.
What's the profit roughly on a cow without a loan? 1000 p.a.? X 35 cows...and there's your average industrial wage.

1k/ cow would require a top skillset even if achievable on a smaller scale. While in theory 35-40 cows could in theory achieve the AIW history tells us that agri inflation is not surviving cost inflation. You want to be adding a cow a year to maintain your income

Mooooo wrote: »

Avg supplier age is between 55 and 60, with many having no or uninterested successors. So there are as many exciting as joining just due to retirements. While some have let out the farm others has switched to dry stock. The mp cap is unlikely to come in, but if it does and farms having an avg of 3 blocks it will mean some may keep young stock to use outside blocks or land swap or movement of some kind. With people able to buy 3 dairy cows for the price of 2 or even 1 sicker in some cases the investment needed can be less than those already in dairy expanding

12-18 months ago was the first hint about 100kgsN/cow for nitrates purposes . I would have assumed that 2025/2026 for implementation of this. It starting this year and looks as if it will be in place by 2023. The push on cleaning up dairying will happen faster than many think. The indicating that the EPA would manage the environmental impact of derogation farms was no accident either.

The government needs to slow down at least if not stop dairy expansion. It is looking at what happened in Holland when the EU intervened. IMO regulation will happen hard and fast from now to 2025. While lads may consider we are not seeing a faster rise cow numbers suggest different. In 2019 dairy cow numbers increased by 30k. In 2020 we saw an increase of over 60k in cow numbers. It increasing faster not slowing it peaking.

tabby aspreme · 19-01-2021 10:14pm

Bass Reeves wrote: »

12-18 months ago was the first hint about 100kgsN/cow for nitrates purposes . I would have assumed that 2025/2026 for implementation of this. It starting this year and looks as if it will be in place by 2023. The push on cleaning up dairying will happen faster than many think. The indicating that the EPA would manage the environmental impact of derogation farms was no accident either.

.

I see Teagasc and the Dairy co-ops are running an initiative to improve water quality around the country, got a letter today about it. The EPA having a role in this must be worrying them

Birdnuts · 20-01-2021 1:51am

tabby aspreme wrote: »

I see Teagasc and the Dairy co-ops are running an initiative to improve water quality around the country, got a letter today about it. The EPA having a role in this must be worrying them

I guess its related to that report the EPA brought out early last month that showed the sharpest decline in water quality nationwide over the last 5 years has been in the the main Dairy regions of Munster and Leinster

dar31 · 20-01-2021 8:54am

kevthegaff wrote: »

I have a few friends on whatsapp working in dublin. One guy asked me how many cows milked and googled profit per cow at 1000 euros x my number. Everyone away from dairy are looking at lads milking cows obviously reckoning it's a gold mine. The penny drops I'd say into the second spring:-)

Funny thing on all these dairy threads, I've never seen established dairy farmers quoting figures of €1000/cow profit.

I'd say the average is €500 and ranging from €200-700 per cow and that's for the lads that do and know there figures.

Also from the "profit" figure drawings tax and capital repayments need to be deducted.

As you said Kev, the penny eventually drops, for some I hope its not to late

Jjameson · 20-01-2021 9:22am

dar31 wrote: »

Funny thing on all these dairy threads, I've never seen established dairy farmers quoting figures of €1000/cow profit.

I'd say the average is €500 and ranging from €200-700 per cow and that's for the lads that do and know there figures.

Also from the "profit" figure drawings tax and capital repayments need to be deducted.

As you said Kev, the penny eventually drops, for some I hope its not to late

Have you a breakdown of that?
I do know for a fact that there’s a lot of merchant debt owed solely by dairy farmers from 2018. Most would be “established”.
I think it’s generally being put down to guys trying to avoid tax and therefore on the “new shed” “machine” or whatever and the payments had to be made no matter the fodder bills and expenses that the year threw up.
I recall a neighbour who milks and does beef telling me his bullocks were eating more value in meal than beef price yet cows were returning it around threefold! (Gross of course)

For those of us in drystock “drawings” are what the kids put on the fridge!
I think the lifestyle hurdle is where must of us would fall.

Mooooo · 20-01-2021 10:24am

Profit figures put out generally don't include own labour, capital repayments and tax due. Anyone paying back land loans must pay tax on the capital portion. Drawings could be put down as own labour if you want but what should be the case is own labour should be included in costs and profit should be what's left over for reinvestment or whatever.

Siamsa Sessions · 20-01-2021 10:36am

Jjameson wrote: »

For those of us in drystock “drawings” are what the kids put on the fridge!

Great quote!

In general, the language used by "industry experts" is usually abstract rather than concrete; hence, drawings = wages, labour unit = one person, etc. I think that's partly where people drift a little from everyday reality.

A "labour unit" sounds like something that can be managed or bought, but it's really a living breathing human who gets sick, has rows with family, is happy today and fed up tomorrow, etc. Even if you have someone part-time (0.5 labour units), they'll likely to be a human too!

The phrase "labour unit" doesn't capture real life and only makes sense on a spreadsheet.

Bass Reeves · 20-01-2021 11:51am

Siamsa Sessions wrote: »

Great quote!

In general, the language used by "industry experts" is usually abstract rather than concrete; hence, drawings = wages, labour unit = one person, etc. I think that's partly where people drift a little from everyday reality.

A "labour unit" sounds like something that can be managed or bought, but it's really a living breathing human who gets sick, has rows with family, is happy today and fed up tomorrow, etc. Even if you have someone part-time (0.5 labour units), they'll likely to be a human too!

The phrase "labour unit" doesn't capture real life and only makes sense on a spreadsheet.

At the end of the day you have to live. If you ever look at small company profit's you be surprised how low they are especially at company level. Retained profits for companies that are in business long term may only be a few hundred K. These would be companies that are very profitable. The reason for this is for any owner you get as much out as tax efficiently as quickly as possible.

Yes you will have your drawings that put bread on the table but if you could see the detailed accounts of a small builder ir the lad that runs 2-3 shops or restaurant it would educate you.

As Jjamison say farmers let themselves down on lifestyle . Most go down the path of doing everything themselves to avoid tax and then look for a labour cost.

TBF Siamsa at least you had the sense to look at the dairying from a hours perspective not just a profitability. The idea of being tied to farm for 7 days a week with dairying which many smaller conversions will be is often not factored in at the start. Then when you have 100k borrowed at 6-7% you are trapped working for 7days a week for often what is not much better than the average industrial wage.

Drystock is a different game. Not as profitable on a per acre basis but with any sort of job if a lad is focused it can still be quite profitable. Ya it harder if you are working on a building site or a hard manual job, but for a lot of jobs it is a good fit. You can write investments off against tax while you set the place up and use lifestyle to shield the tax element down the line.

paddysdream · 20-01-2021 12:13pm

Bass Reeves wrote: »

At the end of the day you have to live. If you ever look at small company profit's you be surprised how low they are especially at company level. Retained profits for companies that are in business long term may only be a few hundred K. These would be companies that are very profitable. The reason for this is for any owner you get as much out as tax efficiently as quickly as possible.

Yes you will have your drawings that put bread on the table but if you could see the detailed accounts of a small builder ir the lad that runs 2-3 shops or restaurant it would educate you.

As Jjamison say farmers let themselves down on lifestyle . Most go down the path of doing everything themselves to avoid tax and then look for a labour cost.

TBF Siamsa at least you had the sense to look at the dairying from a hours perspective not just a profitability. The idea of being tied to farm for 7 days a week with dairying which many smaller conversions will be is often not factored in at the start. Then when you have 100k borrowed at 6-7% you are trapped working for 7days a week for often what is not much better than the average industrial wage.

Drystock is a different game. Not as profitable on a per acre basis but with any sort of job if a lad is focused it can still be quite profitable. Ya it harder if you are working on a building site or a hard manual job, but for a lot of jobs it is a good fit. You can write investments off against tax while you set the place up and use lifestyle to shield the tax element down the line.

You and I might disagree on some things but in this case I think you are 100% right.

Looked at going milking here a few years ago when quotas went.Have 1 block of land that would carry the "wrong" amount of cows ie enough to make it commercially viable but probably not enough to pay labour.
The borrowing/investment part wasn't an issue as well used to debt.
Looked at the figures and asked myself did I want to be working for the next 10 years just to keep Glanbia,the milking equipment suppliers and the fert. industry in Merc's and perks.
What many forget is that the change from drystock to milking is a very big one.
The farm here is paying the mortgage and running the house so what more does a body need ?
For example its a pi**er of a morning here.Still took less than an hour to finish all feeding herding etc.Fill few bags of nuts from store,into back of jeep and drive into paddock to throw them into troughs.Back into yard ,open shed door and let out ewes.Drop in 2 bales silage top feeders and scatter couple of bales of straw.Thats almost 400 done in 20 mins.
Quick look over shed door at lambs on creep bin to make sure none dead and water in trough.Fill another bag of nuts and up road to scatter a few out for early lambers.Quick look at them and over road to check on ewe lambs.Drive around field make sure some hay left in rack.
Back home for tay and make sure young buck has computer on for online schooling.
Big difference to imitating a Mexican working on a Californian dairy farm.

GrasstoMilk · 20-01-2021 2:09pm

paddysdream wrote: »

You and I might disagree on some things but in this case I think you are 100% right.

Looked at going milking here a few years ago when quotas went.Have 1 block of land that would carry the "wrong" amount of cows ie enough to make it commercially viable but probably not enough to pay labour.
The borrowing/investment part wasn't an issue as well used to debt.
Looked at the figures and asked myself did I want to be working for the next 10 years just to keep Glanbia,the milking equipment suppliers and the fert. industry in Merc's and perks.
What many forget is that the change from drystock to milking is a very big one.
The farm here is paying the mortgage and running the house so what more does a body need ?
For example its a pi**er of a morning here.Still took less than an hour to finish all feeding herding etc.Fill few bags of nuts from store,into back of jeep and drive into paddock to throw them into troughs.Back into yard ,open shed door and let out ewes.Drop in 2 bales silage top feeders and scatter couple of bales of straw.Thats almost 400 done in 20 mins.
Quick look over shed door at lambs on creep bin to make sure none dead and water in trough.Fill another bag of nuts and up road to scatter a few out for early lambers.Quick look at them and over road to check on ewe lambs.Drive around field make sure some hay left in rack.
Back home for tay and make sure young buck has computer on for online schooling.
Big difference to imitating a Mexican working on a Californian dairy farm.

Farm here is paying a land/ house mortgage, substantial yard development, herd expansion and 2 wages
Thats why we're in dairy, I wouldn't be farming full-time if not and probably wouldn't either if quotas were still in place

Walk slowly in the opposite direction......they will catch up

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