profit for dairy leased land

Looney1 wrote: »

If anyone had 10 mins could they give me an idea of fixed costs and variable costs associated with running 90 crossbred cows on 120 acres of good/ middling land. facilities very good. aiming for 450kgms per cow per year . estimating gross output of 180 thousand. im trying to work out if a lease is viable. Really appreciate help

The price of the rent will be a big pinpoint imo, the land is good/middling? Will it be ok for early/late grazing? Will you need to upgrade water/fencing? Indexes for ps and ks and lime requirements? A lot of scrutiny to be done on. Plan like such imo

K.G. wrote: »

Fert,ration 55k
Contract,machinery25k
Rent 28k
Vets meds ai 20k
Sundries maintenance 20k
Repayments on stock,start up cost s loan
200 k over 10 years at 6 %?27k
That's 155 k a.year
People will argue about some costs here and there but the key thing here is @450 you will have a profit of 25 to 30 k a year but at 400 kilos you have only maybe 5 or 10k a year.performance on tight money management is where its at and very difficult to achieve. Unless you are 100 %sure you can do it and have done it already forget about it

I'm already arguing with some of your costs but feed and fert combined costs usually something like 35k here, for 160ac, 120cows and whatever youngstock.

K.G. wrote: »

Fert,ration 55k
Contract,machinery25k
Rent 28k
Vets meds ai 20k
Sundries maintenance 20k
Repayments on stock,start up cost s loan
200 k over 10 years at 6 %?27k
That's 155 k a.year
People will argue about some costs here and there but the key thing here is @450 you will have a profit of 25 to 30 k a year but at 400 kilos you have only maybe 5 or 10k a year.performance on tight money management is where its at and very difficult to achieve. Unless you are 100 %sure you can do it and have done it already forget about it

I know nothing about milking it costs involved. But working back on a per head basis and it is cross bred cows OP is using. In your costs
Feet and ration is 610/ cow
Contracting/ machinery is 270/ cow
Vet&meds 220/ cow
Sundries&maintenance 220/ cow
Borrowings just saw recently CU are now giving loans of over 40 k for 4.5%. so for that amount of money you should now be able to shave a bit off 25k/year.
Rent is 233 net/ acre probably allowing for ANC and BPS.
It costs me 350/year to finish bullocks, a n general the ration bill is low on crossbred cows often sub 500kg/year. But If could not keep CB cows for 6-700/year net cost I would give up. TBH I expect that a tight run ship could even squeeze on that for CB cows

alps wrote: »

You can't...you just cant..

Cow will consume 4 tonnes of grass (if you're really good) 1 tonne of silage and 500kg of ration..

No chance of delivering this feed for 600€...

No chance..

You sure €600 to provide feed alone is unrealistic.

Half tonne of ration €175
Make 2 bales of silage @ €20 each for contractor + plastic

€385 left for a tonne of 10:10:20 to grow 5 tonne of grass.

Bass Reeves wrote: »

I know nothing about milking it costs involved. But working back on a per head basis and it is cross bred cows OP is using. In your costs
Feet and ration is 610/ cow
Contracting/ machinery is 270/ cow
Vet&meds 220/ cow
Sundries&maintenance 220/ cow
Borrowings just saw recently CU are now giving loans of over 40 k for 4.5%. so for that amount of money you should now be able to shave a bit off 25k/year.
Rent is 233 net/ acre probably allowing for ANC and BPS.
It costs me 350/year to finish bullocks, a n general the ration bill is low on crossbred cows often sub 500kg/year. But If could not keep CB cows for 6-700/year net cost I would give up. TBH I expect that a tight run ship could even squeeze on that for CB cows

Teagasc/Glanbia had the exact same train of thought as the above when they set up Greenfields and look at the sh**show that turned out to be

"jaymla627 wrote:

Teagasc/Glanbia had the exact same train of thought as the above when they set up Greenfields and look at the sh**show that turned out to be

Teagasc/Glanbia/Farmers Journal error o Greenfield was more to do with set up costs rather than feed costs. There assumptions on woodchip pads, lagoons,outside cubicles, milking facilities, not putting in parlour feeders, no meal feeding at the start etc etc was where the main flaw in the system was. As well that a set up was possible with minimum capital input.

People have to factor in OP'S details on housing and roadways already Insitu.

cute geoge wrote: »

Imo at an average milk price of 30 cent and costs north of 25 cent ,I find it hard to understand the stampede to milking cows from other enterprises .I wonder are many of the new entrants scratching their heads ,surely anyone with any sort of a job and tipping away with a few cattle or a bit of tillage are better off then enslaved to milking cows

Loads of lads may be seeing the green grass of milking cows from other enterprises, but in fairness loads of dairy farmers see the green grass of off farm employment.

Grueller wrote: »

Loads of lads may be seeing the green grass of milking cows from other enterprises, but in fairness loads of dairy farmers see the green grass of off farm employment.

Where are the loads of dairy farmers who are seeing the green grass of off farm employment?

The only dairy farmers I see quitting are old and are retiring or keep taking few dry stock.
I don’t see any young or middle aged dairy farmers quitting milking.
Plenty of existing dairy farmers piling on more cows and new entrants starting tho.

trixi2011 wrote: »

Have been looking for a lease far. Myself this year from budgets I have done and talking to farms with second units real cost of production is sitting at about 28-30 cents l including a small wage . All heifers will be closer to 30c costs and high producing herd can be 28 and under.The extra litres in the mature herd are diluting costs. These crossbreed herds are getting AVE milk price including stock sales of 36c . So that 6c over what ever litres you produce this is assuming are farming in the top 10%. 90 heifers @4500l would leave around 24000 for repayments on stock. I have never come across a genuine turn key farm for lease and extra costs will be there from the off .

Did you look at the land mobility There is usually a few dairy farms around the 100/150 acres on it

trixi2011 wrote: »

Have been looking for a lease far. Myself this year from budgets I have done and talking to farms with second units real cost of production is sitting at about 28-30 cents l including a small wage . All heifers will be closer to 30c costs and high producing herd can be 28 and under.The extra litres in the mature herd are diluting costs. These crossbreed herds are getting AVE milk price including stock sales of 36c . So that 6c over what ever litres you produce this is assuming are farming in the top 10%. 90 heifers @4500l would leave around 24000 for repayments on stock. I have never come across a genuine turn key farm for lease and extra costs will be there from the off .

I’m surprised reading this thread. I thought a dairy cow was leaving €800 + profit a year.

trixi2011 wrote: »

No trying to get my feet on the ladder in Ireland . Have been sharefarming abroad for the last few years. Young family now so trying to be closer to family etc

What part of the country are you looking for

Looney1 wrote: »

If anyone had 10 mins could they give me an idea of fixed costs and variable costs associated with running 90 crossbred cows on 120 acres of good/ middling land. facilities very good. aiming for 450kgms per cow per year . estimating gross output of 180 thousand. im trying to work out if a lease is viable. Really appreciate help

Looney1 wrote: »

I agree. average turnout is 10th of march with on off before that. p and k are index 2. ph ok. needs about 40 acres reseeded. roadways good. im thinking around 230- 240 an acre. forgot to say doesnt have a bulk tank

just one thing OP I really get worried when lads look at any business and cannot do the figures themselves. I remember in one job I was in there was a redundancy package in play and a lad decided he take it and open a convenience shop in the middle of the town.

He got the accountant to do the figures just as he was about to sign the lease he was ringing around to sort stock, cigarette supplier(in the days before the machines came into play) wanted 10K of a stock deposit. Whole project fell through but he had taken the deal.

At cup of tea one morning a lad was blaming the accountant I made the point he had no business trying to set up a business where he had no idea of the costs involved. This was similar to the noughties where builders were building hotels or holiday home resorts to hide profits. In one case I heard one builder asked the accountant what prices he should charge for food. Accountant told him look at local restaurant prices and charge them prices.

mahoney_j wrote: »

That’s the problem ......tegasc/profit monitors etc feed this scutter

And dairy farmers, that's who I hear it from anyway ........ why do they form companies if it's not because of massive profits, not too many drystock farmers forming companies

wrangler wrote: »

And dairy farmers, that's who I hear it from anyway ........ why do they form companies if it's not because of massive profits, not too many drystock farmers forming companies

Not too many beef farmers farm full time. If you've no capital allowances left and earning 80k on a dairy farm needing to pull out 70k for repayments and living...you'll have to go into a company.

There is a massive misunderstanding, maybe lack of appreciation, of the capital expenditure and requirements on a dairy farm.. Cost comparisons and profit monitors rarely show this.

alps wrote: »

You cant surely call something a big success when it is able to pay back "most of its loans" . Its land rent cost was only 180€/acre.

What it proved for me, is that if you have a bank of land, the most efficient way to turn it into a dairy farm is to lease it out for 15 years (initially).

You'll have 180/acre plus your single farm payment plus the contractor costs if you supply that machinery service and end up with a fully set up fully functioning dairy farm debt free at the end of the term..

You couldn't manage it yourself from day one.


As a matter of interest...if hugely successful economically, did the investors give a return on their investment figure?

But does it not show the OP that their plan can work as the repayments on facilities on Greenfield were crippling, while the farm in question here has the facilities in place. Plus the OP is talking about 90 cows on 120 acres. That should not leave any dearth of fodder, in fact there should be a big surplus for any year like 2018 occurring again?
Shoot me down if you like as I am as green as the grass yet this game and might be missing something obvious.

Bass Reeves wrote: »

The only repayments that are not allowable against tax are land repayments. The reason dairy farmers go into a company structure is that they are extremely profitable especially in years where there is a strong milk price.

Second units/land rental are really dependent on farm structure and farmer renting. However from the indications and willingness of some farmers to follow that path it must be fairly profitable. However it is only a choice for some farmers it takes a structure and attitude to develop it. Looking from the outside I think more should diversify outside of farming. However it again comes to understanding the business

It's the write down period is the issue bass, if you've heavily invested in the yard 8 yrs is the write down period, whereas the loan would be over 15, it's the last 7 years of repayments along with tax can put the farm under pressure. With land loans it's the second half of the loan period as the interest on the l9an drops the capital portion increases and can again put the show under pressure

Timmaay wrote: »

Greenfield was a big success in terms of economics, it nicely paid back the most of its loans, and a very hefty land lease, and had built up a nice cash reserve, all while not having access to the Glanbia topup bonus which was worth up to 2c/l in some milk cheques. Where it fell down hugely was having very poor fodder reserves, especially in 2018 when the ex tillage low organic matter soil got absolutely hammered in the drought, the meal bill alone ate into all the cash reserves which was criminal consideration bales of silage were easily got for less than 20e the previous winter. The out wintering pad and exposed outdoor cubicles were both mistakes also, but to call it a sh1t show is wrong, most certainly in terms of economics.

Financial side of it had become non-transparent the last few years of it with no accounts publicly made available, it's still unknown what agreement was reached in the end of the winding up of the experiment and who settled outstanding debts

Panch18 wrote: »

this is gas - Beef lads telling dairy farmers (some top class dairy farmers on here i might add) how much money they are making and how much their costs should be

I don't think any dairy farmer should be completing a profit monitor - this information is being thrown around the place and used by a) coops to keep the price of milk in check and b) non dairy farmers as a stick to beat dairy farmers with.

You be amazed at the amount of resentment there is towards dairy farmers from non dairy farmers - particular what sprung out of these beef factory protests.

Now we have never completed a profit monitor and never will - and i firmly believe it would be in dairy farmers interests if they pulled back from it a bit.

There is never anything gained by everybody knowing your business

Belter of a post lots of common sense .dont do profit monitors and never will don’t see the need or the point see lads tripping over themselves wanting to do them and compare with others .....what for every farm is different and then there is costs left out ,u could have a lad stocked at 4/he and another at 2 one would gave higher feed and Fertliser costs than the other pointless exercise with the info gathered thrown around like confetti by tegasc

alps wrote: »

You cant surely call something a big success when it is able to pay back "most of its loans" . Its land rent cost was only 180€/acre.

What it proved for me, is that if you have a bank of land, the most efficient way to turn it into a dairy farm is to lease it out for 15 years (initially).

You'll have 180/acre plus your single farm payment plus the contractor costs if you supply that machinery service and end up with a fully set up fully functioning dairy farm debt free at the end of the term..

You couldn't manage it yourself from day one.


As a matter of interest...if hugely successful economically, did the investors give a return on their investment figure?

180e but the landowner keeps the sfp? I said "most the loans" because as Jay said very little financial details were released as to how the project wrapped up, who paid off the loans? And that's where your final point is interesting, the initial business plan always stated that the early years of the project there would be significant capital repayments (and paying back at like double/triple the interest rate of most other European countries), and the substantial profitability wouldn't be until the last few years of the project. If I had been say a silent investor taking a yearly cut of the profits I'd most certainly of been asking big questions when the project was wrapping up.

And don't get me wrong I'm far from a fan of the whole project, it failed hugely on the original aim to "showcase" a large greenfield dairy setup in Ireland, the economic and business potential was certainly there, that wasn't the problem, instead it showed the significant hurdles in Ireland with 1stly weather extremes, we are not NZ and cannot expect to get away with almost no winter accommodation or fodder reserves, and by God 2018 hammered that point home on the Greenfield farm, and the 2nd point which is yours, land cost is too high, the landowner getting a large tax free yearly rent is always going to be a big winner. I'm happy that the whole project failed because as a farmer I don't need Glanbia using it as a stick to hammer down the milk price, but if managed differently the outcome could of been alot more successful.