Spending money on the farm good or bad idea?

F.D

Hi All, Just looking for peoples opinions on weather its a good idea to be investing in farming with the economy the way it is.
we're farming 70 acres buying cattle at weanlings and keeping them to finishing, the farm is very tidy but outdated has a few sheds with no floors, good silage pit and an dungsted that seems to fill up with rainwater within a month, there is also 50 acres of forestry planted 4 years, My Granduncle was winding it down in recent years, not in reps and keeping a few cattle on straw and feeding in the yard,
We are planning to put in a 4 bay slatted tank and new shed with a crush built into it for ease of handling, (to difficult to fit into existing sheds already looked at the different options), we were lucky and got into reps 4 in may before things changed, we are also taking back 20 acres of the forestry for reasons i have explained on a previous thread, so our total grazing acres will be 90 acres, all in all we will be spending near 80 k
Dad and i are also working off the farm, my job is looking a bit shakey and could be on a 3 day week before long, are we mad? or should we still plough on and hope it pays for itself

Sam Kade

Yes you are mad. Is the land dry? Could you graze cattle over the winter on saved grass or kale at a lower stocking rate?

DanFindy

Sam Kade wrote: »

Yes you are mad. Is the land dry? Could you graze cattle over the winter on saved grass or kale at a lower stocking rate?

Completely mad my friend at the present time, if possible work with what youve got, save your money it could be more usefull for other things if your job falls through, u got into reps 4 before the may deadline........did you get conformation yet?.................did you get paid on it yet?.......single farm payment is up for review in 2013 thats only a short while away god knows what will happen then?............

Figerty

DanFindy wrote: »

Completely mad my friend at the present time, if possible work with what youve got, save your money it could be more usefull for other things if your job falls through, u got into reps 4 before the may deadline........did you get conformation yet?.................did you get paid on it yet?.......single farm payment is up for review in 2013 thats only a short while away god knows what will happen then?............

Maybe not completely mad, but talk to your accountant,, and if you don't have one, then get one~!

You could write the cost off against your work salary as a part of the buisness cost.

You will get the VAT back on the farm build.
Labour is very cheap at the moment and also available. Maybe scale back your plans, but I'd be inclined to invest.

Look at it this way, A good slatted shed will keep you and the father safe, allow you peace of mind with the cattle being housed and importantly will allow you to continue to work off farm.
You will have a much better slurry that with dungstead.

irish_bob

providing you dont have to get into debt and providing you dont intend selling the farm or getting out of farming , i think now is a good time to invest , labour and materials are well down and competition is fierce , 80 k would do a serious amount of work right now , a farm is a place which always requires reinvestment and your own business is the most important place to reinvest your money no matter what , thier is little opportunity in off farm investments at the moment anway

when eveyone else is running , that is the time to stand still

Sam Kade

Investing in concrete will not give you a return on your investment.

vanderbadger

FD, if there is 2 of ye involved 80k is not too bad, anyway you probably know how much ye are making from the cattle so I suppose its just a case of seeing whether ye can cover the repayments..anyway I think alot of farming decisions arent totally based on financial reasons, sounds like ye like the farming anyway so its worth something to you to be improving the place and doing something youlike

DagneyTaggart

I knew a man who used to say....anyone can spend money in the good times, it takes a brave man to spend money in the bad.

Make of that what you will.

DanFindy

vanderbadger wrote: »

FD, if there is 2 of ye involved 80k is not too bad, anyway you probably know how much ye are making from the cattle so I suppose its just a case of seeing whether ye can cover the repayments..anyway I think alot of farming decisions arent totally based on financial reasons, sounds like ye like the farming anyway so its worth something to you to be improving the place and doing something youlike

I do have to agree with this however, farmings in our blood and its nice to have things a bit handier and neat and tidy...........just be carefull lad.

F.D

Sam Kade wrote: »

Yes you are mad. Is the land dry? Could you graze cattle over the winter on saved grass or kale at a lower stocking rate?

Hi Sam,I know nothing about kale i'm afraid, would you not have higher running costs year on year with cultivation etc. how many cattle could you feed on say 20 acres of the stuff and how lond would it last? if suplemented with silage, what do you do with the land in between crops?

kmick

Do you have to borrow the money? If so I think yes you would be mad.

F.D

Yer right it is down to the love of farming and no we don't have the money we will have to take out a loan, it is also to try and cut the work load, to keep the off farm job for the time being, hopefully in 8 or so years my father will be near retirment and the investment should be well on the way to being payed off, and he can take some money from the farm then as an income at that point and not have too much work to do in the winter months. the land is in good order and well able to keep a good head of cattle as long as we can carry them for the winter aswell, it seems to be the people that have to buy stock in spring and get rid of them this time of year that are having the most trouble and loosing out because the factorys know they have them over a barrell, i'm probably wrong, bottom line we're in it for the long haul and dont want to put a noose around our necks if it wont pay but at the same time want to progress and make things as easy as possible

Sam Kade

F.D wrote: »

Hi Sam,I know nothing about kale i'm afraid, would you not have higher running costs year on year with cultivation etc. how many cattle could you feed on say 20 acres of the stuff and how lond would it last? if suplemented with silage, what do you do with the land in between crops?

http://www.bak.teagasc.ie/newsletters/farmingtips/2008/dairy-20080617.asp
http://www.stackyard.com/news/2008/01/jennifer/02_brassicas.html

You would want dry land for it. 20 acres would roughly feed 80 adult cattle for 120 day winter. They would want bale silage with the kale and also a grass run back for them to lie down. If you could do all the cultivation yourself it would be cheaper still. It works out at half the cost of silage + you don't need to house the cattle or spread slurry. I have seen cattle that gained 1kg liveweight/day on kale and silage without any other feed. You would need to grow it on a different field every year. I don't know how it would work with REPS though.

irish_bob

F.D wrote: »

Yer right it is down to the love of farming and no we don't have the money we will have to take out a loan, it is also to try and cut the work load, to keep the off farm job for the time being, hopefully in 8 or so years my father will be near retirment and the investment should be well on the way to being payed off, and he can take some money from the farm then as an income at that point and not have too much work to do in the winter months. the land is in good order and well able to keep a good head of cattle as long as we can carry them for the winter aswell, it seems to be the people that have to buy stock in spring and get rid of them this time of year that are having the most trouble and loosing out because the factorys know they have them over a barrell, i'm probably wrong, bottom line we're in it for the long haul and dont want to put a noose around our necks if it wont pay but at the same time want to progress and make things as easy as possible

you might find it difficult getting money from a bank at present

F.D

irish_bob wrote: »

you might find it difficult getting money from a bank at present

about two months ago we went into the bank and they were willing to lend us the cash then the fact we were earning a wage outside of the farm had a lot to do with it

MfMan

If you're intent in being in farming for the long haul, then investment in handling facilities is IMHO a very good investment. Nothing worse than trying to test / handle / feed cattle and having them running or breaking away from you, usually when you're on your own. As others have said, materials and labour should be very keen now and you'll probably never be able to do it again as cheaply. Remember, you're paying this off ultra long-term, rather than over a few years.

J. Ramone

Figerty wrote: »

Maybe not completely mad, but talk to your accountant,, and if you don't have one, then get one~!

You could write the cost off against your work salary as a part of the buisness cost.

Not correct, there is no offset available against salary from business (farming) losses or excess capital allowances. You would be able to claim the VAT even if non registered. Do talk to your accountant if you're going ahead though.

cjpm

I'd be very slow to spend so much at the moment esp if it's borrowed cash.

I'd suggest you do some careful planning at the moment, decide what you want and it's layout etc.

Then built it bit by bit as you get the cash....

I.E. start with holding yard and crush.

then one slatted tank with roof and feed area.

then the other slatted tank etc

then cover the crush holding yard etc if required....

And so on.....

You can of course make some changes as you go along...


I'd be afraid to get large sums from the bank at the moment, jobs are too dodgy...

pakalasa

If you do decide to build, you should still stick to the Department spec on buildings. I've seen a lot of posts here recommending such things as less steel in the concrete. not galvanising steel etc. If you do it right it will last you generations - it won't seem so dear then.

leg wax

my only bit to add is keep your own wages in your pocket from your job the farm has to pay back repayments, and on repayments will the farm be able to pay back loan when bank interest rates rise, and they will,would you be able for high rates that were back in the 80s.the banks need money and its you and i will pay for it after nama. the times that we are in now is a once in a life time oppertunity to invest out side the farm gate eg shares , at a altime low earlier in the year, but do not invest in any thing that is involved in ireland.:cool:

Figerty

Very sound advice about the banks. Once NAMA has been settled the banks are going to ride us with interest rates. So I agree about spending your own money.

Investing in the farm should be based on the ability to repay, but If we all took that advice we would all be in the States or somewhere else at this stage. I think you have to invest to make it more efficient even if that means it's easier to work off the farm.

I also agree with stick to the Department specs. I found that great last year. I built a shed under the FYM scheme and while the costs were higher because of demand and a the fact there was a grant there I now have a high quality shed and I was able to get receipts for everything.

Rujib1

You are and will be working off farm. Agreed that you should be keeping the income from that seperate from the farm. No point being a busy fool and subsidising the farm with your off farm income.

Secondly think of the other subsidy your farm gets! The SFP. There is no guarantee it wil be around post 2013. If it is still in place, I reckon you need to factor in a considerable reduction in the amount you will be entitled to.

Thirdly, if you need to borrow for investment, you will need to factor in much increased interest rates post NAMA as other posters have mentioned.

Now, have a cold look at the numbers, and figure out if the investment is financially viable.

Colm McCarthy, (he of Bord Snip) mentioned a few weeks ago on radio, that after the banks had their delinquent developer loans taken off their books by NAMA, they would have to face up to another segment of delinquent loans. Those to hoteliers and farmers :eek:

It is pretty much accepted that much of the loans issued to both these sectors over the past number of years are already falling behind repayment schedule, and will get worse over the coming years.

I believe the only viable future for farming with high fixed costs (buildings etc) is large scale (number of acres 250 +) and high output (sales revenue)

For the rest of us low fixed cost, low inputs, low output but of high quality.

R1