where is there money in farming ?????

bk1991

where is there money in farming ?what enterprse is there money ?
not looking for what ye are makeing but where in yer opinions do ye see to be makeing money and to keep makeing money in future !

thanks
bk1991

maidhc

Unless you inherit a large working farm, forget it.

Connery

Hey Maidhc,

What would your idea of a 'large working farm' be? What acreage or size of dairy herd are we talking about?

I still think there is still opportunity for many of the medium sized family farms which make up a large proportion of farmers in this country i.e. +70 cow dairy herd. Efficiency and cost management is critical.

Id be interested to know your opinions regarding Dairy Partnerships?

reilig

bk1991 wrote: »

where is there money in farming ?what enterprse is there money ?
not looking for what ye are makeing but where in yer opinions do ye see to be makeing money and to keep makeing money in future !

thanks
bk1991

A great enterprise for making money on your farm would be to turn it into a rehabilitation centre for recovering addicts. They would pay to stay with you, you would get a bit of free work from them. They would have an isolated place where they could get away from it all, learn the rural way of life, eat healthy home grown food and breather fresh air. I would recommend doing a Psychology Degree along with with your Cert in Agriculture.

Well, you did ask!!!!

massey woman

In responce to your question "where is the money in farming" my answer is simple
Have an auction if you are the registered owner of an un mortgaged property
Sell the lot,sit back and consider your options
Farms are the only property that are still selling
The next generation will flog it to offset your retirement expenses and their expected inheritance if your lucky enough to live that long
There will be no pension at 60-66 DB or DC and unlikely the state will be able to pay even the OAP next year the ways things are looking here

maidhc

Connery wrote: »

Hey Maidhc,

What would your idea of a 'large working farm' be? What acreage or size of dairy herd are we talking about?

I still think there is still opportunity for many of the medium sized family farms which make up a large proportion of farmers in this country i.e. +70 cow dairy herd. Efficiency and cost management is critical.

Id be interested to know your opinions regarding Dairy Partnerships?

Dunno, but we have 120 acres at home, all drystock.I work full time, and will continue to do so.

My father does some farming, but is scaling back.

The farm won't be sold, but the beef is marginal, cereals are loss making, and dairy is hideously expensive to get into, time consuming, and the returns are unpredictable. Tell me if I am missing something.

Efficiency and cost management are critical in every business. The difference between having a business and a farmer though is at least when you have your own business you succeed or fail on your own merits, not on the weather or on the whim of the "agri food business".

reilig

massey woman wrote: »

In responce to your question "where is the money in farming" my answer is simple
Have an auction if you are the registered owner of an un mortgaged property
Sell the lot,sit back and consider your options
Farms are the only property that are still selling
The next generation will flog it to offset your retirement expenses and their expected inheritance if your lucky enough to live that long
There will be no pension at 60-66 DB or DC and unlikely the state will be able to pay even the OAP next year the ways things are looking here

Land prices are down 30% to 50%. Now is the time for young people to get into farming. They can now buy land, take a loan (if they can get it) and have some possibility of paying back the loan with money earned off the land that they buy. The problem with the farming media is that farming is recorded as a business instead of a way of life and this puts a poor light on farm profits. Now I know that in order to survive you need to run a farm as a business, but as a farmer, I know that you know that farming is a way of life too.

So for a farmer to sell his land is to sell his way of life. If I sold my land I'd be selling my lifestyle - I'd have no more lamb or beef for my freezer. I wouldn't be growing my own organic vegetables. I wouldn't get my exercise every morning and evening while looking at my cattle and sheep. I'd lose out on the fresh air, the stress relief of going out in the evening to do a bit of work, feed cattle etc. or even the buzz I get when I go to the mart to sell the few cattle that I bred and raised myself.

The above to me is the "profit" made on farms, even though it is not in a monetary form nor is it recorded in my profit and loss (even though it probably should be). Beyond this, I do realise that its hard to have money in my pocket in order to keep up with the rest of society ahd have the new car, new house, holidays etc. In order to have these additional extras, I have to work off farm or else come up with an alternative enterprise on my farm. I have chosen to work off farm. But I still have the farm lifestyle and the perks that go with it. Realistically, there isn't a money making future in farming for the majority of those with less than 100 acres - especially with the quality of land in Leitrim (probably 200 acres in 10 years time). So if people want to maintain the farming lifestyle, they will have to have an off farm job or they will have to diversify their farm enterprise to something non traditional.

Generations of people in the past said the same thing as you. "Sure our children will probably sell the land to pay for our retirement, they'll have no interest in farming". The truth is that farming goes up and down. It has done for hundreds of years and will do into the future. Not many people get out of farming. Most of the land that is sold belonged to people who have died and had no children to pass it on to. But if you are born and bred on a farm and have farming in your blood, you will not sell.

Tipp Man

maidhc wrote: »

Dunno, but we have 120 acres at home, all drystock.I work full time, and will continue to do so.

My father does some farming, but is scaling back.

The farm won't be sold, but the beef is marginal, cereals are loss making, and dairy is hideously expensive to get into, time consuming, and the returns are unpredictable. Tell me if I am missing something.

Efficiency and cost management are critical in every business. The difference between having a business and a farmer though is at least when you have your own business you succeed or fail on your own merits, not on the weather or on the whim of the "agri food business".

Maidhc everything you have said above is true, but i have 1 question for you, why won't the farm be sold?? 120 acres can still make 1m maybe more depending on quality which is a nice amount of money if you are in full time employment

I'm not trying to pry into your personal life i'm just curious as i see it in my local area as well, 2 120 acres farms near us are being let which we have partly rented, in 1 the son is away never to return and the other the guy has inherited it from his deceased father but i haven't seen him near the place for 5 years i'd say. Why are places like these not being sold (for top money as they are top farms) and giving the young gneration of farmers some chance at getting land, expanding, whatever??

irish_bob

Tipp Man wrote: »

Maidhc everything you have said above is true, but i have 1 question for you, why won't the farm be sold?? 120 acres can still make 1m maybe more depending on quality which is a nice amount of money if you are in full time employment

I'm not trying to pry into your personal life i'm just curious as i see it in my local area as well, 2 120 acres farms near us are being let which we have partly rented, in 1 the son is away never to return and the other the guy has inherited it from his deceased father but i haven't seen him near the place for 5 years i'd say. Why are places like these not being sold (for top money as they are top farms) and giving the young gneration of farmers some chance at getting land, expanding, whatever??

the answer is very simply , the irish have a connection to land which is unrivalled , most farmers would perfer loose a limb , sell a lung or drown thier children than sell land

leg wax

how long would it take the fool who would pay 1 million for 100 acres to pay it back just from profits on the 100 acres, the real value of land is what a farmer can pay back in 20-25years and that is only about 100-180 euros a acre a year, if farmers cant make money from land renting at these prices its still harder with interest adding on a lone from a bank , you saw it here first land will drop back to under 5000 euro an acre. rant over.

reilig

leg wax wrote: »

how long would it take the fool who would pay 1 million for 100 acres to pay it back just from profits on the 100 acres, the real value of land is what a farmer can pay back in 20-25years and that is only about 100-180 euros a acre a year, if farmers cant make money from land renting at these prices its still harder with interest adding on a lone from a bank , you saw it here first land will drop back to under 5000 euro an acre. rant over.

Agree!!

Land survey in last week's Farming Independent stated that agricultural land is very close to this €5000 per acre and they predicted that it will go below this.

The day of the €1 million for 100 acres is gone out the window. And its no harm either.

JohnBoy

now that the boom is over and farmland prices are not being driven up by the proceeds of development land sales we're seeing a major drop in prices, and that's only going to continue, I agree with mr wax, agricultural land will settle around 5k an acre within 12 months.

there's a huge stigma in rural ireland to selling the farm, it's just ingrained in people.

I want to be a farmer, but I often question the sanity of those that dont, who still keep the land.

Username John

Tipp Man wrote: »

I'm not trying to pry into your personal life i'm just curious as i see it in my local area as well, 2 120 acres farms near us are being let which we have partly rented, in 1 the son is away never to return and the other the guy has inherited it from his deceased father but i haven't seen him near the place for 5 years i'd say. Why are places like these not being sold (for top money as they are top farms) and giving the young gneration of farmers some chance at getting land, expanding, whatever??

Selling land is easy - developers do it every day.
Selling a farm - not so easy.

I wonder is it when farmers buy more land, this is exactly what they are buying, its more land to them, so its easy to talk about. But if you sell all your land, then you are selling the farm - which is a very different thing. Its selling the way of life (which to some might be a blessing, but to others, may be the worst thing they can think of)...

There is a tie to 'the land' (not land - THE land) that you have when you are brought up on a farm.

I would say there are a lot of people who leave home, to go out and work with the intention of coming home one day, back to the farm. I say this as I was one of these people. Maybe not all want to go farming, but to come back to country life. This then makes people hold onto the farm, and rent it in the meantime.
Then - there are other people who have no interest in returning home, but still dont want to sell the home-farm, due to memories, sentimentality. I think there is a feeling amoungst Irish people that to sell the farm would leave them slightly homeless somehow.

JohnBoy wrote: »

I want to be a farmer, but I often question the sanity of those that dont, who still keep the land.

Why? Do you mean when they have an asset they could cash in on?

maidhc

Tipp Man wrote: »

Maidhc everything you have said above is true, but i have 1 question for you, why won't the farm be sold?? 120 acres can still make 1m maybe more depending on quality which is a nice amount of money if you are in full time employment

A number of reasons.

1) It is useful collateral into the future.
2) We do farm and it does make money
3) I live on the farm and I like it.
4) Farming at the weekends beats playing golf.
5) The money releaed from the sale is of less value than having the land.

Mind you, borrowing 1m to buy a 120 acre farm and hope to pay it back and make a living is about as rubbish a business proposition as one can have.

JohnBoy

Username John wrote: »

Why? Do you mean when they have an asset they could cash in on?

Yeah,

if you're getting the use/good from the land then fine, not nessecarily a profit, but at least getting the benefits of it.

but if you're not getting any good out of it then why sit out looking at half a million plus of grass that's bringing in a few grand a year in rent. it'll still be there if you sold it.

I know it's a sentimental attatchment thing, but it's always struck me as a very expensive memory for some people.

DagneyTaggart

I disagree on the long term value of land leveling at €5K. It is, has been and will be higher, on average. I see it around €10K and rising for the following reasons which I encourage you to disect.

Land doesn't depreciate like other assets, therefore it's won't have, and hasn't had, the low value that other assets have after 20-25 years of use. For example, if I'm planning a new shed I look at the cost of the shed versus the return I expect from that shed - over a certain lenght of time. The shed will have a specific life span. Over the years this decreases, assuming nothing too significant is spend on repair and renewal. Land is slightly different. With good crop rotation and a certain amount of slurry/fertaliser it's quality can be maintained. So in 20-25 years it's value will be much the same. Add in inflation and it will be significantly higher (over a 20-25 year period).

In real terms land became overvalued in recent times and now it is coming to a truer value. However, I have yet to see reason why land prices will now stay at these historically low levels from here on? Why and why now are my two questions. All assets have fallen in value and the vast majority are expected to increase again with the passage of time. This is what has happened since time began. Why now the sudden and drastic long term correction? Money is still coming in from the EU. People still farm. The same number of acres are still being farmed in this country. And they're not making any more land either.

With regard to the OP I think to make a living in farming consistently over the next 20-25 years two things are desirable. One is scale as margins are tight even on the these farms. Two is to work in an area of farming in Ireland that is at the free-market end of the industry. Therefore you are less prone to waking up one morning to find that A) you're funding/income has been reduced, or the market you are selling in is suddendly not welcoming a deluge of cheaper imports. Comments welcome.

JohnBoy

my reasoning on land settling in or around 5k is based on the fact that once all the development money is gone out of the system people will be back to borrowing to buy land, and banks will need to see serious business plans to show how these loans will be paid back.

I'm not even sure if land is worth 5 grand an acre at the moment to be honest. how long would it take to pay it off, never mind actually make a profit from it?

DagneyTaggart

To take your example John: Let's say I rent land to grow potatoes. Rent per acre is say €400. Price of land is €5K. In this scenario it would take 12.5 years to breakeven excluding interest payments so maybe closer to 15-20 years if you are borrowing money.

However John, I would point to my last post as to why this is not the only factor here.

Username John

DagneyTaggart wrote: »

To take your example John: Let's say I rent land to grow potatoes. Rent per acre is say €400. Price of land is €5K. In this scenario it would take 12.5 years to breakeven excluding interest payments so maybe closer to 15-20 years if you are borrowing money.

However John, I would point to my last post as to why this is not the only factor here.

400E per acre?

Do you make that much money growing potatoes to still make a profit after paying 400E / acre rent... :eek:

DagneyTaggart

We don't grow potatoes; we do however let land for potatoes. Suffice to say it's decent land. The actual rent is slightly higher and the guy who is farming these potatoes is no slouch either. However, I was just giving John an example of what he was looking for. Any thoughts on it yourself?

Curious Geroge

DagneyTaggart wrote: »

We don't grow potatoes; we do however let land for potatoes.

At €400+ per arce your tenant has gotta be getting SPF and REP payments !! Could'nt or would'nt pay any man to pay that considering

DagneyTaggart

What is the going rate for potatoes? (It may seem like an odd question, however I'm not directly involved in this side of things.)

irish_bob

DagneyTaggart wrote: »

I disagree on the long term value of land leveling at €5K. It is, has been and will be higher, on average. I see it around €10K and rising for the following reasons which I encourage you to disect.

Land doesn't depreciate like other assets, therefore it's won't have, and hasn't had, the low value that other assets have after 20-25 years of use. For example, if I'm planning a new shed I look at the cost of the shed versus the return I expect from that shed - over a certain lenght of time. The shed will have a specific life span. Over the years this decreases, assuming nothing too significant is spend on repair and renewal. Land is slightly different. With good crop rotation and a certain amount of slurry/fertaliser it's quality can be maintained. So in 20-25 years it's value will be much the same. Add in inflation and it will be significantly higher (over a 20-25 year period).

In real terms land became overvalued in recent times and now it is coming to a truer value. However, I have yet to see reason why land prices will now stay at these historically low levels from here on? Why and why now are my two questions. All assets have fallen in value and the vast majority are expected to increase again with the passage of time. This is what has happened since time began. Why now the sudden and drastic long term correction? Money is still coming in from the EU. People still farm. The same number of acres are still being farmed in this country. And they're not making any more land either.

With regard to the OP I think to make a living in farming consistently over the next 20-25 years two things are desirable. One is scale as margins are tight even on the these farms. Two is to work in an area of farming in Ireland that is at the free-market end of the industry. Therefore you are less prone to waking up one morning to find that A) you're funding/income has been reduced, or the market you are selling in is suddendly not welcoming a deluge of cheaper imports. Comments welcome.

land is not presently at historical low levels , land is still more expensive than it was in 1999 and the economy and farming was in better shape ten years ago , the arguement that they dont make land anymore is a cliche , they were not making any more land a hundred years ago either

nilhg

Have a look at this graph, I know it's from 2007 which was at the height of the madness boom, but it illustrates pretty well how divorced our land prices are from farmers gross margins.

DagneyTaggart

Interesting lads. Thanks for info.

Rujib1

GM crops around the corner whether or not the EU do gooders like it. When that happens, you can expect vastly improved production per acre of crop planted.
Result, ever cheaper food, and much less land required to produce it.

Result, value of land for agricultural purposes will decline sharply :mad:

R1