Milk Price- Please read Mod note in post #1

Milked out

Keep going fair enough in discussions groups and that those figures are used for comparison but when they then get thrown out in the media without the labour or land included it only serves undermine the actual production cost.

Milked out

rangler1 wrote: »

kowtow wrote: »

Don't agree at all - I wish people wouldn't assume that proper P&L budgeting is for comparison - that's the last thing it's for.

The purpose of a P&L is to understand the inherent profitability or otherwise of a business. It's for decision making.

Failing to include a labour or land charge in a pro forma budget would suggest that one could expand ad infinitum, with a milk price of about 25-30c / litre... which would be a critical error if at some point you expected either to be paid for your own labour or to gain a return on (or acquire more) land.

Anyone that expects to get land rent and paid for labour in farming is too long protected by milk quota and should seek help,
Discussing whether to include it or not is just a bit of willy waving...are dairy farmers really creaming (pun) it and can include it without going into a negative figure, if they are they could stop the incessant whingeing at least

It's not about getting the rent it's the opportunity cost of it rangler. In my case I'm sting that cost in interest on money borrowed to buy but as you say if we are to get real if you don't include.a.land charge when doing the figures you are ignoring the possibility that you may be as well off renting the place as farming it

Buford T. Justice XIX

Milked out wrote: »

Keep going fair enough in discussions groups and that those figures are used for comparison but when they then get thrown out in the media without the labour or land included it only serves undermine the actual production cost.

That's it in a nutshell.

The purpose of those figures are inter farm comparisons of cost base and how different systems can be managed to reduce farm cost.

When they use those figures in the media, they should then publish firms profitability by adding on the cost of labour to the headline figures.

Profit monitor figures aren't accountancy figures to determine the actual profitability of farms. The profit and loss sheet from the farm is the set of figures to use for that.

Farmer Ed

Milked out wrote: »

It's not about getting the rent it's the opportunity cost of it rangler. In my case I'm sting that cost in interest on money borrowed to buy but as you say if we are to get real if you don't include.a.land charge when doing the figures you are ignoring the possibility that you may be as well off renting the place as farming it

Exactly. At the end of the day it's all about what let's you with the most money in your pocket at the end of the year. Or in a year like this. What ever leaves you with the least bills. Imagine owning a property in a prime city center location and not including the site and labour costs when deciding the best way to make a return on that asset?

rangler1

Milked out wrote: »

It's not about getting the rent it's the opportunity cost of it rangler. In my case I'm sting that cost in interest on money borrowed to buy but as you say if we are to get real if you don't include.a.land charge when doing the figures you are ignoring the possibility that you may be as well off renting the place as farming it

There's a lot of advantages to farming to consider other than money, there's a lot of disadvantages too, most would be financially better off renting but if we all did it wouldn't be long becoming a renters market.....becoming that way around here for land that's tired from long term renting/ neglect. new rents still making good money though

Farmer Ed

Our last two minister's for agricultural decided pretty quickly that they could make more money by not farming their own farms. I'm not knocking them for that. It was just the financial reality.

kevthegaff

Should sfp be included seeing it is tied to the land and should be added to the land charge or opportunity cost? Land type should account also?

Bass Reeves

Sam Kade wrote: »

All true, there will be a mass exodus of small/medium size farmers down the line.

Not so sure it is too east to work and run a medium size farm. However I think the Government have a cunning plan at present with leasing. They are encouraging lads to lease land in 10-12 years time if they change the tax regime these lads or there children will no longer be able to reenter farming. They will then either have to pay tax on the rent or sell the asset. However if a lot of land suddenly came on the market it would depress the price

WheatenBriar wrote: »

If that's the case,I don't see the point in 100 cow farmers continuing
When I was in UCD many many moons ago one of my lecturers told me ,an Ag lecturer displaying an ignorance of his field,sub 100 weren't viable
Do you know what it is,it's all nonsense
Europe should have ignored the Ukraine too and we'd have been near a 30 base price building markets in Russia but the pc brigade interference has enhanced an unnecessary extra markets head ache

The 80-120 cow man is the most viable. It is not really viable to pay labour. At present labour is heading to 15/hour very fast for good skilled workers. You will need excellent labour management skills to handle larger cow numbers

kowtow wrote: »

There's a teagasc 2011 report which I have linked previously on this thread giving all figures both methods for eu and world.

We're only competitive when land + labour is excluded. With them included we're quite far down the table. I never understood why this report had been written but was never quoted.

This fascination with land and labour cost is intriguing as loads of farmers never bought any of the land they farm. Not only that most inherit it tax free. If you are unhappy with farming returns you can sell the land and lease it back or use the money for where you consider you will have a better return opportunity. This is the decision any investor has. Farmers have to decide when enough is enough and stop looking over the ditch and comparing it to other jobs or business's. it a bit like the LUAS drivers comparing themselves to DART drivers.

cute geoge wrote: »

Reading your posts all this time back ,i would consider you would be at least in the top 20% dairy farmers profits wise .Imagine the cost of production of farmers with new parlours,buildings and machinery . I am sorry to think but there will be a lot of big dairy farming casualties and they probably will bring down a lot other farming related business as well

This will be a huge issue, I was talking to a small contractor and he is really worried about getting paid this year.

Milked out wrote: »

It's not about getting the rent it's the opportunity cost of it rangler. In my case I'm sting that cost in interest on money borrowed to buy but as you say if we are to get real if you don't include.a.land charge when doing the figures you are ignoring the possibility that you may be as well off renting the place as farming it

That is the decision you have to make as an individual. You can always rent it or sell it and then get a job that entails working to some elses agenda. It will have risk as well that during a recession you may lose your job. If you do not want to make that choice then do not complain about it.

Farmer Ed

kevthegaff wrote: »

Should sfp be included seeing it is tied to the land and should be added to the land charge or opportunity cost? Land type should account also?

Good question. I so know of guys now letting land and getting the tenant to claim the Bfp for them. Not sure of the nuts and bolts of how that works,but sounds crazy.

alps

kevthegaff wrote: »

Should sfp be included seeing it is tied to the land and should be added to the land charge or opportunity cost? Land type should account also?

Yes.....its income and it exists...you might even make a business decision to buy more....

Some have high labour, some high feeding, some high land rent, some high depreciation...They are all intertwined..For comparison, the overall...how much can this guy make,..is the message y ou want to pull from any of them..

mahoney_j

jaymla627 wrote: »

working back on your figures I assume your sending in circa 1.2 million litres, taking 100k drawings/ 5.5 cl feed costs/36k rental costs (200) acres that would mean your total costs less feed drawings and rental are sub 12 cent a litre, pretty amazing figures given you have expanded your herd considerably and are carrying a lot of replacement stock

Assumption is the mother of all fook ups I heard somewhere once

mahoney_j

kevthegaff wrote: »

Should sfp be included seeing it is tied to the land and should be added to the land charge or opportunity cost? Land type should account also?

Sfp hard to include Kev as everyone's different .ive said it before that the pm results Tegasc print with mikey waving false cops are totally misleading .they don't include a labour charge ,land charge ,debt repayment.all 3 are a cruical cop as without land you've no where to milk cows and without labour you've no slave to run the show and on debt nearly every farmer has some .a standard labour charge for 50 hour week should be included as standard I think and all land should have a standard value say 180/200 an acre .

patsy_mccabe

Reading this and dairy guys discussing whether or not to include land and labour costs. Ye should try suckling, Teagasc won't allow discussion beyond Gross Margin. No mention of fixed costs allowed.

alps

patsy_mccabe wrote: »

Reading this and dairy guys discussing whether or not to include land and labour costs. Ye should try suckling, Teagasc won't allow discussion beyond Gross Margin. No mention of fixed costs allowed.

Can appreciate your pain Patsy and wouldn't make light of it....however most guys here won't work for nothing for any sustained period...

Water John

I wonder why Patsy?

Trying to hide the reality from farmers in any enterprise does them a disservice.
Give them the info and let them make their own decisions.

keep going

kowtow wrote: »

Don't agree at all - I wish people wouldn't assume that proper P&L budgeting is for comparison - that's the last thing it's for.

The purpose of a P&L is to understand the inherent profitability or otherwise of a business. It's for decision making.

Failing to include a labour or land charge in a pro forma budget would suggest that one could expand ad infinitum, with a milk price of about 25-30c / litre... which would be a critical error if at some point you expected either to be paid for your own labour or to gain a return on (or acquire more) land.

But where do you draw the line on these notional figures, should you be basing it on the purchase price of your farm given in alot our competitors they buy the whole business and mortage it over x number of years.then if you are acessing long term profitably do you include the replacement cost with new on every implement or building.i suppose what im trying to say can be best exampled by new zealand, relatively cheap system of production but the servicing the capital involved is killing them

Jaysus Christ

Can't believe ye don't know what weekly wage your on. The whole idea is to get a wage. I give myself €1000 a week and I don't have to touch bfp.

Sam Kade

Jaysus Christ wrote: »

Can't believe ye don't know what weekly wage your on. The whole idea is to get a wage. I give myself €1000 a week and I don't have to touch bfp.

That's a nice round figure from farming.

WheatenBriar

Sam Kade wrote: »

That's a nice round figure from farming.

He's still trolling,I see,I stuck him on ignore
You don't see his troll posts when you do that,just quoted posts in other peoples replies
Theres a tab in your user control panel

Still it gets rid of most of the shoite


https://en.m.wikipedia.org/wiki/Internet_troll

kevthegaff

Had a contractor/dairy who's says their COP was 14c a litre, find it hard to believe most farmers these days:-D

mahoney_j

kevthegaff wrote: »

Had a contractor/dairy who's says their COP was 14c a litre, find it hard to believe most farmers these days:-D

Pile of ****e Kev ,doing himself and dairy farmers in general a total disservice throwing a figure like that our

jaymla627

kevthegaff wrote: »

Had a contractor/dairy who's says their COP was 14c a litre, find it hard to believe most farmers these days:-D

More then likely wasn't accouting for machinery and work done by contracting side of business for dairy farm, diseal/machinery maintaine/repayments come to 3 c/l here on top of contracting costs which 3 c/l as well, a lot of guys have their heads in the sand about their true cop

Farmer Ed

I think the elephant in the room here is if we calculate our cop differently to other countrys. How do we actually know how compedtive we actually are? Also cost is just one element of overall profitability. I agree that people making silly claims about being able to produce milk at unrealistically low costs are not helping any of us.

You don't hear grape producers in the champaine region competing with each other as to who can produce the cheapest grapes.

whelan2

Jaysus Christ wrote: »

Can't believe ye don't know what weekly wage your on. The whole idea is to get a wage. I give myself €1000 a week and I don't have to touch bfp.

only 1000, you're selling yourself short there lad

mahoney_j

whelan2 wrote: »

only 1000, you're selling yourself short there lad

Wouldn't get outta bed for less than that

Jaysus Christ

its the least I would take for the hours I put in. I won't be calving this many cows in ten years time. Or maybe none at all.

Jaysus Christ

WheatenBriar wrote: »

He's still trolling,I see,I stuck him on ignore
You don't see his troll posts when you do that,just quoted posts in other peoples replies
Theres a tab in your user control panel

Still it gets rid of most of the shoite


https://en.m.wikipedia.org/wiki/Internet_troll

You must have been one of these €500+ an acre for 5 year boyos.

Farmer Ed

mahoney_j wrote: »

Wouldn't get outta bed for less than that

If I remember correctly. Someone with a similar sounding name is quoted as saying the love of money is not a good thing anyway.

Jaysus Christ

Farmer Ed wrote: »

If I remember correctly. Someone with a similar sounding name is quoted as saying the love of money is not a good thing anyway.

He also said love thy neighbour.
Then another lad said don't covet your neighbour wife or commit adultery.

Milked out

https://www.agriland.ie/farming-news/irish-milk-production-falls-in-april-compared-to-last-year

May will be a proper gauge as the weather in April knocked things back this year as well as all the milk held till April 15 for qouta. I reckon may will still be up on last year

Farmer Ed

http://danskofoods.com/dairygold-warn-of-milk-price-cut/

Sam Kade

Farmer Ed wrote: »

http://danskofoods.com/dairygold-warn-of-milk-price-cut/

Not sustainable for Dairygold to subsidise milk prices but the farmer can sustain any price :rolleyes:

kowtow

keep going wrote: »

But where do you draw the line on these notional figures, should you be basing it on the purchase price of your farm given in alot our competitors they buy the whole business and mortage it over x number of years.then if you are acessing long term profitably do you include the replacement cost with new on every implement or building.i suppose what im trying to say can be best exampled by new zealand, relatively cheap system of production but the servicing the capital involved is killing them

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....

patsy_mccabe

So for the ignorant, like myself :rolleyes:. Land Cost is the market rental cost of similar land. It doesn't relate to purchase cost of land whatsoever. Is that correct?

WheatenBriar

patsy_mccabe wrote: »

So for the ignorant, like myself :rolleyes:. Land Cost is the market rental cost of similar land. It doesn't relate to purchase cost of land whatsoever. Is that correct?

Whoever says thats correct is talking daft
Its a cod applying a rental cost because if you were renting your land you wouldnt have your own enterprise on it in the first place so nothing to apply any cost to
There is no opportunity cost either unless the rental is higher than the profit you'd make on it

Injuryprone

Farmer Ed wrote: »

http://danskofoods.com/dairygold-warn-of-milk-price-cut/

That article is only about a year out of date

kowtow

WheatenBriar wrote: »

Whoever says thats correct is talking daft
Its a cod applying a rental cost because if you were renting your land you wouldnt have your own enterprise on it in the first place so nothing to apply any cost to
There is no opportunity cost either unless the rental is higher than the profit you'd make on it

If my daddy dies and leaves me a shop full of diamonds, and I sell the diamonds at £10 a kg, 10 1 kg diamonds a day, and I pay the shop girl £100 a day, do I have a profitable business?

WheatenBriar

kowtow wrote: »

If my daddy dies and leaves me a shop full of diamonds, and I sell the diamonds at £10 a kg, 10 1 kg diamonds a day, and I pay the shop girl £100 a day, do I have a profitable business?

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

Farmer Ed

https://www.agriland.ie/farming-news/farmers-split-over-introduction-of-milk-supply-control-measures/

Buford T. Justice XIX

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

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.

jaymla627

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.

I find the whole rental opportunity cost a double edged sword,.
Of course you could rent out the farm for 200 a acre and think your doing great work, but if you have the wrong tenant that mines the place of p and k puts out noting but urea/can and let's the place fall down around him in terms of fencing/hedges/poaching ground when you get the land handed back to you it will cost you a solid fortune to get it back right

kowtow

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

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.

Farmer Ed

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.

I was talking about this today to someone and we came to the conclusion that when people value their time a lot depends on what other options they may have. The two most high profile cases that came to mind as good examples are our two last minister's for agricultural. Both their father's where also politicians and in their day it probably made perfect business sence to hire a farm manager and continue farming their own farms. I'm sure the two younger politicians would have also done the figures and have reached the decision that the returns from their farms would no longer cover the land value and labour costs. So they took what they felt was the correct action and got out of farming. Increasingly the margins have been getting tighter with a long time.

browned

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.

Would putting a value on land and labour be a similar to the inclusion of depreciation in profit monitors?

Brown Podzol

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.

red bull

Guys, He or She who works for nothing will never be out of work. Be aware harvest 2020 was never about looking after farmers, it was and is an aspiration as to how much farmers can produce to provide jobs in the processing sector.

billie holiday

There was a programme called 'first time farmers' or something similar on English tv couple of years ago.
The youngsters had mentoring from older experienced farmers one of whom said:
'20 years ago if you had good land and a good work ethic you were guaranteed an income from farming
Now the margins are so tight that you can very easily lose money farming'

For real. True that motherf***er

20silkcut

Doing my own calculations I am at absolutely nothing if it wasn't for the SFP/BPS .
If a farmer was to rent out his land the loss of BPS/DAS/GLAS would have to be factored in as an opportunity lost.

WheatenBriar

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.

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 cost
Rent it out or sell and you don't have the enterprise you farmed on it,you are no longer a farmer

Bass Reeves

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.

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. It also pushed the case that farmers must have a flexible business that is easy to exit and reenter and that the capital is flexible. You then question as what purpose this added extra cost adds to the business case.

Worker A hand produces Slevets he makes a living at it selling this produce for Chinese medicine.As there is a large quanity of raw material around and the skill set required to make the Slevets is limited. It is highly profitable and he makes a good living.

Worker B realizes you can automate this process and gets machinery made, builds a factory and starts producing slevets in huge quanties. The prices of Slevets falls He puts worker A out of business. However the raw material for Slevets is limited and after two years because of the limit in material and it increase in price.he has to increase the price substantially demand drops and he goes broke. he feels hard done by as he feels he is entitles to a return on his capital and a fair wage related to his possible output.

Worker A goes back into business. He buys Workers B factory at 3c in the euro reduces supply, lets raw material build up and charges a price acceptable to the end user. He now plays golf and is overweight.