Milk Price- Please read Mod note in post #1

Buford T. Justice XIX

WheatenBriar wrote: »

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

That's fine as long as your aspiration is to be a farmer.

If your aspiration is to make as good a living for your family as possible then you have to compare farming to what the land would make from rental and follow which course suits your aspirations better.

patsy_mccabe

My view on it is, you have to look at 3 different profits. Gross margin, net margin (includes fixed costs) and then return on capital. The later includes every cost right down to farmers own labour, land costs, lost opportunity etc etc.
Strange as it may seem, the last value should never be positive for any sustained period. This will attract investors from outside farming. This is last thing you need. In a way, it is the farmers own labour and expertise that protects him from outside investment, competition for land etc.

Sam Kade

A farmer near me who was dairying rented out his land this year for €290:acre and his single payment on top. He keeps and feeds heifers belonging to the lessor for the winter for extra money. It beats milking cows for a living.

Bass Reeves

Sam Kade wrote: »

A farmer near me who was dairying rented out his land this year for €290:acre and his single payment on top. He keeps and feeds heifers belonging to the lessor for the winter for extra money. It beats milking cows for a living.

Milk price is too high at 25c/L it should be reduced to sub 20c/L

Jaysus Christ

So none of ye know the wage yer on.

How much income tax did ye pay last year would be a rough idea. That's if ye pay tax.

Bass Reeves

Jaysus Christ wrote: »

So none of ye know the wage yer on.

How much income tax did ye pay last year would be a rough idea. That's if ye pay tax.

Most farmers work on drawing not on a wage. In reality you may need to extract a certain amount each year to make land repayments and for family needs. However you may limit drawings when you hit 52% Tax, USC and PRSI to the minimum possible. This is often where farmers get caught paying up front for anything brings large tax liability on year one however capital allowances are handy in years after that as it defrays tax bill. Lately farmers lease dairy farmers especially this is hugely tax efficient.

However it has disadvantages as it is hard when milk prices drop to meets repayment. lately i saw another disadvantage. Local small contractor bought a 2nd hand Kuhn conditioner mower. it was a farmers machine that was 3 years old his opinion was that at most it had at most 300 acres cut. He could not understand why the farmer traded it in against a new machine. It got me thinking and the only reason I taught of was there was a balancing payment and because of the year and the tax he was afraid to pay this. He would have struggled to get the value of the machine in a trade in and it was just about run in.

It is impossible to evade tax as a farmer you can try to avoid as much as possible

WheatenBriar

Methinks the poster most of who's post's I dont see thanks to the ignore function is still trolling if he doesnt know most farmers use drawings from their farm current account to live on up to the point they cant due to passing their overdraft limit,then its just obvious his lack of knowledge of this proves hes never run a farm

Why he continues to waste bandwith with 9 out of 10 troll posts is a mystery
Last time I was generous and thought he should go to the pub instead if hes old enough and daddy and mammy has given him enough pocket money
But todayhe can clean out a few calf houses wearing a wooly jumper tbh
Yawn

Goodbye everyone by the way

Jaysus Christ

I hope yer all proud of yourselves. ^^^^^

I run this place like a business and all goin well will be a ltd company within 5 years.

By the way. Hello everybody.

kowtow

Bass Reeves wrote: »

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.

Absolutely.

In fact, not accounting for the notional land cost in COP might well contribute to farmers overpaying for land.

For example..

If I inherit 100 acres FOC, and in my private reckoning of COP I count nothing for land (because I inherited it)... and then I decide to rent an additional 100 acres..

The 2nd 100 acres will figure in my COP, but it will be diluted by the effect of the first 100 acres Free of Cost. In effect, I am only reckoning half the land charge I might be if I attempted a realistic COP. I might well be tempted to pay a little more for the 100 acres because of this, and I'd be tempted to think I had an inherently profitable business when in fact the profitability depended on the "free" land. This is something which would hit home quickly if I expanded to 500 paid for acres, because the original land would be a much smaller factor.

I can't stress enough that this is not tax accounting - nor yet profit monitors for comparing with other farms - it's simply a realistic approach to reckoning the true cost of production. As someone points out above, you need several sets of figures to understand your business properly - they don't have to be 100% accurate, but they have to be there somewhere.

(As my Father in Law used to say, for tax purposes it helps if two of the three sets of figures are written in pencil)

If - and most of us thankfully can - you can work at a lower cash cost of production in the bad years then thank your lucky stars, because you'll be able to last longer and build a business which is hopefully capable of standing on it's own feet through good times and bad..

patsy_mccabe

:rolleyes:

whelan2

WheatenBriar wrote: »

Methinks the poster most of who's post's I dont see thanks to the ignore function is still trolling if he doesnt know most farmers use drawings from their farm current account to live on up to the point they cant due to passing their overdraft limit,then its just obvious his lack of knowledge of this proves hes never run a farm

Why he continues to waste bandwith with 9 out of 10 troll posts is a mystery
Last time I was generous and thought he should go to the pub instead if hes old enough and daddy and mammy has given him enough pocket money
But todayhe can clean out a few calf houses wearing a wooly jumper tbh
Yawn

Goodbye everyone by the way

Again! These people closing accounts jaysus christ

Buford T. Justice XIX

WheatenBriar wrote: »

Methinks the poster most of who's post's I dont see thanks to the ignore function is still trolling if he doesnt know most farmers use drawings from their farm current account to live on up to the point they cant due to passing their overdraft limit,then its just obvious his lack of knowledge of this proves hes never run a farm

Why he continues to waste bandwith with 9 out of 10 troll posts is a mystery
Last time I was generous and thought he should go to the pub instead if hes old enough and daddy and mammy has given him enough pocket money
But todayhe can clean out a few calf houses wearing a wooly jumper tbh
Yawn

Goodbye everyone by the way

Don't let the fekkers win, WB:mad:

I hope he re regs, another good poster gone:(

Bass Reeves

Sam Kade wrote: »

A farmer near me who was dairying rented out his land this year for €290:acre and his single payment on top. He keeps and feeds heifers belonging to the lessor for the winter for extra money. It beats milking cows for a living.

kowtow wrote: »

Absolutely.

In fact, not accounting for the notional land cost in COP might well contribute to farmers overpaying for land.

For example..

If I inherit 100 acres FOC, and in my private reckoning of COP I count nothing for land (because I inherited it)... and then I decide to rent an additional 100 acres..

The 2nd 100 acres will figure in my COP, but it will be diluted by the effect of the first 100 acres Free of Cost. In effect, I am only reckoning half the land charge I might be if I attempted a realistic COP. I might well be tempted to pay a little more for the 100 acres because of this, and I'd be tempted to think I had an inherently profitable business when in fact the profitability depended on the "free" land. This is something which would hit home quickly if I expanded to 500 paid for acres, because the original land would be a much smaller factor.

I can't stress enough that this is not tax accounting - nor yet profit monitors for comparing with other farms - it's simply a realistic approach to reckoning the true cost of production. As someone points out above, you need several sets of figures to understand your business properly - they don't have to be 100% accurate, but they have to be there somewhere.

(As my Father in Law used to say, for tax purposes it helps if two of the three sets of figures are written in pencil)

If - and most of us thankfully can - you can work at a lower cash cost of production in the bad years then thank your lucky stars, because you'll be able to last longer and build a business which is hopefully capable of standing on it's own feet through good times and bad..

I said I would quote both of these together. I highlighted the first. IMO if the above case is true the lessor is away with the fairies. No matter how accessible the land is and what is cost base is, it is hard to imagine that this lad is making making money on this land. Along with that he is pushing up rents locally on other farmers. Yet dairy farmers at present are the biggest offenders, historically it was tillage and potato men.

TBH this idea of including a land cost in a cost of production senario solves nothing. rather you have to look at each individual area rented see what it cost and the value it adds to the operation. But at present dairy farmers tend to lump all costs together. Adding an unrealistic rental price and a labour cost for yourself solves nothing.

Rather you have to look at each individual part of the operation and see if it makes sense and if it is washing it face. This is best business practice this is what decide's if you are a busy fool. There is no point in costing your labour at 15/hour for an 80 hour week and saying add this to my COP. When you may still have the same profit by reducing o/p by 30% and not taking up leases in the example above.

This then lends to the situation where a farmer with a 100 acre farm thinks the real rental value is 28K+SFP when in reality this is not sustainable

atlantic mist

As we move forward i think land cost will become a feature in irish cop. We dont seem to value our land our time or what we produce. We are afraid to include rent and wages in our cop as it has a real impact on the bottom line. Really like the german model of entrepreneurial profit, it shows the individual value have they really added from their farm after all items in system costed.

More land will be rented reduced farming numbers.....if were following the nz model the famers/banks of today could be the landlords of the future....where do we get the share milkers from to work themselves and the land to the bone thou, we will always have cheaper competitors, look at nz farmers who have exited nz and moved to chile, or the uk farmers (20years ago) who invested in oz instead of continuing investment at home think thats more of the reason with processing issues in uk, i know a few uk farmers who all own farms in uk, rent them out and used rental to fund expansion in cheaper regions

we rent over 70% of farm so is a realistic figure for us, next door neighbor is a limited company and rent is shown in his accounts also so it aids in us comparing systems....

another farmer bounding is looking for 300 an acre for rented land in grass and looking for sfp to be paid on top, think half that figure would be a fair price for both

Sam Kade

Bass Reeves wrote: »

I said I would quote both of these together. I highlighted the first. IMO if the above case is true the lessor is away with the fairies. No matter how accessible the land is and what is cost base is, it is hard to imagine that this lad is making making money on this land. Along with that he is pushing up rents locally on other farmers. Yet dairy farmers at present are the biggest offenders, historically it was tillage and potato men.

TBH this idea of including a land cost in a cost of production senario solves nothing. rather you have to look at each individual area rented see what it cost and the value it adds to the operation. But at present dairy farmers tend to lump all costs together. Adding an unrealistic rental price and a labour cost for yourself solves nothing.

Rather you have to look at each individual part of the operation and see if it makes sense and if it is washing it face. This is best business practice this is what decide's if you are a busy fool. There is no point in costing your labour at 15/hour for an 80 hour week and saying add this to my COP. When you may still have the same profit by reducing o/p by 30% and not taking up leases in the example above.

This then lends to the situation where a farmer with a 100 acre farm thinks the real rental value is 28K+SFP when in reality this is not sustainable

It is true, prime dairy land on cork. I've heard prices of up to €500/acre.

Timmaay

Buford T. Justice V wrote: »

That's fine as long as your aspiration is to be a farmer.

If your aspiration is to make as good a living for your family as possible then you have to compare farming to what the land would make from rental and follow which course suits your aspirations better.

This is the key point! We are all here arguing over the COP etc from the point if the processors using it as a stick to beat us with, and the public perception of the cost to produce milk, whereas at the end of the day it's us ourselves who get the most benefit from knowing where we stand on cost. Farmers will continue working regardless of what arbitrary labour or opportunity rental figures are put on their business once they know themselves they can stay afloat and generate a salary (or drawing) they can live off.

Much more importantly in my view is changing the "cost of production" phrase to something like EBITL (earnings before investment/tax/labour), which might do something to change the government and public perception that dairyfarmers can knock out unlimited volumes of milk for 20c/l etc.

Milked out

Sam Kade wrote: »

Bass Reeves wrote: »

I said I would quote both of these together. I highlighted the first. IMO if the above case is true the lessor is away with the fairies. No matter how accessible the land is and what is cost base is, it is hard to imagine that this lad is making making money on this land. Along with that he is pushing up rents locally on other farmers. Yet dairy farmers at present are the biggest offenders, historically it was tillage and potato men.

TBH this idea of including a land cost in a cost of production senario solves nothing. rather you have to look at each individual area rented see what it cost and the value it adds to the operation. But at present dairy farmers tend to lump all costs together. Adding an unrealistic rental price and a labour cost for yourself solves nothing.

Rather you have to look at each individual part of the operation and see if it makes sense and if it is washing it face. This is best business practice this is what decide's if you are a busy fool. There is no point in costing your labour at 15/hour for an 80 hour week and saying add this to my COP. When you may still have the same profit by reducing o/p by 30% and not taking up leases in the example above.

This then lends to the situation where a farmer with a 100 acre farm thinks the real rental value is 28K+SFP when in reality this is not sustainable

It is true, prime dairy land on cork. I've heard prices of up to 500/acre.

Tbh when I hear figures like that I'd have to call bs. Again the furthest I've 'heard' is two lads bidding up to 350/acre dairy and tillage with tillage man winning out. Unless someone says theyre paying it or receiving it I couldn't believe the 500/acre

Waffletraktor

Milked out wrote: »

Tbh when I hear figures like that I'd have to call bs. Again the furthest I've 'heard' is two lads bidding up to 350/acre dairy and tillage with tillage man winning out. Unless someone says theyre paying it or receiving it I couldn't believe the 500/acre

I hope mr tillage man grows veg or drugs as that's just shy of what a wheat crop will cost him.

kowtow

Waffletraktor wrote: »

I hope mr tillage man grows veg or drugs as that's just shy of what a wheat crop will cost him.

From what I can see part of the problem is an unnaturally illiquid land rental market - with it's origins in conacre, no doubt - where people pay up even for 11 months, for fear of "losing" the ground to someone else when prices turn for the better. All this despite the fact that they know they are only burning diesel working the ground for the coming season.

Not sure what the solution is to this - it will take many years to work itself out, for certain, arguably big shocks like a true farming recession, a land price crash, or sharp interest rate rises are the only events that will shake it up.

Waffletraktor

kowtow wrote: »

From what I can see part of the problem is an unnaturally illiquid land rental market - with it's origins in conacre, no doubt - where people pay up even for 11 months, for fear of "losing" the ground to someone else when prices turn for the better. All this despite the fact that they know they are only burning diesel working the ground for the coming season.

Not sure what the solution is to this - it will take many years to work itself out, for certain, arguably big shocks like a true farming recession, a land price crash, or sharp interest rate rises are the only events that will shake it up.

Well, I can't argue with that but one thing I would suggest we are looking at a long recession simply due to us having got too good at produce bulk quantities of relatively cheap food. The fact us in Western Europe have increased our cost base for stuff and are struggling to make a margin is of little consequence until we get a food price spike or we take a hit and everyone else catches up.

Bass Reeves

Waffletraktor wrote: »

Well, I can't argue with that but one thing I would suggest we are looking at a long recession simply due to us having got too good at produce bulk quantities of relatively cheap food. The fact us in Western Europe have increased our cost base for stuff and are struggling to make a margin is of little consequence until we get a food price spike or we take a hit and everyone else catches up.

Every body is chasing efficiency and higher numbers to sustain the same income

Farmer Ed

Bass Reeves wrote: »

Every body is chasing efficiency and higher numbers to sustain the same income

If you look at it objectively this is a race to the bottom. All the spin about white gold was just that. Spin. What is the answer?
Well they do say doing the same thing over and over again and expecting different results is the definition of lunacy. There just has to be a better way.

patsy_mccabe

It's a race to the bottom in every business. Ye dairy guys are just not used to it. Too protected under the milk quotas.

Farmer Ed

patsy_mccabe wrote: »

It's a race to the bottom in every business. Ye dairy guys are just not used to it. Too protected under the milk quotas.

To be fair Patsy I don't see why this has to be about who is suffering the most. If a dairy farmer loses his shirt, it doesn't nessacerily make you any richer. If we all just continue down the road of producing commodities, then we shouldn't be too surprised if we end up having a lot in common with coffee bean producers.

Maybe it's time to introduce fair trade meat,milk and other farm products. It's unreasonable to expect farmers to produce below cost.

Timmaay

Farmer Ed wrote: »

To be fair Patsy I don't see why this has to be about who is suffering the most. If a dairy farmer loses his shirt, it doesn't nessacerily make you any richer. If we all just continue down the road of producing commodities, then we shouldn't be too surprised if we end up having a lot in common with coffee bean producers.

Maybe it's time to introduce fair trade meat,milk and other farm products. It's unreasonable to expect farmers to produce below cost.

The ultimate problem is in the wester world we just do not put any value on food anymore! We have become obsessed with material wealth instead, ya spend 1/2 your life chasing the 161 car and the big semi-d house, and once ya get there nether are good enough and you have to upsize again etc. However food wise it doesn't matter the f*ck the fact that you eat processed crap as 80% of your daily diet for much your life. Which will make a much much bigger difference on the quality of your life and both your physical and mental health than any sort of material goods could ever make.

Milked out

Waffletraktor wrote: »

Milked out wrote: »

Tbh when I hear figures like that I'd have to call bs. Again the furthest I've 'heard' is two lads bidding up to 350/acre dairy and tillage with tillage man winning out. Unless someone says theyre paying it or receiving it I couldn't believe the 500/acre

I hope mr tillage man grows veg or drugs as that's just shy of what a wheat crop will cost him.

Previous tenant was a veg crowd, new fella it's grain. Couldn't understand it but then some would say I'm worse for buying land to farm it.....

whelan2

Milked out wrote: »

Previous tenant was a veg crowd, new fella it's grain. Couldn't understand it but then some would say I'm worse for buying land to farm it.....

900/acre for potato ground close to me. Not bull****

Timmaay

whelan2 wrote: »

900/acre for potato ground close to me. Not bull****

It will probably be worthless for the next 3yrs though ha.

whelan2

Timmaay wrote: »

It will probably be worthless for the next 3yrs though ha.

Crazy money

enricoh

1000 an acre offered for land beside me by a lad doing parsnips. Land hadn't seen a plough in 30 years. Apparently he saves a fortune on fertilizer that way. My garden is 3/4 of an acre I might ring yer man n offer it!

whelan2

enricoh wrote: »

1000 an acre offered for land beside me by a lad doing parsnips. Land hadn't seen a plough in 30 years. Apparently he saves a fortune on fertilizer that way. My garden is 3/4 of an acre I might ring yer man n offer it!

Yeah this had been in dairy paddocks for years.

Waffletraktor

One thing talking up about getting this money but actually being paid is a different story. The local agri contractor here has dropped a few customers he knew were slow payers and has a few in court proceedings over debt.
Flip side is farm at home is let on long term for 120/acre to farmer with it on his milking platform, but he's relaying half the slats in cubicle shed this year(keeps his beef stock there) after re-sheeting 1 and painting all the sheds last year. Swings and roundabouts.

Buford T. Justice XIX

Milked out wrote: »

Previous tenant was a veg crowd, new fella it's grain. Couldn't understand it but then some would say I'm worse for buying land to farm it.....

But think of the development potential...:pac:

The tiger might roar again:rolleyes:

Dawggone

Timmaay wrote: »

It will probably be worthless for the next 3yrs though ha.

Excellent Swheat after spuds.

Dawggone

Can we not face up to the fact that Irish dairy farmers are mining their true worth to sustain an industry that has persuaded us that we can burn the competition? Really?


#grasstomilk and you're a millionaire....:)

jaymla627

Dawggone wrote: »

Can we not face up to the fact that Irish dairy farmers are mining their true worth to sustain an industry that has persuaded us that we can burn the competition? Really?


#grasstomilk and you're a millionaire....:)

Nearly convinced here the local grass to milk guys have won the euro millions, have tagged on an extra 500 cows the last 2 years opened up a new dairy unit on a greenfield site 50 unit rotary/350 outdoor cubicles and dropped the guts of 2 million on top of this buying and reclaiming 200 acres that's on a floodplain bordering them and here I am scratching my head wonder where I'm going wrong trying to keep the show on the road haha

Dawggone

jaymla627 wrote: »

Nearly convinced here the local grass to milk guys have won the euro millions, have tagged on an extra 500 cows the last 2 years opened up a new dairy unit on a greenfield site 50 unit rotary/350 outdoor cubicles and dropped the guts of 2 million on top of this buying and reclaiming 200 acres that's on a floodplain bordering them and here I am scratching my head wonder where I'm going wrong trying to keep the show on the road haha

Tut, tut.
You must have a feed wagon...:)

jaymla627

Dawggone wrote: »

Tut, tut.
You must have a feed wagon...:)

Haven't the price of one, do have a good milky herd of holstein cows though and would be putting in a nice bit of feed....
ole chap was at a wake last night and was got chatting local grass to milk guy couldn't get over the group of maiden heifers we had grazing beside the main road where's your young lad going with them was his best line , would be a lot of Shottle through them so where big typey white heifers, would be a endangered species around my area

Sam Kade

Milked out wrote: »

Tbh when I hear figures like that I'd have to call bs. Again the furthest I've 'heard' is two lads bidding up to 350/acre dairy and tillage with tillage man winning out. Unless someone says theyre paying it or receiving it I couldn't believe the 500/acre

Teagasc must be lying then, they mentioed it on the local radio farm program.

Milked out

Sam Kade wrote: »

Milked out wrote: »

Tbh when I hear figures like that I'd have to call bs. Again the furthest I've 'heard' is two lads bidding up to 350/acre dairy and tillage with tillage man winning out. Unless someone says theyre paying it or receiving it I couldn't believe the 500/acre

Teagasc must be lying then, they mentioed it on the local radio farm program.

They hardly confused it with ha? Seeing as most of their forms are in ha now not acres. Crazy if true.

Milked out

Sam Kade wrote: »

Milked out wrote: »

Tbh when I hear figures like that I'd have to call bs. Again the furthest I've 'heard' is two lads bidding up to 350/acre dairy and tillage with tillage man winning out. Unless someone says theyre paying it or receiving it I couldn't believe the 500/acre

Teagasc must be lying then, they mentioed it on the local radio farm program.

They hardly confused it with ha? Seeing as most of their forms are in ha now not acres. Crazy if true.

kevthegaff

FJ supposedly written FOR us farmers heading earlier in the year "record rent prices" my landlord was looking for more soon after, last week "spiralling contractor rates".!is the FJ trying to ride us all..

mf240

The reality is if you don't include a land charge when doing the ole sums.

You are basically giving siobhan Talbot or Larry Goodman or whoever the use of your land for free.

mf240

kevthegaff wrote: »

".!is the FJ trying to ride us all..

You been reading the lonely hearts page!?

Sam Kade

Milked out wrote: »

They hardly confused it with ha? Seeing as most of their forms are in ha now not acres. Crazy if true.

No it was acres. €200/acre for land around here would be considered cheap.

Farmer Ed

http://www.buzzfeed.com/evanmcsan/sanders-claims-cbs-canceled-agriculture-interview-because-mo

Could this be influencing us production costs and also turning consumers away from dairy products.

billie holiday

kevthegaff wrote: »

FJ supposedly written FOR us farmers heading earlier in the year "record rent prices" my landlord was looking for more soon after, last week "spiralling contractor rates".!is the FJ trying to ride us all..

"Fearlessly on the farmers side"
Ornua sponsor ifj podcasts...

keep going

jaymla627 wrote: »

Nearly convinced here the local grass to milk guys have won the euro millions, have tagged on an extra 500 cows the last 2 years opened up a new dairy unit on a greenfield site 50 unit rotary/350 outdoor cubicles and dropped the guts of 2 million on top of this buying and reclaiming 200 acres that's on a floodplain bordering them and here I am scratching my head wonder where I'm going wrong trying to keep the show on the road haha

could also be he s on the right track too

jaymla627

keep going wrote: »

could also be he s on the right track too

Time will tell, a wet November and December similar to last winter and a lot of this reclaimed/bought ground will be under 6-7 feet of water.
I personally don't think theirs any cow type/system that can pay back 4-5 grand debt per cow at current prices not having a whinge about their system it seems to be working well and have no bias towards crossbreeds even have a nice few here but am getting more disappointed as they mature compared to Holstein herdmates simply aren't producing the litres for the feed and do they"re getting,

mf240

Hard to beat a good holstein cow.