Milk Price- Please read Mod note in post #1

Water John

Some peoples bank have too much info on them, Buford.
Good idea of some guys to open a post office acc for BPS.

Buford T. Justice XIX

Water John wrote: »

Some peoples bank have too much info on them, Buford.
Good idea of some guys to open a post office acc for BPS.

Done 11 years ago.

Found out the hard way:(

kevthegaff

Buford T. Justice V wrote:

Found out the hard way

Well?

Water John

You want too much info there, Kev.

Sacrolyte

Worse than a shaggin banker. :rolleyes:

Buford T. Justice XIX

kevthegaff wrote: »

Well?

My current account wouldn't give me any cash one day when I really needed it there and then as the renewal of my overdraft wasn't done despite getting it all sorted 2 weeks before.

I had to go home to get bits and pieces and got stuck in traffic on the way back into town and missed my second child being born.:mad:

But the following day I opened a current account in another bank and transferred my BFP details in there.

The mouldy fekkers are still on to me to move it back to them:rolleyes:

I have issues with banks, don't I:D

Farmer Ed

Buford T. Justice V wrote: »

My current account wouldn't give me any cash one day when I really needed it there and then as the renewal of my overdraft wasn't done despite getting it all sorted 2 weeks before.

I had to go home to get bits and pieces and got stuck in traffic on the way back into town and missed my second child being born.:mad:

But the following day I opened a current account in another bank and transferred my BFP details in there.

The mouldy fekkers are still on to me to move it back to them:rolleyes:

I have issues with banks, don't I:D

I was just in with my accountant today and had a very interesting conversation. I got the impression that farm borrowings levels are much higher than the official figure. He told me that it wouldn't be uncommon for farmers to have €200k mortgages on top of farm borrowings. He also said that generally speaking dairy farmers are much more exposed to risk as they are far more likely to have high levels of debt compared to dry stock farmers.

whelan2

Farmer Ed wrote: »

I was just in with my accountant today and had a very interesting conversation. I got the impression that farm borrowings levels are much higher than the official figure. He told me that it wouldn't be uncommon for farmers to have €200k mortgages on top of farm borrowings. He also said that generally speaking dairy farmers are much more exposed to risk as they are far more likely to have high levels of debt compared to dry stock farmers.

What did teagasc say a while back, the average dairy farmer had loans of 60k was it? Seemed small to me at the time

Water John

Would believe that a significant number of dairy farms have fairly high borrowings. This has always been played down. The drystock sector does not have those. They would never be given them not could they service them.

Farmer Ed

whelan2 wrote: »

What did teagasc say a while back, the average dairy farmer had loans of 60k was it? Seemed small to me at the time

From what I gather mortgages are not included in that figure of 60k, I wouldn't be surprised if other debt was missing from that figure also.

whelan2

Farmer Ed wrote: »

From what I gather mortgages are not included in that figure of 60k, I wouldn't be surprised if other debt was missing from that figure also.

where do they get their figures?

Water John

But you pay for the mortgage from the salary which Teagasc says you don't draw. Nothing to do with the farm!!!

Farmer Ed

whelan2 wrote: »

where do they get their figures?

To be honest I'm not sure but I'm guessing they are depending on he good will of farmers to reveal at least some of that information to them. Question is where did they get the figures for cost of production? The problem seems to be human nature is that no one wants to be at the bottom of the class and things get exaggerated.

OverRide

Farmer Ed wrote: »

From what I gather mortgages are not included in that figure of 60k, I wouldn't be surprised if other debt was missing from that figure also.

That would be it as a significant number have their primary farm loans secured on their homeloan mortgages aswell as the cost of the house,all of which is hidden from teagasc profit monitors
Its farcical
Good fodder for George Lee though to report how not so bad things are :rolleyes:

Bass Reeves

Farmer Ed wrote: »

From what I gather mortgages are not included in that figure of 60k, I wouldn't be surprised if other debt was missing from that figure also.

When you say a mortgage I presume you mean a house Mortgage. A house mortgage is exactly a loan on a house it has nothing to do with farming. It is outside the farm profit and loss account and the interest is not allowable against farm income. No other business or worker can offset interest on borrowing for a house against income

OverRide wrote: »

That would be it as a significant number have their primary farm loans secured on their homeloan mortgages aswell as the cost of the house,all of which is hidden from teagasc profit monitors
Its farcical
Good fodder for George Lee though to report how not so bad things are :rolleyes:

In this case if the money borrowed was transferred into the farm account or if part of it was then that part of the loan is allowable against tax. People do it all the time they give security of homes etc against loans for commercials ventures. As long as the borrowed money is transferred into the farm or business account then it is part of the profit and loss associated with that business.


If a farmer went out and borrowed 100K for to buy a yacht should this be considered in the Teagasc profit monitor or would it be considered as farm borrowing. If a farmer has an external business and borrows for that is that farm borrowing.

Farmer Ed

Bass Reeves wrote: »

When you say a mortgage I presume you mean a house Mortgage. A house mortgage is exactly a loan on a house it has nothing to do with farming. It is outside the farm profit and loss account and the interest is not allowable against farm income. No other business or worker can offset interest on borrowing for a house against income




In this case if the money borrowed was transferred into the farm account or if part of it was then that part of the loan is allowable against tax. People do it all the time they give security of homes etc against loans for commercials ventures. As long as the borrowed money is transferred into the farm or business account then it is part of the profit and loss associated with that business.


If a farmer went out and borrowed 100K for to buy a yacht should this be considered in the Teagasc profit monitor or would it be considered as farm borrowing. If a farmer has an external business and borrows for that is that farm borrowing.

As OverRide said some people would have mortgaged their houses in the past to invest on farm. I don't think it's possible since the crash but in the good old days it was common. I get you point about a true house mortgage being separate to the farm but like everyone else if a farmer loses his income he will go in to mortgage arrears and at very best it will damage his credit rating. So IMO it is relevant if a farmer finds himself in trouble.

freedominacup

Farmer Ed wrote: »

Bass Reeves wrote: »

When you say a mortgage I presume you mean a house Mortgage. A house mortgage is exactly a loan on a house it has nothing to do with farming. It is outside the farm profit and loss account and the interest is not allowable against farm income. No other business or worker can offset interest on borrowing for a house against income




In this case if the money borrowed was transferred into the farm account or if part of it was then that part of the loan is allowable against tax. People do it all the time they give security of homes etc against loans for commercials ventures. As long as the borrowed money is transferred into the farm or business account then it is part of the profit and loss associated with that business.


If a farmer went out and borrowed 100K for to buy a yacht should this be considered in the Teagasc profit monitor or would it be considered as farm borrowing. If a farmer has an external business and borrows for that is that farm borrowing.

As OverRide said some people would have mortgaged their houses in the past to invest on farm. I don't think it's possible since the crash but in the good old days it was common. I get you point about a true house mortgage being separate to the farm but like everyone else if a farmer loses his income he will go in to mortgage arrears and at very best it will damage his credit rating. So IMO it is relevant if a farmer finds himself in trouble.

Not relevant at all. I got my house mortgage long before I took the reins on the farm. House mortgage has no more to do with the running of my business than my wife's salary ie nothing at all, the two are totally seperate.

Farmer Ed

freedominacup wrote: »

Not relevant at all. I got my house mortgage long before I took the reins on the farm. House mortgage has no more to do with the running of my business than my wife's salary ie nothing at all, the two are totally seperate.

In most cases you are correct, but if you remortgaged your hose to put up a milking parlour then that's a different story. Also regardless of what you make a living doing, if you can no longer make an income doing it it's going to cause you problems with your mortgage. What is happening to dairy farmers incomes at the moment could be potentially just as serious to farmers with mortgages as losing someones job is to a non farmer with a mortgage.

OverRide

freedominacup wrote: »

Not relevant at all. I got my house mortgage long before I took the reins on the farm. House mortgage has no more to do with the running of my business than my wife's salary ie nothing at all, the two are totally seperate.

Well thankfully you're doing ok,but for the farmer , and there's an ever increasing number of them,who has to choose which gets paid,his/her home mortgage or the merchants,the house mortgage has everything to do with the farm

Waffletraktor

OverRide wrote: »

Well thankfully you're doing ok,but for the farmer , and there's an ever increasing number of them,who has to choose which gets paid,his/her home mortgage or the merchants,the house mortgage has everything to do with the farm

If they cant make it pay longerterm cash in the many hundred k"s worth and something else .

Bass Reeves

Farmer Ed wrote: »

In most cases you are correct, but if you remortgaged your hose to put up a milking parlour then that's a different story. Also regardless of what you make a living doing, if you can no longer make an income doing it it's going to cause you problems with your mortgage. What is happening to dairy farmers incomes at the moment could be potentially just as serious to farmers with mortgages as losing someones job is to a non farmer with a mortgage.

If you remortgaged you house for 100K to put up a milking parlor the money and the loan will appear in the accounts and will appear in Teagasc figure. Or else some of you are dealing with bad accountants. This is a farm loan. If you borrow 100K and the money is put into a house then it cannot appear in the accounts.

Farmer Ed

Bass Reeves wrote: »

If you remortgaged you house for 100K to put up a milking parlor the money and the loan will appear in the accounts and will appear in Teagasc figure. Or else some of you are dealing with bad accountants. This is a farm loan. If you borrow 100K and the money is put into a house then it cannot appear in the accounts.

Fair point but does teagasc have access to people's bank statements? Or do they just take an average figure based on an overall farm borrowing figure given to them by the banks? I still go back to my point of regardless what the money was borrowed for. If the farmer has no income to make the repayments it still becomes a very real issue for the farm business

OverRide

Bass Reeves wrote: »

If you remortgaged you house for 100K to put up a milking parlor the money and the loan will appear in the accounts and will appear in Teagasc figure. Or else some of you are dealing with bad accountants. This is a farm loan. If you borrow 100K and the money is put into a house then it cannot appear in the accounts.

To be honest,I think you have too much faith in what farmers tell teagasc or what they're willing to share with their neighbours,there are limits with most
There is no penalty to keep certain things private from Teagasc that obviously are declared to the taxman

At any rate,the home loans have to be financed by the farm and to suggest that farmers finding it tight wouldn't cut back on farm expenses in such situations in order to prioritise food on the table and the home loan isn't being realistic
That latter point is the main reason for my view that the profit monitor being used to compare farm incomes to non farmers incomes is misleading

Bass Reeves

Farmer Ed wrote: »

Fair point but does teagasc have access to people's bank statements? Or do they just take an average figure based on an overall farm borrowing figure given to them by the banks? I still go back to my point of regardless what the money was borrowed for. If the farmer has no income to make the repayments it still becomes a very real issue for the farm business

Teagasc look at profit monitors which show borrowings, I imagine that they also access figures through other means ie with business plans and and maybe helping with loan applications.

The thing about mortgages and personnel loans is that no farmers should borrow such money if possible. It is much more tax efficient to borrow for stock than for a house extension, for a tractor than a car as the interest on these loans is 100% tax deductible.

However your point about what ever money is borrowed that it should be taken into account in stasticial information for is irrelevant. If I work as a postman and cannot pay back my mortgage is that relevant to my job as a postman.

Bass Reeves

OverRide wrote: »

To be honest,I think you have too much faith in what farmers tell teagasc or what they're willing to share with their neighbours,there are limits with most
There is no penalty to keep certain things private from Teagasc that obviously are declared to the taxman

At any rate,the home loans have to be financed by the farm and to suggest that farmers finding it tight wouldn't cut back on farm expenses in such situations in order to prioritise food on the table and the home loan isn't being realistic
That latter point is the main reason for my view that the profit monitor being used to compare farm incomes to non farmers incomes is misleading

No I have no faith in such infomation. The thing about stastics is

There are lies, damned lies and then there are statistics

If you look at AA Ireland they will give a figure of what it costs to run a car in Ireland

http://www.theaa.ie/aa%20ireland/aa/motoring%20advice/cost%20of%20motoring/cost%20of%20motoring%202014.aspx


Now is that applicable to everyone, how many people is it applicable to it is only a f@@king statistic.

Farmer Ed

Bass Reeves wrote: »

Teagasc look at profit monitors which show borrowings, I imagine that they also access figures through other means ie with business plans and and maybe helping with loan applications.

The thing about mortgages and personnel loans is that no farmers should borrow such money if possible. It is much more tax efficient to borrow for stock than for a house extension, for a tractor than a car as the interest on these loans is 100% tax deductible.

However your point about what ever money is borrowed that it should be taken into account in stasticial information for is irrelevant. If I work as a postman and cannot pay back my mortgage is that relevant to my job as a postman.

Where it becomes relevant 'is if you don't get paid from your job as a postman and to add insult to injury you are losing money by being a postman. Not alone could your future career as a postman be in doubt but the mortgage on your home would also be in arrears.

Maybe I understood my accountant wrong but his comment of farmers having mortgages of 200k sounds to me like money was secured from the value of the family home. If you take in to account most farmers own their own site 200k would build a fair size of a house and I doubt if they have 100% loan to value. You could be correct in saying it is not tax efficient but it sounds to me as if people have gone down that road regardless for whatever reason.

Water John

Hope no bank lent money for farming with the house as collatoral.

Farmer Ed

Water John wrote: »

Hope no bank lent money for farming with the house as collatoral.

Unless you're house is on a different folio number to the security held by the bank I would suspect it is very common. However if push came to shove the house would be the last thing they'd repossess.

OverRide

If I work as a postman and cannot pay back my mortgage is that relevant to my job as a postman.

The postman isn't self employed so not a valid comparison in that respect as he/she does not for example have the option of cutting back on the costs of delivering the post in order to put food on the table or to ensure the mortgage is paid
If he could,then yes it would be

This is the sad road we're all now on if milk prices stay this low and its way more mainstream a problem already than is let on thanks to fudging the stats
It is a time for calm heads and considered decisions

Farmer Ed

OverRide wrote: »

The postman isn't self employed so not a valid comparison in that respect as he/she does not for example have the option of cutting back on the costs of delivering the post in order to put food on the table or to ensure the mortgage is paid
If he could,then yes it would be

This is the sad road we're all now on if milk prices stay this low and its way more mainstream a problem already than is let on thanks to fudging the stats
It is a time for calm heads and considered decisions

True the postman is not self employed and can't cut his costs to improve his income. But I would suggest many farmers are at the point that even if they are self employed, there is nothing more to cut. Also it is very unlikely that the postmans mortgage was used to build the post office. Either way the consequences of not being able to pay the mortgage would be the same for the postman as the farmer. Let's face it it's a horrible situation to be

whelan2

See Glanbia shares were at a 12 month low yesterday of 15.61, a long way off the high of 19.55 during that time

whelan2

http://bit.ly/290uCyW

mf240

whelan2 wrote: »

See Glanbia shares were at a 12 month low yesterday of 15.61, a long way off the high of 19.55 during that time

All shares back due to the brexit.

I think as a plc they are a solid investment. They are in a Great position with rock bottom raw materials from a captive supply Base and well invested in plant.

Farmers don't matter a lot to them though. :mad:

Farmer Ed

Fall in the levels of milk powder being offered into intervention @agrilandIreland http://www.agriland.ie/farming-news/fall-levels-milk-powder-sold-intervention/

Surely with this slim bit of hope pressure can be put on co ops here to at least hold the June price

jaymla627

Farmer Ed wrote: »

Fall in the levels of milk powder being offered into intervention @agrilandIreland http://www.agriland.ie/farming-news/fall-levels-milk-powder-sold-intervention/

Surely with this slim bit of hope pressure can be put on co ops here to at least hold the June price

All signs are pointing to serious drops in milk being produced in England with alot of processors now crying out for milk/raising prices, as supply is dropping of more then they ever envisioned, think they where down 6% on may supplies compared to last year, given its a very significant market for Irish milk even with the brit exit saga theirs no justification for them to drop lower on the tide of a rising market....
whatever about the other co-ops if glanbia go again with another drop it will be indefensible, and talbot and co will need to be strung-up

Water John

If Drinagh said they'd at least hold price for the rest of the year. All others should do the same at least.
Anyone dropping price now would be shameless.

Bass Reeves

Farmer Ed wrote: »

Where it becomes relevant 'is if you don't get paid from your job as a postman and to add insult to injury you are losing money by being a postman. Not alone could your future career as a postman be in doubt but the mortgage on your home would also be in arrears.

Maybe I understood my accountant wrong but his comment of farmers having mortgages of 200k sounds to me like money was secured from the value of the family home. If you take in to account most farmers own their own site 200k would build a fair size of a house and I doubt if they have 100% loan to value. You could be correct in saying it is not tax efficient but it sounds to me as if people have gone down that road regardless for whatever reason.

A 200K mortgage over 25 years costs slightly less than 1K/months whether variable or 5 year fixed at present. I think few of you get the point that the mortgage or part there of was farm lending it would appear in the accounts therefore it should show up in Teagasc statistics.

While 200k may sound a lot of money in terms of houses I see build by farmer children after they get a site in most cases there are putting 50K with it and parking the A4 Audi and the Golf outside on the tarmac as well. I see few new build houses in the country costing less than this. In the majority of cases the 200K mortgage is a houses loan plain and simple.

In reality in most cases just like PAYE workers it is the not the main loan that is the issue it is the subsidary loans. in the case of most people it is not the Mortgage is the issue rather it is the credit card bill car loans and maybe the cost odf the holiday in the Scyhelles.

Farming issue are something similar. Most lads that get into trouble have Co-op, overdrafts and maybe leases on machinery that gets them in trouble. recently a contractor near me bought a 2014 rake that cost 13K. It had being leased by a dairy farmer for the last two years and he traded it in against a new one this year. Contractor was of the opinion that it had done about 2-300 ares of work:eek:. I imagine that it cost 16-18K+ new and that the machinery dealer had a margin on the sale. Now paying 4-6K for that is grand as long as you can afford it( but stupid IMO ) but this is the type of borrowing that gets lads in trouble in a downturn.

In the scheme of things mortgage money even if used for farm loans is ok as long as it is used for development and as opportunities arise in an upturn it is paid down.

OverRide wrote: »

The postman isn't self employed so not a valid comparison in that respect as he/she does not for example have the option of cutting back on the costs of delivering the post in order to put food on the table or to ensure the mortgage is paid
If he could,then yes it would be

This is the sad road we're all now on if milk prices stay this low and its way more mainstream a problem already than is let on thanks to fudging the stats
It is a time for calm heads and considered decisions

I prefer a milk cheque rather than a postman wages and take my chances. Maybe it is not a valid comparison but tens of thousands of workers do not have the postmans security either and have the same issue with mortgage's

Farmer Ed wrote: »

True the postman is not self employed and can't cut his costs to improve his income. But I would suggest many farmers are at the point that even if they are self employed, there is nothing more to cut. Also it is very unlikely that the postmans mortgage was used to build the post office. Either way the consequences of not being able to pay the mortgage would be the same for the postman as the farmer. Let's face it it's a horrible situation to be

Maybe there is nothing more to cut but in reality irresponsible borrowing by some people cannot be avoided whether farmer or postmen. At the end of the day if the farmer or the post man have borrowed irresponsibe for a mortgage they will more than likely have other borrowing as well that are the real issue.

OverRide

Bass Reeves wrote: »

Maybe there is nothing more to cut but in reality irresponsible borrowing by some people cannot be avoided whether farmer or postmen. At the end of the day if the farmer or the post man have borrowed irresponsibe for a mortgage they will more than likely have other borrowing as well that are the real issue.

Aye but ,to be honest,One mans definition of irresponsible is another mans definition of the consequences of unusually prolonged unfairly low milk prices

whelan2

https://www.facebook.com/photo.php?fbid=263756973994015&set=gm.1617882781855693&type=3

yosemitesam1

http://www.wcds.ca/proc/2006/Manuscripts/Eicker.pdf

few good points made in this, worth considering both from potential of other countries to outcompete us and whether intensive grass production makes sense

Farmer Ed

yosemitesam1 wrote: »

http://www.wcds.ca/proc/2006/Manuscripts/Eicker.pdf

few good points made in this, worth considering both from potential of other countries to outcompete us and whether intensive grass production makes sense

I think the big question regarding the competitiveness of grass is what value you put on the land that grass is grown on. Obviously if you are paying €300 an acre then it becomes obvious that it is a cost that can't be ignored. But even if you own the land should we be including it as a cost?

atlantic mist

http://www.agriland.ie/farming-news/hogan-warns-continuing-to-increase-milk-production-not-sustainable-in-the-current-market-conditions/

not looking good, them Europeans and their cosy home markets...a selectively protected union it should be called, once it it voluntary i dont mind forward we want to go not backwards

land cost, we rent 70% of farm hard for me to compare against another operators if they dont put some value on it but each to their own

mortgage in accounts, cant say i have ever seen it, revenue dont allow mortgage interest to be written against farm profits, it can be included in balance sheet but most dont have house included in balance sheet.

Bass Reeves

atlantic mist wrote: »

http://www.agriland.ie/farming-news/hogan-warns-continuing-to-increase-milk-production-not-sustainable-in-the-current-market-conditions/

not looking good, them Europeans and their cosy home markets...a selectively protected union it should be called, once it it voluntary i dont mind forward we want to go not backwards

land cost, we rent 70% of farm hard for me to compare against another operators if they dont put some value on it but each to their own

mortgage in accounts, cant say i have ever seen it, revenue dont allow mortgage interest to be written against farm profits, it can be included in balance sheet but most dont have house included in balance sheet.

If the money was borrowed for the farm i.e. you borrowed 80K against your house and that money was transfered straigh into the farm account and used in the farm to build a shed or even for cash flow it it can be treated as a farm loan.

There is a suggestion by some that some young farmers that have 200K mortgages may have usedused some or all of this money in the farm. If the money was borrowed to build a house you cannot use it against the farm if it was borrowed to build a milking parlor and to upgrade a tractor you can. However you have to prove it to the accountant and he has to see the money trail in the bank accounts.

This all stems from that some think that teagasc is not reflecting the true nature of farm borrowing in there figures. They may not be. But to suggest that houses mortgages should be considered in those debt figures unless as I have suggested above is a fallacy.

This is similar to those that suggest that a land cost on owned land should be included.

atlantic mist

why do we borrow at business loan rates then maybe you dont but i do and i could have mortgaged like your saying but got refused point blank, the tracker interest rate at the time outweight the tax relief lost on interest (as it was a mortgage not a farm/business loan, loans are paid from your drawings/personal money not the farm for tax purposes) banks dont give out farm loans through mortgages they wouldnt be in business if they did and wed all be on tracker mortgages:)

i dont they like to give out money on the home house anymore (harder to take off you) that being said if they know your going under they might as well have the house as the farm

mahoney_j

Farmer Ed wrote: »

I think the big question regarding the competitiveness of grass is what value you put on the land that grass is grown on. Obviously if you are paying €300 an acre then it becomes obvious that it is a cost that can't be ignored. But even if you own the land should we be including it as a cost?

Yes yes and yes at least for published cop figures anyway .sick of saying it re pm and willy waving figures cherry picked from it .our land and labour is free .....

Farmer Ed

atlantic mist wrote: »

why do we borrow at business loan rates then maybe you dont but i do and i could have mortgaged like your saying but got refused point blank, the tracker interest rate at the time outweight the tax relief lost on interest (as it was a mortgage not a farm/business loan, loans are paid from your drawings/personal money not the farm for tax purposes) banks dont give out farm loans through mortgages they wouldnt be in business if they did and wed all be on tracker mortgages:)

i dont they like to give out money on the home house anymore (harder to take off you) that being said if they know your going under they might as well have the house as the farm

That is an excellent question. If a bank can give a farmer a mortgage at 3% to build a sun room on to his house why do they charge 5.5% and more for secured farm loans?. Much easier to force a farmer to sell land than force him sell his home. If anything the farm loan is more secure.

kowtow

I was thinking the other day that there is a much more pragmatic realisation among the press in Ireland that cost of labour is missing (and shouldn't be) from dairy figures, while at the same time there is a big current emphasis on cashflow planning, and yet there is still a tendency to confuse ourselves (and confuse others, deliberately or otherwise) by substituting P&L figures for Cashflow and vice versa.

I wonder if we are being patronised, or patronising ourselves, by attempting to make things too simple. A Profit monitor, which is unique to farming, is of course a strange hybrid of P&L and cash figures, which confuses everything further, although for comparison between farms as a set of KPI's it makes perfect sense.

A P&L should, almost beyond doubt, include actual wages and a land opportunity cost for owned land. There is a case for both of these being standardised because when wages are actually drawn they are more akin to partners drawings and usually meet the precise requirements of the farming family (this is not totally unique to farming, it's what small solicitors practices would have done for many years for example). You still need a standard figure of some description in there or your farm will appear profitable with the cows eating 9kg of nuts every day just because you didn't take any cash that year - and that is obviously misleading from an accounting point of view. The same goes for inherited land... including standardised figures for both (without agonising too much over them) would be the best way of getting a month to month idea of whether a farm is profitable.

Cashflow, on the other hand, is specific to a particular farming family and a particular time. You can say with some certainty that your future cashflow is all you have to rely on once your monthly P&L goes negative, and also that once your monthly P&L goes positive things will get no worse than your future cashflow already shows... but that is the extent of the relationship between them. Both are essential to any business (and neither are exactly the same as end of year accounts for tax purposes).

It strikes me that producing an online profit monitor which allowed for both of these essential elements of business planning would not be difficult, even if it was a little more complex than the current model.

RightTurnClyde

kowtow wrote: »

I was thinking the other day that there is a much more pragmatic realisation among the press in Ireland that cost of labour is missing (and shouldn't be) from dairy figures, while at the same time there is a big current emphasis on cashflow planning, and yet there is still a tendency to confuse ourselves (and confuse others, deliberately or otherwise) by substituting P&L figures for Cashflow and vice versa.

I wonder if we are being patronised, or patronising ourselves, by attempting to make things too simple. A Profit monitor, which is unique to farming, is of course a strange hybrid of P&L and cash figures, which confuses everything further, although for comparison between farms as a set of KPI's it makes perfect sense.

A P&L should, almost beyond doubt, include actual wages and a land opportunity cost for owned land. There is a case for both of these being standardised because when wages are actually drawn they are more akin to partners drawings and usually meet the precise requirements of the farming family (this is not totally unique to farming, it's what small solicitors practices would have done for many years for example). You still need a standard figure of some description in there or your farm will appear profitable with the cows eating 9kg of nuts every day just because you didn't take any cash that year - and that is obviously misleading from an accounting point of view. The same goes for inherited land... including standardised figures for both (without agonising too much over them) would be the best way of getting a month to month idea of whether a farm is profitable.

Cashflow, on the other hand, is specific to a particular farming family and a particular time. You can say with some certainty that your future cashflow is all you have to rely on once your monthly P&L goes negative, and also that once your monthly P&L goes positive things will get no worse than your future cashflow already shows... but that is the extent of the relationship between them. Both are essential to any business (and neither are exactly the same as end of year accounts for tax purposes).

It strikes me that producing an online profit monitor which allowed for both of these essential elements of business planning would not be difficult, even if it was a little more complex than the current model.

Agree 100%, leaving out opportunity value on your labour and your land leaves the PM null and void.
But there's more...
Example of the guy next door to me, 55 yrs of age, had a very tidy well setup 50 cow farm 20 yrs ago. Three kids all of had no interest in farming and have gone the college route. For the last 10 years, minimal repairs, if a gate falls down...baling twine, cattle box damaged...borrows neighbours, tractor falling apart...suffers on, no lime for the last 8-10 yrs, reseeding stopped 5yrs ago, fencing...oh god.
He's 4 or 5 years from retiring, he'll either dry stock farm or lease out at that stage.
Leaving the labour/land issue aside, he'll throw up a Pm showing a COP of 16c.
There's no accounting for the fact that he's yard is a H&S hazard and only fit to be bulldozed, and that he's lost out on future leasing values on his land. The cost to bring his farm back to where it was 20 years ago would be immense. There's 3-4 cent a litre unaccounted depreciation in his system year on year.

His is an extreme case but, there are loads of variations that can tweak your PM a few cent either way, doesn't actually mean you're making more P.
The PM is a rubbish exercise.

whelan2

http://www.agriland.ie/farming-news/outstanding-superlevy-bills-revealed-cork-owes-most-but-donegal-has-highest-average/ The 1 sligo farmer has a big bill

kevthegaff

Had a feeling tipp would be bad