The Kingston story: Bidders fail to pay up for auctioned cows

handlemaster

fepper wrote: »

Its good that land prices are steady/rising its a valuable asset

Are they ? I Didnt think there was much of a change

fepper

Melissak said it in post b4 me

whelan2

fepper wrote: »

Melissak said it in post b4 me

Must be true so

20silkcut

I found an old letter from a solicitor at home dated 1984 valuing our farm at 150000.
In today's terms that's about half a million maybe 600k. But according to local land prices at the minute it would conservatively realise over 900k.
The conclusion I come to is that land is more valuable today than it was in 1984.
Which is amazing considering the increase in input prices and static farm gate prices and increase in regulation etc.

melissak

handlemaster wrote: »

Are they ? I Didnt think there was much of a change

They got pretty low there for a while. I think we are on the start of an upswing, if I understand this boom bust lark. I might not. I find economics awfully boring.

Suckler

20silkcut wrote: »

The conclusion I come to is that land is more valuable today than it was in 1984.
Which is amazing considering the increase in input prices and static farm gate prices and increase in regulation etc.

Increased herd numbers ensures a surplus of animals. Farms can't afford to hold out for better prices as the stock will keep incurring cost but will depreciate in value.

Same with milk, I'm not in dairy so open to correction on this; quotas gone, dairy farms pushed to expansion. There are very few commodities that increase in value when supply is increased so much. Especially farm produce that can't be stock piled to wait for prices to pick up.

rangler1

coolshannagh28 wrote: »

Have times been any worse for many people in the last 10 years ,isn't that what the thread is all about

My information is that there's still write downs if people are prepared to sell assets, but unless you go through it yourself you never know whether its true or not.
I know that ifa guys are still being called upon and i put two people in contact with someone as well so some banks must be negotiating

greysides

rangler1 wrote: »

I have my principles too and if they don't suit, i've another set at home

That shows your age there Groucho...:D

melissak

I have been thinking about it and some of the comments I made about people buying repossessed farms were a bit unfair. ( it turns out someone I know bought a reposted house). It is not my place to judge others trying to make a living. I get a bit hot headed sometimes in debate. As a previous poster stated my moral code is not the same as others and there is probably lots of things I do that others would not approve of
It makes me sad to think of all the people who got themselves into a hole they couldn't get out of. It must be very hard to deal with.

Nekarsulm

20silkcut wrote: »

I found an old letter from a solicitor at home dated 1984 valuing our farm at 150000.
In today's terms that's about half a million maybe 600k. But according to local land prices at the minute it would conservatively realise over 900k.
The conclusion I come to is that land is more valuable today than it was in 1984.
Which is amazing considering the increase in input prices and static farm gate prices and increase in regulation etc.

In 1984 the price of a good finished Hereford bullock would almost buy an acre of land.
Take most of a pen of them now.

melissak

Nekarsulm wrote: »

In 1984 the price of a good finished Hereford bullock would almost buy an acre of land.
Take most of a pen of them now.

Has the price of cattle fallen that much or just particular breeds?

Nekarsulm

melissak wrote: »

Has the price of cattle fallen that much or just particular breeds?

An acre of land round here in 84 would have been 1200 to 1400.
A factory bullock would have been 1000 to 1200.
Remember that was in Punts,
Green Diesel was about 50p a gallon.

All inputs have increased by a factor of 3 or 4.
Land price by a factor of 4 to 6.
Cattle and milk prices static or reduced (esp. grain)

locha

Nekarsulm wrote: »

An acre of land round here in 84 would have been 1200 to 1400.
A factory bullock would have been 1000 to 1200.
Remember that was in Punts,
Green Diesel was about 50p a gallon.

All inputs have increased by a factor of 3 or 4.
Land price by a factor of 4 to 6.
Cattle and milk prices static or reduced (esp. grain)

We're were interest rates at back then?

blue5000

locha wrote: »

We're were interest rates at back then?

I think the old pair got a fixed 5 yr loan around 15% in '82/3.

Farm incomes really jumped on the back of joining EEC. I'll always remember my geography teacher telling us that you guys will never have it so good again, should have heeded him:D

arctictree

20silkcut wrote: »

I found an old letter from a solicitor at home dated 1984 valuing our farm at 150000.
In today's terms that's about half a million maybe 600k. But according to local land prices at the minute it would conservatively realise over 900k.
The conclusion I come to is that land is more valuable today than it was in 1984.
Which is amazing considering the increase in input prices and static farm gate prices and increase in regulation etc.

I believe that all of that gain would have been between 1984 and 2000.

Between 2000 and now, there has been very little change in land prices.

Muckit

20silkcut wrote: »

I found an old letter from a solicitor at home dated 1984 valuing our farm at 150000.
In today's terms that's about half a million maybe 600k. But according to local land prices at the minute it would conservatively realise over 900k.
The conclusion I come to is that land is more valuable today than it was in 1984.
Which is amazing considering the increase in input prices and static farm gate prices and increase in regulation etc.

Yes but what were the Interest rates back then? This is something you rarely hear people taking into account.... the real cost of the land they bought. Unless you are buying with money straight out of your bank account the sale price bears little or no relation to what the land cost you.

Brown Podzol

Muckit wrote: »

Yes but what were the Interest rates back then? This is something you rarely hear people taking into account.... the real cost of the land they bought. Unless you are buying with money straight out of your bank account the sale price bears little or no relation to what the land cost you.

Very true, but skewed backwards a bit again by the fact that interest is tax deductible while capital is not.

coolshannagh28

As the system changes you must adapt , when we joined the EU prices rose as there was demand ,in the meantime as food production has increased subsidy is used to compensate farmers for lower prices which are vital for political and economic stability .
In a subsidised system the winners are those with scale ie processors or those who play the system . In such a system farmers are not meant to take profit just to survive .

Nekarsulm

Interest rates were running about 10 to 12%, but if you had a few pound you got a return on it, no DIRT tax etc.
It spiked up to 21% in 89 or 90 I think.

Bass Reeves

Interest rate's are a funny thing. Back in the 80's farm loans averaged 14-20%. At present they average 3-4% and if you borrowed in the noughties at present these loans are costing less than 2%. I have a land loan since 2004 I think it will average about 3.5 % over its duration from 2004-2019.

Now to put these figure in context on a 20 year loan in the eighties if a loan averaged 16% a farmer would have expected to pay back 260K on a 100K loan. It is grand to speak about tax relief V Capital but at the time it was hard to use up all relief at the top tax rate unless borrowings were small. Remember any other loans would have higher rates as well. 20% on small borrowing was not unheard of.

At present on a 100K loan one would expect that if the interest averaged 5% on a 100K loan one would pay back 150K over 20 years. However as interest rates are lower all interest will be against higher tax rates.

The reality at the end of all this is that the present day borrower in real term will expect to pay about 25% for the money over 20 years. Back in the eighties the borrower could expect to pay 70-100% of the loan in interest.

You also have to remember that farming was more labour intensive. Nowadays we have round bales v square bales, 4WD tractors etc. Contractor costs have not followed general farming inflation.

This may be why people are willing to pay a premium for land versus the 80's

BoatMad

melissak wrote: »

They only need to be not bought up for a few years to send the message to the bank's that there is no windfall in repossessing farms. This will make them more likely to try to reach a fair settlement with farmers who have the potential for turnaround

And what's a " fair " settlement where there is not a realistic potential for turnaround , what then ???

rangler1

Bass Reeves wrote: »

Interest rate's are a funny thing. Back in the 80's farm loans averaged 14-20%. At present they average 3-4% and if you borrowed in the noughties at present these loans are costing less than 2%. I have a land loan since 2004 I think it will average about 3.5 % over its duration from 2004-2019.

Now to put these figure in context on a 20 year loan in the eighties if a loan averaged 16% a farmer would have expected to pay back 260K on a 100K loan. It is grand to speak about tax relief V Capital but at the time it was hard to use up all relief at the top tax rate unless borrowings were small. Remember any other loans would have higher rates as well. 20% on small borrowing was not unheard of.

At present on a 100K loan one would expect that if the interest averaged 5% on a 100K loan one would pay back 150K over 20 years. However as interest rates are lower all interest will be against higher tax rates.

The reality at the end of all this is that the present day borrower in real term will expect to pay about 25% for the money over 20 years. Back in the eighties the borrower could expect to pay 70-100% of the loan in interest.

You also have to remember that farming was more labour intensive. Nowadays we have round bales v square bales, 4WD tractors etc. Contractor costs have not followed general farming inflation.

This may be why people are willing to pay a premium for land versus the 80's

You would've paid well in 2004 , we were trying to get a land value of 30000/acre from National Roads Authority for our compo that year

melissak

BoatMad wrote: »

And what's a " fair " settlement where there is not a realistic potential for turnaround , what then ???

I don't know to be honest. It is a tough one. I got a bit knee jerk tbh. Of course loans should be repayed otherwise bank's won't lend. If farmers could join together and form an advisory group or similar perhaps that a farmer can avail of when he starts to fall behind.?

BoatMad

melissak wrote: »

I don't know to be honest. It is a tough one. I got a bit knee jerk tbh. Of course loans should be repayed otherwise bank's won't lend. If farmers could join together and form an advisory group or similar perhaps that a farmer can avail of when he starts to fall behind.?

The fact remains, if the potential , as accessed by the lender , and thats really the only on that can decide, is not there, then all that can be done is liquidation and partial or full debt recovery

Businesses must be allowed to fail.

Yes provide all the advice, and I suspect that many in trouble followed all the " advice", because often "advice" is just wrong

Bass Reeves

rangler1 wrote: »

You would've paid well in 2004 , we were trying to get a land value of 30000/acre from National Roads Authority for our compo that year

Comparing the NRA to me is like comparing CIE to Transdev. I refinanced in 2004 with ACC. Orginally borrowed off BOI 15 months previously, had purchassed the land in late 2002 paid less than a quarter/acre than what you quoted above.

rangler1

Bass Reeves wrote: »

Comparing the NRA to me is like comparing CIE to Transdev. I refinanced in 2004 with ACC. Orginally borrowed off BOI 15 months previously, had purchassed the land in late 2002 paid less than a quarter/acre than what you quoted above.

lucky the NRA didn't get hold of that example. Land beside me made 34000/ac that time, Auctioneer came to me after the auction and offered 40000/acre from the underbidder.......still banging my head for refusing that.
That 34000/ac farm sold for 7000/ac two years ago

kowtow

Muckit wrote:

Yes but what were the Interest rates back then? This is something you rarely hear people taking into account.... the real cost of the land they bought. Unless you are buying with money straight out of your bank account the sale price bears little or no relation to what the land cost you.

That is not strictly true.

If you buy land at 20k / acre at a time of zero interest rates, when interest rates revert back towards their long term mean ... say 5-10% base... the land is very likely to fall back strongly in value.

So you'll pay in capital loss at least what you saved in financing cost.

It might not be a cash item, but it will still be there.

Bullocks

rangler1 wrote: »

lucky the NRA didn't get hold of that example. Land beside me made 34000/ac that time, Auctioneer came to me after the auction and offered 40000/acre from the underbidder.......still banging my head for refusing that.
That 34000/ac farm sold for 7000/ac two years ago

Would you have been good enough with the money to have bought it back at the 7k per acre ? A couple of lads here managed to buy back what they sold in the boom . Unfortunately plenty more lost it on bank shares

Farmer Ed

rangler1 wrote: »

lucky the NRA didn't get hold of that example. Land beside me made 34000/ac that time, Auctioneer came to me after the auction and offered 40000/acre from the underbidder.......still banging my head for refusing that.
That 34000/ac farm sold for 7000/ac two years ago

So you are saying land next to you was making up to 40000k per acre in 2004? and IFA negotiators could only get 30000k from the NRA?
In Spite of the disturbance that may have been caused to farmers by splitting up holdings etc? I would have thought land brought by the NRA should command a premium?

rangler1

Farmer Ed wrote: »

So you are saying land next to you was making up to 40000k per acre in 2004? and IFA negotiators could only get 30000k from the NRA?
In Spite of the disturbance that may have been caused to farmers by splitting up holdings etc? I would have thought land brought by the NRA should command a premium?

No, there is a disturance figure, injurious affection, plus a five thousand/acre bonus for ''goodwill'' added on, i got way more than that per acre . Don't know if the €5000/ac goodwill is available now.
To get €40000 an acre considered in the valuation negotiations, the sale would have to go through and be signed up, 10 acres beside me made 50000/acre shortly after all the deals were done. For sale at the moment for€10000/acre, no one interested, there'd be more clay on an acre of real land