profit for dairy leased land

Panch18

Timmaay wrote: »

180e but the landowner keeps the sfp? I said "most the loans" because as Jay said very little financial details were released as to how the project wrapped up, who paid off the loans? And that's where your final point is interesting, the initial business plan always stated that the early years of the project there would be significant capital repayments (and paying back at like double/triple the interest rate of most other European countries), and the substantial profitability wouldn't be until the last few years of the project. If I had been say a silent investor taking a yearly cut of the profits I'd most certainly of been asking big questions when the project was wrapping up.

And don't get me wrong I'm far from a fan of the whole project, it failed hugely on the original aim to "showcase" a large greenfield dairy setup in Ireland, the economic and business potential was certainly there, that wasn't the problem, instead it showed the significant hurdles in Ireland with 1stly weather extremes, we are not NZ and cannot expect to get away with almost no winter accommodation or fodder reserves, and by God 2018 hammered that point home on the Greenfield farm, and the 2nd point which is yours, land cost is too high, the landowner getting a large tax free yearly rent is always going to be a big winner. I'm happy that the whole project failed because as a farmer I don't need Glanbia using it as a stick to hammer down the milk price, but if managed differently the outcome could of been alot more successful.

Managed differently??

There was more "brains" and "consulting" time spent on that project than any other farm in Ireland, ever.

And the lads actually doing the work were good operators as well

Simple fact is that when a dairy farm has to stand on its own 2 feet there isn't nearly the money in it that a) fellas think there is or b) that Teagasc et al keep throwing around

K.G.

Panch18 wrote: »

Managed differently??

There was more "brains" and "consulting" time spent on that project than any other farm in Ireland, ever.

And the lads actually doing the work were good operators as well

Simple fact is that when a dairy farm has to stand on its own 2 feet there isn't nearly the money in it that a) fellas think there is or b) that Teagasc et al keep throwing around

Theres money in it alright but not half as much as people think and for alot more work than people realise.

Bass Reeves

K.G. wrote: »

Theres money in it alright but not half as much as people think and for alot more work than people realise.

Over the years and working in many different area's I always found that people within the area always taught the work was harder and less profitable/well paid than it actually was. They always taught people on the other side of the fence had it easier and were better paid more profitable.

The truth is usually somewhere in between

Timmaay

Panch18 wrote: »

Managed differently??

There was more "brains" and "consulting" time spent on that project than any other farm in Ireland, ever.

And the lads actually doing the work were good operators as well

Simple fact is that when a dairy farm has to stand on its own 2 feet there isn't nearly the money in it that a) fellas think there is or b) that Teagasc et al keep throwing around

All the brains and consulting in the world couldn't overcome the initial biases that the farm had to be a low input low cost Nz style no matter what, that's why bucket loads of money was spent on an out wintering pad which got ripped out after few yrs, that's why parlour feeders weren't installed until like 5yrs into the project, with countless litres and late lactation bonuses left behind, that's why only enough fodder for the bare 90 day winter was ever kept. Change them preconceptions which were high level management decisions early on, and the whole outcome of the project could of been completely different. I still maintain the basic economics of a greenfield dairy setup in Ireland are solid if done correctly, which is why you see them popping up all over the country since the quotas went.

K.G.

Timmaay wrote: »

Greenfield was a big success in terms of economics, it nicely paid back the most of its loans, and a very hefty land lease, and had built up a nice cash reserve, all while not having access to the Glanbia topup bonus which was worth up to 2c/l in some milk cheques. Where it fell down hugely was having very poor fodder reserves, especially in 2018 when the ex tillage low organic matter soil got absolutely hammered in the drought, the meal bill alone ate into all the cash reserves which was criminal consideration bales of silage were easily got for less than 20e the previous winter. The out wintering pad and exposed outdoor cubicles were both mistakes also, but to call it a sh1t show is wrong, most certainly in terms of economics.

I think the biggest thing to learn from greenfield is when things go wrong with big numbers the s##t really hits the fan

cosatron

K.G. wrote: »

I think the biggest thing to learn from greenfield is when the weather gets bad and you don't have proper facilities the s##t really hits the fan

fixed that for you

Tonynewholland

Bass Reeves wrote: »

Over the years and working in many different area's I always found that people within the area always taught the work was harder and less profitable/well paid than it actually was. They always taught people on the other side of the fence had it easier and were better paid more profitable.

The truth is usually somewhere in between

Aside from the financial The truth is there are not many jobs now that are as physically demanding as dairy farming nowadays. 7 days a week takes a toll on the body unlike most other jobs.

GrasstoMilk

Say my name wrote: »

In keeping with the thread theme.

Owner wants 300e an acre plus sfp
It's all reclaimed from the sea

When its wet its very wet and when its dry its like the Sahara

K.G.

cosatron wrote: »

fixed that for you

Happens everyone

Siamsa Sessions

GrasstoMilk wrote: »

Owner wants 300e an acre plus sfp
It's all reclaimed from the sea

When its wet its very wet and when its dry its like the Sahara

Is that the same Brady Group where Mike Brady is a head honcho? The same Mike Brady who was writing in the Farming Indo last week saying there was still loads of room for new entrants in the dairy sector?

Re investing in rented land: we have 40 acres leased out to a dairy neighbour here at the moment. He's 2 years into a 6-year lease. The place was in good repair with roadways, hedges, water, etc. But he has spent weeks if not months now tidying up, clearing drains, putting up new electric fences, resurfacing the roadways, etc. I can see why someone would reseed some of the ground and spread lime but most of what he's at is not exactly necessary.

I'm not going to stop him, but I do wonder at times if he has too much money or time on his hands.

Edit: it’s an out farm for him. He only cuts silage off it and grazes heifers in the summer. The only point I’m making is that some lads like things neat and spend on that but others don’t. We’re all different and invest in different things

Say my name

GrasstoMilk wrote: »

When its wet its very wet and when its dry its like the Sahara

I was thinking that about that land.
Most likely go into tillage. But probably looking for someone to set up a dairy infrastructure (for afters) and not mine the place.

trixi2011

GrasstoMilk wrote: »

Owner wants 300e an acre plus sfp
It's all reclaimed from the sea

When its wet its very wet and when its dry its like the Sahara

300 without any facilities

GrasstoMilk

trixi2011 wrote: »

300 without any facilities

There is considerable amount of slatted shed space there but it would cost to convert that also

Bass Reeves

GrasstoMilk wrote: »

Owner wants 300e an acre plus sfp
It's all reclaimed from the sea

When its wet its very wet and when its dry its like the Sahara

Just to put it in context if they achieve that price they will be getting nearly 100k in rent + BPS. BPS would be a minimum of about 20k but more than likely in the 50k bracket

GrasstoMilk

Say my name wrote: »

I was thinking that about that land.
Most likely go into tillage. But probably looking for someone to set up a dairy infrastructure (for afters) and not mine the place.

My BIL is tillage farming down that area and he hasnt any interest in it, even if the price was reasonable
Be like rice farming trying go get the crops out on a year like this

Theres also no well water available seemingly

atlantic mist

are lads still paying sfp back to land owners?
id walk away from ground if thats even mentioned

Siamsa Sessions

atlantic mist wrote: »

are lads still paying sfp back to land owners?
id walk away from ground if thats even mentioned

Land we leased out had no SFP so straight rent only

mahoney_j

atlantic mist wrote: »

are lads still paying sfp back to land owners?
id walk away from ground if thats even mentioned

Nothing pissesme off more ,person farming the land should get this without question but in most parts where land is in high demand it goes back to land owner who is getting tax free rent also if leased long term

trixi2011

atlantic mist wrote: »

are lads still paying sfp back to land owners?
id walk away from ground if thats even mentioned

Seems to be the norm on rental farms . Have asked land owners if they would lease out there entitlements to allow me to establish a sfp from the national reserve on their land . Would of offered to pay the difference between the lease amount and their original sfp but they were too concerned that they might lose their entitlementd.

wrangler

trixi2011 wrote: »

Seems to be the norm on rental farms . Have asked land owners if they would lease out there entitlements to allow me to establish a sfp from the national reserve on their land . Would of offered to pay the difference between the lease amount and their original sfp but they were too concerned that they might lose their entitlementd.

Looks like landlords will not be getting entitlements in the next CAP reform

Dinzee Conlee

wrangler wrote: »

Looks like landlords will not be getting entitlements in the next CAP reform

Where is the reform now Wrangler?

I didn’t think anything much was agreed yet, but I haven’t been following it...

GrasstoMilk

wrangler wrote: »

Looks like landlords will not be getting entitlements in the next CAP reform

Will land rental price just go up to compensate?

wrangler

Dinzee Conlee wrote: »

Where is the reform now Wrangler?

I didn’t think anything much was agreed yet, but I haven’t been following it...

It's now put back to the end of 2022 so it's way off at this stage, but there's a lot of emphasis on the active farmer

wrangler

GrasstoMilk wrote: »

Will land rental price just go up to compensate?

The tenants will put it up because they'll have their own entitlements I suppose

K.G.

mahoney_j wrote: »

Nothing pissesme off more ,person farming the land should get this without question but in most parts where land is in high demand it goes back to land owner who is getting tax free rent also if leased long term

Are.you saying they should throw in the entitlements for free.if the entitlements werent paid back there would be no land made available around this country.you would have even more lads with a few cattle just to claim entitlements

Timmaay

The only solution is for farmers to all cool off themselves and walk away if the price goes too high, and most certainly don't lock horns with a rival neighbour farmer and drive the price stupidly high. I know for one I'd be happily hanging up the wellys and off to the next career if my only option was 250/300e rent.

Actually doing out them sums, if I had to pay 250e/ac for the 112 owned acres here, plus hand back the 16k bps, that would be 44k/year I'd be down.

mahoney_j

K.G. wrote: »

Are.you saying they should throw in the entitlements for free.if the entitlements werent paid back there would be no land made available around this country.you would have even more lads with a few cattle just to claim entitlements

The donkey doing all the work should get them he is doing all the work the land owner gets tax free income at the very least 50% minimum of entitlement value should go foc

mahoney_j

Timmaay wrote: »

The only solution is for farmers to all cool off themselves and walk away if the price goes too high, and most certainly don't lock horns with a rival neighbour farmer and drive the price stupidly high. I know for one I'd be happily hanging up the wellys and off to the next career if my only option was 250/300e rent.

That all well in an area with lots of land changing hands 250/300 plus is common round here lads would nearly sell the wife for an acre of land unless land was outside the ditch of milking parlour reseeded ,indexes good and roads/water all in I wouldn’t pay the colour of that

Mooooo

Timmaay wrote: »

The only solution is for farmers to all cool off themselves and walk away if the price goes too high, and most certainly don't lock horns with a rival neighbour farmer and drive the price stupidly high. I know for one I'd be happily hanging up the wellys and off to the next career if my only option was 250/300e rent.

Actually doing out them sums, if I had to pay 250e/ac for the 112 owned acres here, plus hand back the 16k bps, that would be 44k/year I'd be down.

And the mysterious opportunity cost appears......

MIKEKC

trixi2011 wrote: »

Seems to be the norm on rental farms . Have asked land owners if they would lease out there entitlements to allow me to establish a sfp from the national reserve on their land . Would of offered to pay the difference between the lease amount and their original sfp but they were too concerned that they might lose their entitlementd.

Are you sure it is possible to do this .Thought this was illegal

K.G.

mahoney_j wrote: »

The donkey doing all the work should get them he is doing all the work the land owner gets tax free income at the very least 50% minimum of entitlement value should go foc

I agree but just like leasing and buying and selling quota it should have never been allowed.

Bass Reeves

Dinzee Conlee wrote: »

Where is the reform now Wrangler?

I didn’t think anything much was agreed yet, but I haven’t been following it...

I think there is an anomaly in the last CAP where if you leased and held back 2HA you were allowed to draw entitlements over the rest of the farm. It was similar to previous CAP except that then you leased entitlements with land and they were safe. In this CAP you could not lease entitlements with land this was a way around.

With dairying now reaching Carbon and Nitrate limits this is just the next step on the road.

I may be wrong about the way the BFP rules are in place at present

alps

GrasstoMilk wrote: »

Will land rental price just go up to compensate?

For sure..

Land value is based on one thing only..

What you have to pay to stop the other fella from getting it.

Whatever it's worth for agri value plus whatever payments can be pulled off of it will go back to the landlord because that's what the other fella will be offering, and if you want it...you'll have to offer that too...plus a little more..

MIKEKC

Bass Reeves wrote: »

I think there is an anomaly in the last CAP where if you leased and held back 2HA you were allowed to draw entitlements over the rest of the farm. It was similar to previous CAP except that then you leased entitlements with land and they were safe. In this CAP you could not lease entitlements with land this was a way around.

With dairying now reaching Carbon and Nitrate limits this is just the next step on the road.

I may be wrong about the way the BFP rules are in place at present

Never heard about the 2ha rule. I was leasing land at the time, lease was just up and farmer wanted to increase rental by 50%. I stacked entitlements and walked away. (Land was bounding me). If this rule was there wouldn't everyone have kept their entitlements?

Bass Reeves

MIKEKC wrote: »

Never heard about the 2ha rule. I was leasing land at the time, lease was just up and farmer wanted to increase rental by 50%. I stacked entitlements and walked away. (Land was bounding me). If this rule was there wouldn't everyone have kept their entitlements?

There may have been a time limit. I remember something about it but cannot be sure

older by the day

Tonynewholland wrote: »

Aside from the financial The truth is there are not many jobs now that are as physically demanding as dairy farming nowadays. 7 days a week takes a toll on the body unlike most other jobs.

Hardly, I see lads starting at 7.30 in the morn levelling concrete, putting up shutters, I know carpenters, plumbers, plasterers getting opperations before there 40;.backs and knees ffed,

wrangler

MIKEKC wrote: »

Never heard about the 2ha rule. I was leasing land at the time, lease was just up and farmer wanted to increase rental by 50%. I stacked entitlements and walked away. (Land was bounding me). If this rule was there wouldn't everyone have kept their entitlements?

That was the way alright, those farmers that went for the retirement scheme weren't allowed keep their entitlements as they weren't allowed farm any land.
It was a big blow to them.
If you were farming two hectares you were reckoned to be an active farmer and got to kepp all your entitlements. Martin O sullivan on the indo reckoned you should be considered an active farmer with 5ha, I also heard once you were farming 10% of your land you'd be able to keep the entitlement, So I'd be considered an active farmer if either of those was the case

Looney1

op here. sfp all going back to farmer on top of lease. it was great to get such a discussion going. i intentionally didnt say at the time that i have a very good off farm income at the moment which would reduce by at least 50% if i was to take it on. I think i have my answer

straight

Panch18 wrote: »

this is gas - Beef lads telling dairy farmers (some top class dairy farmers on here i might add) how much money they are making and how much their costs should be

I don't think any dairy farmer should be completing a profit monitor - this information is being thrown around the place and used by a) coops to keep the price of milk in check and b) non dairy farmers as a stick to beat dairy farmers with.

You be amazed at the amount of resentment there is towards dairy farmers from non dairy farmers - particular what sprung out of these beef factory protests.

Now we have never completed a profit monitor and never will - and i firmly believe it would be in dairy farmers interests if they pulled back from it a bit.

There is never anything gained by everybody knowing your business

That beef farmer even threw in the "highly profitable" line that I'm sick of reading in the media. When you break down the wage into an hourly rate I consider it modern day slavery. I'd say in years to come there will be a farmers lives matter movement.

cosatron

straight wrote: »

That beef farmer even threw in the "highly profitable" line that I'm sick of reading in the media. When you break down the wage into an hourly rate I consider it modern day slavery. I'd say in years to come there will be a farmers lives matter movement.

FLM:D

straight

Looney1 wrote: »

op here. sfp all going back to farmer on top of lease. it was great to get such a discussion going. i intentionally didnt say at the time that i have a very good off farm income at the moment which would reduce by at least 50% if i was to take it on. I think i have my answer

I gave up a good job to go dairy farming. It's amazing the amount of constant investment needed. I'm heading into year 5 and have the place fairly right but there will always be bits of spending needed. The farming doesn't pay as good as the job and the hours are long but I enjoy it most of the time and don't envy too many lads in jobs and commuting, etc. either. It would be a non runner of I had to pay rent and I wouldn't be putting in water systems, concrete, sheds, etc on another mans land. A small hobby farm is all that a lad needs to feed the farming habit.

MIKEKC

Bass Reeves wrote: »

There may have been a time limit. I remember something about it but cannot be sure

As retiring farmers weren't allowed to keep 2ha it wasn't any use to them. It would only be of use to someone letting their land or selling up. Then of course the land would be worth less without entitlements

roofer1988

Panch18 wrote: »

this is gas - Beef lads telling dairy farmers (some top class dairy farmers on here i might add) how much money they are making and how much their costs should be

I don't think any dairy farmer should be completing a profit monitor - this information is being thrown around the place and used by a) coops to keep the price of milk in check and b) non dairy farmers as a stick to beat dairy farmers with.

You be amazed at the amount of resentment there is towards dairy farmers from non dairy farmers - particular what sprung out of these beef factory protests.

Now we have never completed a profit monitor and never will - and i firmly believe it would be in dairy farmers interests if they pulled back from it a bit.

There is never anything gained by everybody knowing your business

At last someone that understands what a profit monitor is really for

wrangler

MIKEKC wrote: »

As retiring farmers weren't allowed to keep 2ha it wasn't any use to them. It would only be of use to someone letting their land or selling up. Then of course the land would be worth less without entitlements

The land I let without entitlements made a good bit more than the land I let with entitlements, much better demand for land without.

MIKEKC

wrangler wrote: »

The land I let without entitlements made a good bit more than the land I let with entitlements, much better demand for land without.

Hard to understand that. Unless there was never entitlements with that land and the person taking it could establish entitlements

wrangler

MIKEKC wrote: »

Hard to understand that. Unless there was never entitlements with that land and the person taking it could establish entitlements

They wanted to use their own entitlements, I reckoned that, as a landlord, I was going to lose the entitlements anyway in the next CAP.
Plenty of customers for leasing entitlements as well

alps

wrangler wrote: »

The land I let without entitlements made a good bit more than the land I let with entitlements, much better demand for land without.

But did the tenant on the land with entitlements pay tou the entitlements as well as the land rent?

wrangler

alps wrote: »

But did the tenant on the land with entitlements pay tou the entitlements as well as the land rent?

The entitlements were a seperate deal, land was €240/acre, plus he gives me 70% of the subsidy so he gets a nice reduction on his rent there.
Land without entitlements made €300

alps

wrangler wrote: »

The entitlements were a seperate deal, land was €240/acre, plus he gives me 70% of the subsidy so he gets a nice reduction on his rent there.
Land without entitlements made €300

Up front answer in fairness..

It makes sense though for someone who can establish payments on this clean ground and it will converge towards the average.

In effect you are collecting some of his new payment also..

This is why I suggest, that as long as there are 2 people interested in the ground, the landlord will always recieve the BP...maybe not all, but certainly the higher share of it..

And while the landlord recieved the BP, the tenant will just have to get over it...sure it mightn't be too long before the tenant becomes the landlord..

MIKEKC

alps wrote: »

Up front answer in fairness..

It makes sense though for someone who can establish payments on this clean ground and it will converge towards the average.

In effect you are collecting some of his new payment also..

This is why I suggest, that as long as there are 2 people interested in the ground, the landlord will always recieve the BP...maybe not all, but certainly the higher share of it..

And while the landlord recieved the BP, the tenant will just have to get over it...sure it mightn't be too long before the tenant becomes the landlord..

You say it makes sense for someone who can establish entitlements on this clean ground. My understanding is that you cant remove entitlements from land and then someone else establish new ones.This came about in the 2004 CAP. Some people tried to stack entitlements, give bare land to a son/daughter to git entitlements on. This was not allowed