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Teagasc New Entrants Training

This guide provides essential insights into the financial aspects of dairy farming for new entrants. It covers critical topics, including understanding money inflows and outflows, necessary investments, and personal cash flow management. Farmers will find projections for cow numbers, average milk prices, and associated costs of on-farm investments. Key examples and case studies highlight successful farming strategies and the importance of financial planning and team collaboration in achieving profitability. Equip yourself for success in your dairy farming journey.

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Teagasc New Entrants Training

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  1. Teagasc New Entrants Training Abigail Ryan Teagasc Moorepark

  2. Overview • Why? • Money in • Money out • Investments • Personal • Cash flow

  3. Why? • Money in • Money out • Investments • Personal • Cash flow

  4. Why? – because it will cost a lot of money Existing farmers 2020 Vision – 50% increase in volumes ICBF Projections on Cow Numbers - +100k in Glanbia?? Possible Cost of on-farm Investment €2,000/cow = €200m €4,000/cow = €400m New Entrants 50% are currently beef farmers Average investment €160,000 approx. Target a yield of 385kg (1,100 gallons) per cow + 10 c/litre profit

  5. Why? • Money in • Money out • Investments • Personal • Cash flow

  6. Average Producer Milk Prices 2 c/litre

  7.  6 c/litre 2 c/litre Average Producer Milk Prices

  8. Monthly Milk Prices (vat incl.) Average milk price : 2008 : 33.2 c/litre ; 2007 : 33.5 c/litre Source: CSO

  9. Aut 07 Spr 08 Monthly Milk Prices (vat incl.) Average milk price 2008 33.2 c/litre : 2007 33.5 c/litre Source: CSO

  10. Milk price variation vs milk sales Variation €60,000 per 100 cows

  11. Why? • Money in • Money out • Investments • Personal • Cash flow

  12. Range in Physical & Financial Performance 2010 Variation €28,400 per 100 cows

  13. Range in Physical & Financial Performance 2010 Variation €24,100 per 100 cows

  14. Range in Financial Performance 2010 Variation €52,500+ per 100 cows

  15. Residual cash(€/cow)- left to pay yourself, taxation and repay the investments

  16. Residual cash (€/cow)- left to pay yourself, taxation and repay the investments

  17. Why? • Money in • Money out • Investments • Personal • Cash flow

  18. ‘Average’ investment costs

  19. Possible investment costs

  20. Possible investment costs

  21. Residual cash (€/extra cow)- left to pay yourself and for taxation

  22. Expansion – a case study

  23. Case study – the investments made

  24. Case study – the investments made Expansion costs €3,700/cow

  25. Case study – the profit generated

  26. Lessons from Case Study • Efficient dairy farms … • Can deliver a ‘good’ income independent of SFP • Can increase income through expansion • But are affected by low milk price

  27. Why? • Money in • Money out • Investments • Personal • Cash flow

  28. Living Expenses for Farm Families • A consumption unit needs €11,400 • A consumption unit = 13+ years • Less than 13 years = ½ unit • 2 adults and 2 children = €34,200 • Average farm family (in 2000) 3.56 persons or 3.2 units (€36,400) • What is the figure for your family?

  29. Why? • Money in • Money out • Investments • Personal • Cash flow

  30. The transition to 2015 - Cash flow • Pre-2015 • Cost of rearing extra heifers • The milk quota issue • Timing of the investment • Post-2015 • Increasing cow number on milk receipts

  31. Dairy cow Suppliers per county

  32. Compound annual growth in milk output %

  33. What % of live heifers calve at 22-26 months?

  34. Cash flow – keeping extra heifers €65 per cow - 10% more heifers

  35. Cash flow - The milk quota issue

  36. Cash flow - Milk quota options

  37. Cash flow – timing of the investment

  38. Cash flow – effect of expansion on milk yield per cow Source: CSO

  39. More heifers Herd getting younger Cash flow – effect of expansion on milk yield per cow Herd maturing Source: CSO

  40. Cash flow – effect of expansion on milk yield per cow Milk sales reduced by €300 per cow until herd starts to stabilise again Source: CSO

  41. Cash flow – ongoing investment costs €65 per cow - 10% more heifers

  42. Successful farmers – the team approach • Adviser • AI technician • Banker • Contractor • Co-op person • Family • Milking machine technician • Vet

  43. Risk analysis

  44. Risk analysis – example farm

  45. Risk analysis – example farm

  46. Risk analysis – example farm

  47. Risk analysis – example farm

  48. Your next steps … • Establish your position – Profit Monitor • Complete the worksheet • Update your 5 year plan

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