lloyd
Member
- Location
- Herefordshire
Farm Subsidies......expand or GET OUT???
- Thread starter Bossfarmer
- Start date
Good analogy.
As with everything, it's all down to the timing.
Pulling a lump of capital out of the farm in prosperous times to pay a house deposit is fine, provided it doesn't strangle the farm in the meantime via increasing interest rates or bad tenants.
There does seem to be an assumption that almost every diversification is within the skillset of the farmer and guaranteed to be profitable.
The truth can be very different.
I say that as someone who wrapped up a diversification that turned over nearly a million quid but lost money and commanded inordinate amounts of time.
There's a lot to be said for doing what you do best, and doing it better. You can't do that by spreading yourself too thinly across lots of different businesses.
Also, I'd far rather have a bit less spare brass and enjoy how I spend my time. We're only here once!
- Location
- Devon
There is a lot about being a landlord that is a lot worse than it used to be.
But that's quite irrelevant, the point being you are subsidising the farm if you are funding it with cash from elsewhere that could give a better return elsewhere.
But then I understand, the likes of Dyson can save some tax by flogging hoovers and buying fendts.
But that's quite irrelevant, the point being you are subsidising the farm if you are funding it with cash from elsewhere that could give a better return elsewhere.
But then I understand, the likes of Dyson can save some tax by flogging hoovers and buying fendts.
Devil's advocate
Member
- Location
- Posh side of Barnsley
Property is quite dear to buy at the moment.
My point is it does not matter how money is earnt, providing more is earnt than spent.
Lee's point is only large scale farmers should be allowed to invest in agriculture, that is because he is a large scale farmer, but he knows the diversified ones can out bid him on land price or rent. He does not like that, so he calls them idiots.
Devil's advocate
Member
- Location
- Posh side of Barnsley
I found with a staff shortage, I had to close a farm shop that was once very profitable. It was sad, but it served its purpose & retailing changed in the 50 year period from opening to closing.
I've missed it much less than I expected.
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Devil's advocate
Member
- Location
- Posh side of Barnsley
But the farm paid for the houses. So the houses are property of the farming business & can easily sub the farm for a while if needed.
I've just done some drainage work, with cereals where they are price wise. I used income from veg production to pay for the work is that some how wrong? Would it be wrong if I used rental income?
I've a friend who in a good potato year installed a new milking parlour, I don't see anything wrong with that.
- Location
- NSW, Newstralya
err, of course, the other option is to DECREASE inputs . . .
Aspiring Peasants
Member
- Location
- North Pennines
Well after an interesting read through that this is my pennysworth
Turnover is vanity, profit is sanity. Speaks for itself.
If you have a small farm that for sake of argument makes £20,000 per year from farming it, but you want £40,000 per year, then diversifying is not subsidising the farming. I agree, it shouldn’t be subsidising the farming, and that needs carefully watching but keeping it as one business can have useful tax advantages.
Subsidies are needed if the country wants a good level of self sufficiency in food, at prices to the consumer which are below the cost of production. If they don’t want that, then a farm business needs to look at doing things differently. Any business has to do the best it can in the commercial conditions it faces. It’s been like this before.
I’m actually quite relieved given the low level of understanding in government about the relationship between farming and food production that SFI is there. They don’t have to provide anything. They could just have legislated to achieve what they think they want as is starting to happen in the EU. That doesn’t mean we don’t fight and lobby for it to be done differently, the discrepancy between lowland and up land payments being a prime example.
A business has to use whatever assets it has (including non farming ones) for best advantage. For example buy land or put up buildings? The buildings will produce an immediate return whereas the land won’t to the same degree. But, in 10 years the land has doubled and the building needs money spending on it. I personally think the best business decision in that situation is buy the land , farm in a simple low cost way and generate some more income from something else. Others will see it differently, but you need to look at your land, other assets, cash as a business instead of a farm
Turnover is vanity, profit is sanity. Speaks for itself.
If you have a small farm that for sake of argument makes £20,000 per year from farming it, but you want £40,000 per year, then diversifying is not subsidising the farming. I agree, it shouldn’t be subsidising the farming, and that needs carefully watching but keeping it as one business can have useful tax advantages.
Subsidies are needed if the country wants a good level of self sufficiency in food, at prices to the consumer which are below the cost of production. If they don’t want that, then a farm business needs to look at doing things differently. Any business has to do the best it can in the commercial conditions it faces. It’s been like this before.
I’m actually quite relieved given the low level of understanding in government about the relationship between farming and food production that SFI is there. They don’t have to provide anything. They could just have legislated to achieve what they think they want as is starting to happen in the EU. That doesn’t mean we don’t fight and lobby for it to be done differently, the discrepancy between lowland and up land payments being a prime example.
A business has to use whatever assets it has (including non farming ones) for best advantage. For example buy land or put up buildings? The buildings will produce an immediate return whereas the land won’t to the same degree. But, in 10 years the land has doubled and the building needs money spending on it. I personally think the best business decision in that situation is buy the land , farm in a simple low cost way and generate some more income from something else. Others will see it differently, but you need to look at your land, other assets, cash as a business instead of a farm
Hilly
Member
- Location
- Scottish Borders.
Ive no idea , suck it and see , the alternative is what we have now and its been shyt for years ..
If you could provide parking in a redundant shed, i.e if you are not keeping cattle because of lack/no profit - then ask yourself how many cars can you park in the redundant silage pit shed. Under roof parking, in a secure yard, @ least £30 a week !!
PS - fact of life, if you're a young farmer - then you need to marry a woman with a job paying well above average, who is happy to pay the houdehold bills, the holidays/days off, and the new car. If you don't have one of those, then perhaps the best relacement for the BPS is to trade the present model for one who fits this mould.
PPS - i'm typing this as i'm opening the door to the cellar - should be safe in there.
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- Location
- Owaka, New Zealand
Get good at running a business and get clear about what drives your business - effectiveness
Bossfarmer
Member
- Location
- between Perth and Inverness
A far better example would be to maintain production but to increase efficiency with technology etc so that a labour unit could be dropped, scaling back very rarely results in MORE profit, unless its been badly set up to start with
Bossfarmer
Member
- Location
- between Perth and Inverness
Another way of saying that is dairy pays far better than beef or sheep
- Location
- Devon
After decades of consolidation and the loss of the majority of farms, I'm not sure there are any left that are particularly 'badly run', or inefficient.
I think you've read too much propaganda about how technology will help farmers.
Technology will only ever provide the most modest of returns as the owners of the technology will always take any major cost savings/ benefits.
Scaling back will almost always mean less profit, but very often higher profitability.
midlandslad
Member
- Location
- Midlands
I’m
All that glitters is not gold!
I get round a lot of farms and the quality of management varies significantly. I can assure you there are plenty that are badly run.
All that glitters is not gold!
Bossfarmer
Member
- Location
- between Perth and Inverness
Spot on, this is what puts me off diversification, i have a lifetimes knowledge and practical experience in farming, if i go into another sector im up against many in that sector with far greater experience and knowledge putting me at a clear disadvantage, then theres the tax complications and extra overheads etc
Surely better to stay in the sector your skilled in any expand to dilute current overheads and take advntage of all the tx advantages of farming?
Bossfarmer
Member
- Location
- between Perth and Inverness
Simplistic view as inputs should already be at optimal levels so reducing would be counter productive, we did reduce slightly in the high fert price year but and more would not have been cost effective
And…diversification means you need to pay heed to BPR as you will lose APR and could end up paying IHT…but it’s a lot harder to get…
Bossfarmer
Member
- Location
- between Perth and Inverness
Technology is useful i.e. a 2nd hand 35ft combine is a similar cost to a 2nd hand 25ft due to the 25 being a more popular size , however the 35 will cut a lot more grain in a day when the weathers good, gets harvest out the way quicker, frees up a few days for baling straw, and getting to silage
- Location
- sw scotland
We had a whole farm review which advised some changes such as more inputs - feed and fertiliser mainly. Fertiliser price then more than doubled and the advisor admitted that wiped out any improvements he had suggested which in reality amounted to a few %.
On a livestock farm good staff will beat technology every time. Saving a few lambs or 2 calves will return more than a robotic silage pusher. The main issue affecting profit I see is far too much fancy metal depreciating to be funded by more livestock for no gain.
For example extra tractors left hooked to a machine to save 5 minutes changing it to another job.
On a livestock farm good staff will beat technology every time. Saving a few lambs or 2 calves will return more than a robotic silage pusher. The main issue affecting profit I see is far too much fancy metal depreciating to be funded by more livestock for no gain.
For example extra tractors left hooked to a machine to save 5 minutes changing it to another job.