Expand and invest or sit tight and save up money

[wrenchy]

All the advisers are telling us all to expand and modernise our business's before brexit but we don't know for shaw which sectors have a viable future and which don't.

No one wants be the man who invested in a film developing the week before the digital camera came out!!!!!

 

[Daniel Larn]

We've been talking with our financiers quite a bit about this recently.

It's unlikely any sector will become truly unviable post brexit, as the UK is generally an importer of produce.

Things will be more challenging, so efficiency will be the key to success. This means heavy investment and modernisation is the way to go.

We are encouraging our farms to move to running a less capital intensive, cashflow based structure.

Buying new machinery and using finance to improve the stability of cost of production, run smaller margins if you have to but increase the volume to compensate.

 

[Martyn]

We've been talking with our financiers quite a bit about this recently.

It's unlikely any sector will become truly unviable post brexit, as the UK is generally an importer of produce.

Things will be more challenging, so efficiency will be the key to success. This means heavy investment and modernisation is the way to go.

We are encouraging our farms to move to running a less capital intensive, cashflow based structure.

Buying new machinery and using finance to improve the stability of cost of production, run smaller margins if you have to but increase the volume to compensate.

Why does every so called adviser have it in their head that heavy investment leads to better efficiency? usually the chepest but best thought out ideas lead to profit improvement, not throwing a lump of cash at it!

 

[Paul E]

Best thing you can spend on any business, is time.
Thinking time usually.
And no, one size does not fit all.

 

[Martyn]

Why does every so called adviser have it in their head that heavy investment leads to better efficiency? usually the chepest but best thought out ideas lead to profit improvement, not thowing a lump of cash at it!

Iv just googled your business the Willand Group but your websites not working. Just found a few snipits on your facebook claiming many statments of how you can fix agriculture with intensive agriculture.

 

[Yale]

Sheepmeat to Europe is facing a 50 odd percent tariff.

Which ever way you look at that it cannot be good!

 

[davieh3350]

We've been talking with our financiers quite a bit about this recently.

It's unlikely any sector will become truly unviable post brexit, as the UK is generally an importer of produce.

Things will be more challenging, so efficiency will be the key to success. This means heavy investment and modernisation is the way to go.

We are encouraging our farms to move to running a less capital intensive, cashflow based structure.

Buying new machinery and using finance to improve the stability of cost of production, run smaller margins if you have to but increase the volume to compensate.

Pish. No one is going to pay me more for my beef if I invest in a big fendt and a mixer wagon and all the other gubbins to go along with it.
If I invested in advertising and set up a butchery then I'd get the major share of the money. Not churning out as many as I could so someone else can profit from it.

 

[Dave6170]

Sheepmeat to Europe is facing a 50 odd percent tariff.

Which ever way you look at that it cannot be good!

I dont get all this. Does that mean that french wine, spanish fruit and veg or german cars will have huge tarrifs as well. I dont know how that will work.
Every second car you see is german made.

 

[Daniel Larn]

Iv just googled your business the Willand Group but your websites not working. Just found a few snipits on your facebook claiming many statments of how you can fix agriculture with intensive agriculture.

Yes, we are currently reworking our website completely, that's why it isn't up and running.

We are trying to take our new intensive system to market this year too, hence the agenda on social media.

We also help small farms with extensive production methods, we do more than just our buildings, we just aren't doing much in the way of publicity for it yet.

 

[S J H]

Sheepmeat to Europe is facing a 50 odd percent tariff.

Which ever way you look at that it cannot be good!

Where have you heard that from @Yale?

 

[Daniel Larn]

Pish. No one is going to pay me more for my beef if I invest in a big fendt and a mixer wagon and all the other gubbins to go along with it.
If I invested in advertising and set up a butchery then I'd get the major share of the money. Not churning out as many as I could so someone else can profit from it.

Couldn't agree more, as a beef producer you probably wouldn't be focussing on shiny new machinery. You could be better served looking at butchering your own, as you suggested, infrastructure is the issue there though.

You have to find an outlet, generate sufficient sales and then deliver it. It may not quite see the uplift in margin you'd think.

 

[milkloss]

The jam tomorrow, or lack of, will always pay someone else’s wage.

 

[Kiwi Pete]

Pish. No one is going to pay me more for my beef if I invest in a big fendt and a mixer wagon and all the other gubbins to go along with it.
If I invested in advertising and set up a butchery then I'd get the major share of the money. Not churning out as many as I could so someone else can profit from it.

That's the chestnut IMO, all focus is on supply and not getting a share of the value.
When you look at our Ag export figure of $37b it looks impressive until you realise that it gets sold onto international markets for an estimated $250b - we need to look at getting that added value back!
So the value chain needs to be explored in much more detail and depth, any fool can sell good produce but the key is adding value before it goes out the gate.
That is the place to make investments IMVHO whether it is your wool or meat or whatever, turn it into something special rather than give it away to make some pansy in a suit a wealthy man

Investment is good but not all investments are equal, my Apple corp. shares have increased from US$20k to US$180k in less than a decade, so it puts your Fendt and Keenan wagon strongly in the liability column AFAIK

 

[Daniel Larn]

Why does every so called adviser have it in their head that heavy investment leads to better efficiency? usually the chepest but best thought out ideas lead to profit improvement, not thowing a lump of cash at it!

It's probably for the same reason why most farmers think investment is expensive.

As I said, we are encouraging farms to move away from capital costs and move to finance and cashflow. This way they have flexibility to make changes and adapt quickly. RPS or whatever gets delayed, no problem, you have plenty of cash in the bank to deal with it.

Installing water harvesting and treatment, smaller and more efficient tractors, buying equipment to support a change to CTS agriculture. All of these things cost money, But generally pay for themselves quite quickly in savings made.

We try to reduce the cost of production wherever we can, thus improving your margin, where we cant we try to improve your output. If we still can't manage that we try to improve your flexibility.

It's not a one size fits all thing, and yes, we agree entirely that the best thing spent on any farm is time.

 

[Kidds]

Does that mean that french wine, spanish fruit and veg or german cars will have huge tarrifs as well

Happy days.

 

[Pond digger]

It's probably for the same reason why most farmers think investment is expensive.

As I said, we are encouraging farms to move away from capital costs and move to finance and cashflow. This way they have flexibility to make changes and adapt quickly. RPS or whatever gets delayed, no problem, you have plenty of cash in the bank to deal with it.

Installing water harvesting and treatment, smaller and more efficient tractors, buying equipment to support a change to CTS agriculture. All of these things cost money, But generally pay for themselves quite quickly in savings made.

We try to reduce the cost of production wherever we can, thus improving your margin, where we cant we try to improve your output. If we still can't manage that we try to improve your flexibility.

It's not a one size fits all thing, and yes, we agree entirely that the best thing spent on any farm is time.

First time I’ve heard anyone advocating smaller tractors; can you expand on this- optimum size and why?

 

[Daniel Larn]

That's the chestnut IMO, all focus is on supply and not getting a share of the value.
When you look at our Ag export figure of $37b it looks impressive until you realise that it gets sold onto international markets for an estimated $250b - we need to look at getting that added value back!
So the value chain needs to be explored in much more detail and depth, any fool can sell good produce but the key is adding value before it goes out the gate.
That is the place to make investments IMVHO whether it is your wool or meat or whatever, turn it into something special rather than give it away to make some pansy in a suit a wealthy man

Investment is good but not all investments are equal, my Apple corp. shares have increased from US$20k to US$180k in less than a decade, so it puts your Fendt and Keenan wagon strongly in the liability column AFAIK

The supply chain, especially beef, is a challenge for sure.

But as for making investments in stocks and shares, it's a great option if you can afford it. Again, freeing up capital and having a pot of gold to sit on allows you to make the most of it.

It's all about trying to diversify incomes for me.

 

[franklin]

Will be a combination of investing in things with either a solid monthly income stream; paying back Lloyds bank; and sitting tight.

One thing is for sure is that I wont be investing in any business thing that doesnt pay as well and as easily as a house or two. And thus the folly of UK industrial policy is revealed, but while there is a bandwagon that the government does support, I'll jump on it.

 

[wrenchy]

Couldn't agree more, as a beef producer you probably wouldn't be focussing on shiny new machinery. You could be better served looking at butchering your own, as you suggested, infrastructure is the issue there though.

You have to find an outlet, generate sufficient sales and then deliver it. It may not quite see the uplift in margin you'd think.

Remember you have to find customers for the whole animal not just steaks and the nice joints

 

[foxbox]

Where have you heard that from @Yale?

If we hard Brexit as is being pushed by the hardcore Brexiteers without a formal tariff free quota to export lamb to the EU (our largest export market for lamb) we'll face their import tariffs which as @Yale says are frighteningly high. Details of the quota and a summary of potential effects are in the AHDB Horizon report here and can be found in the table on the last page. This was all known before the referendum but at the time the industry (and the rest of the country) was being promised all sorts of things (anyone still banking on the increased support payments we were promised by George Eustace etc?) and it got lost in the fog to some extent.