Paying down debt....

[Dragon]

I put autosteer in my oldest and cheapest to run tractor (JD 6400) and now it's the first one out of the yard



At least with your own kit you can know that it is properly serviced up and in the best condition you can get it. With contractors gear you have no idea whether it's going to break down or not.

use a contractor the properly maintains their kit then.
my contractor has reputation for being a bit of a shark - I just don't see it. for silage I can book him a week in advance and usaually he will turn up on the day. his silage acres getting towards a 5000s acre with a ten year old machine - if not older if it breaks down just he gets another forager in from others contractors to keep the acres being picked up. new ones can break down just as much old ones. He does aim pickup 200 acres per day.
15 years ago we used do 500 acres first cut with a trailed and it took at least a week tying up staff during this time which detracted from there usual routine all silage is picked up by contractors now.

 

[Durry cows]

Interesting thread this out of interest people on here who are going to the banks to buy let's say 10k acre land what % are you being offered and what's the annual payback over 25 years for example? Pm if you like....

 

[Clever Dic]

Borrowing needs careful thought but I think its very hard to grow and plan for future business requirements without some element. As an example last year was very difficult for my haylage/hay business I actually gave away or just dumped 35% of my first cut which is the main event in quality and quantity.The reason being in a difficult year I needed much more capacity in a small window.

The result is a much reduced profit , cash flow ok as liquidating stock carried forward from previous year and a burning desire to not let this happen twice in a row.
So what I have done is buy 3 more balers plus ancillary equipment on HP as it is far more than can be funded out of cash flow in a difficult year.
However this is far more desirable and easily funded over 5 years than losing that amount of product for a second time which could damage the business irreparably.
In my monthly accounts one of the figures I look forward to following the most is my total indebtedness against total worth this is to include all borrowing,HP,OD, and creditors against Stock,growing crops,valuations and debtors and the obvious aim is to yearly improve that balance.

 

[Bossfarmer]

Yes quite few now. really tax efficient moving capital from partnership to ltd company via director loans especially if at higher tax rate.

Why are they so tax efficient and why would you want to move capital from a partnership to a ltd company?

 

[Hilly]

I put autosteer in my oldest and cheapest to run tractor (JD 6400) and now it's the first one out of the yard



At least with your own kit you can know that it is properly serviced up and in the best condition you can get it. With contractors gear you have no idea whether it's going to break down or not.

Absolute popy cock, anything to justify owning a bit of depreciating metal.

 

[sleepy]

Borrowing needs careful thought but I think its very hard to grow and plan for future business requirements without some element. As an example last year was very difficult for my haylage/hay business I actually gave away or just dumped 35% of my first cut which is the main event in quality and quantity.The reason being in a difficult year I needed much more capacity in a small window.

The result is a much reduced profit , cash flow ok as liquidating stock carried forward from previous year and a burning desire to not let this happen twice in a row.
So what I have done is buy 3 more balers plus ancillary equipment on HP as it is far more than can be funded out of cash flow in a difficult year.
However this is far more desirable and easily funded over 5 years than losing that amount of product for a second time which could damage the business irreparably.
In my monthly accounts one of the figures I look forward to following the most is my total indebtedness against total worth this is to include all borrowing,HP,OD, and creditors against Stock,growing crops,valuations and debtors and the obvious aim is to yearly improve that balance.

Wouldn't it be nice if you could buy it in and just be a middleman taking a margin

 

[sleepy]

Absolute popy cock, anything to justify owning a bit of depreciating metal.

Just my experience, servicing a big baler properly can cost thousands. I will say yes to replacing a big drive chain that might cost 800 quid and looks a bit worn, but would the contractor?

 

[Clever Dic]

Wouldn't it be nice if you could buy it in and just be a middleman taking a margin

I am liking the concept for sure.

 

[Happy at it]

Interesting thread this out of interest people on here who are going to the banks to buy let's say 10k acre land what % are you being offered and what's the annual payback over 25 years for example? Pm if you like....

As far as I know locally (in NI), the rates would be in round 5% for both overdraft and variable rates loans. Best I can get anyway....

 

[dinderleat]

As far as I know locally (in NI), the rates would be in round 5% for both overdraft and variable rates loans. Best I can get anyway....

Had a quote of 1.5% above base on Wednesday and plus +.6% to fix it. That was for buying land with 75%LTV

 

[The Agrarian]

@Clever Dic raised a good point about machinery and weather.

It's reasonably well known that there is quite a lot of machinery in Northern Ireland for the area of land that is covered. It's assumed by those of you in warmer climes that we love machinery and we love laying out hard earned profit on metal. There might be some examples of that, but it's generally not the main reason behind it.

The fact is that weather windows appear to have been fewer and shorter over the last thirty, forty, fifty years here. Frequency of rain is frankly a massive problem. As a fellow contributor said on another thread, he made a start last month by spreading 25 loads of slurry while he waited for the contractor to come. The window closed and I can only assume he is still waiting, as it's pished ever since.

We are, by English standards at least, very over specked. The obvious reason is we need lots of capacity for the short windows of opportunity. This certainly costs a lot upfront, but from my point of view as a farmer user, it doesn't matter in the end because we just keep them for a bit longer. My mowers for example get oil changed in beds and gearboxes each winter, are well greased and if carefully used will do me year upon year. Yes, the mowers will depreciate over the first half dozen years. I don't really care as I'm keeping them for probably twenty.

 

[Clay52]

Just my experience, servicing a big baler properly can cost thousands. I will say yes to replacing a big drive chain that might cost 800 quid and looks a bit worn, but would the contractor?

For me thats an argument for not owning. I don't want to have to pay thousands of dollars for servicing.

I'm not worrying myself with what the contractor is doing servicing wise but if he is breaking down all the time I'll look for a new contractor.

 

[Bossfarmer]

Had a quote of 1.5% above base on Wednesday and plus +.6% to fix it. That was for buying land with 75%LTV

I was under the impression you MUST have a 40% deposit to buy land these days?

 

[Rossymons]

We've never paid a deposit and we've bought 2 farms in the last 10 years. Hellish repayment though.

 

[Bossfarmer]

We've never paid a deposit and we've bought 2 farms in the last 10 years. Hellish repayment though.

how you paying it back? dairy? veg?

 

[Rossymons]

Dairy.

Its quite eye watering and we're looking at restructuring the mortgages. The bank has done the maths and come back with a figure. Its less than 10k saved a year and they will spread it over 20 years. In less than 10 we will have cleared it so I doubt we will take them up on that offer

 

[dinderleat]

I was under the impression you MUST have a 40% deposit to buy land these days?

Depends on your business I suppose

 

[Dragon]

Why are they so tax efficient and why would you want to move capital from a partnership to a ltd company?

I'm not up for writing an essay on this. But for us it reduced our tax liability. It makes no difference to us if trading assets asset into a Ltd company.
It would paying off the directors loan @20% tax and using that to pay back loans rather than using money that we paid 40% on.
In times of milk quota with high historical value moving quota into ltd co was a good. Dad even sold all the quota and bought it back again over two week period. selling quota at loss against historical values creating a loss, then buying quota in company. quota purchased in a ltd company was a tangible asset and could be offset against trading income. Must add this is all above board.

 

[Dragon]

quite a few comment on on here about debt per cow. The easiest way for someone to reduce debt per cow is to increase cow numbers, especially with the use of the annual investment allowance. I know some will say that's daft, but hey ho!!

 

[Princess Pooper]

to increase cow numbers, especially with the use of the annual investment allowance.

??