Profitability poll across sectors

[Bossfarmer]

with brexit upon us and farm subsidies to be phased out i thought a poll to see how businesses are stacking up in each sector at the moment(with support) would be interesting, ive set it up so the votes are anonymous and will wait until others have voted before doing so myself, thanks!

 

[Bossfarmer]

@Hilly @gone up the hill @chaffcutter @lexion man @Brisel @turbo @Cowabunga @Cowmangav @Thomas-milmain @Clive

 

[Bald Rick]

You forgot “brothel keeper” .... by far the most lucrative venture of mine .. er .. I mean my neighbours







All you need to do @Bossfarmer is download the cost monitoring stats off the various agencies to see who’s doing ok.
Strip out subs and even the dairy sector struggles esp with volatility

 

[Cowabunga]

Paper profit, as such, is fairly meaningless if it isn't sufficient to cover personal expenditure [the family's living expenses], capital repayments and income tax with sufficient left over for reinvestment. A huge problem is that capital repayments are mostly made after tax is deducted, not before, so for heavily borrowed businesses it is extremely difficult to pay back loans. The money allocated to pay back is taxed as profit so a minimum of around 25% more income is required than is available to repay loans.
This is one reason why you often find companies with seemingly huge profits go down the pan, ultimately unable to pay back both loans and their tax liability.

 

[Henarar]

so @Bossfarmer you think that beef or sheep farmers would be to embarrassed to say so you haven't asked

 

[Bossfarmer]

Paper profit, as such, is fairly meaningless if it isn't sufficient to cover personal expenditure [the family's living expenses], capital repayments and income tax with sufficient left over for reinvestment. A huge problem is that capital repayments are mostly made after tax is deducted, not before, so for heavily borrowed businesses it is extremely difficult to pay back loans. The money allocated to pay back is taxed as profit so a minimum of around 25% more income is required than is available to repay loans.
This is one reason why you often find companies with seemingly huge profits go down the pan, ultimately unable to pay back both loans and their tax liability.

yes im aware that most farms will have drawings for partners AND substantial mortgages to pay out of the profit figure which is why it really needs to be 6 figures for most farms before removing support can be viable

 

[Bossfarmer]

so @Bossfarmer you think that beef or sheep farmers would be to embarrassed to say so you haven't asked

i thought that would come under mixed but i will add them

 

[neilo]

yes im aware that most farms will have drawings for partners AND substantial mortgages to pay out of the profit figure which is why it really needs to be 6 figures for most farms before removing support can be viable

Irrespective of farm size? A £20k profit would be great from a 10ac farm, not so good on a massive 1000ac holding.

 

[Cowabunga]

Assuming someone's milk price has averaged 5ppl less than for farmers selling to another buyer this year. That means that one's gross is down some £65,000 compared to the other, assuming they sell the same litres 1.3 million litres, which is only slightly larger than the average dairy farm output. That makes a massive difference to the viability of their respective businesses. Assuming, for the sake of argument [don't assume anything else], that one makes enough profit to maintain a neutral cashflow for the year, if they had the missing £65000, they would have about £50,000 extra after tax to reinvest or pay back outstanding debts or reduce the overdraft.

There are 5ppl differences between buyers locally, so this is not just theoretical.

 

[unlacedgecko]

This has all the makings of a BossFarmer classic.

Interested in other sectors
Feigned concern for the wider industry
Potential to run in excess of 20 pages
Barely disguised moan about the threat of sub removal

Would anyone else like to join me in a game of BossFarmer bingo?

 

[Henarar]

i thought that would come under mixed but i will add them

that's good, I thought I was going to have to cross you off my Christmas card list for a bit then

 

[Bossfarmer]

This has all the makings of a BossFarmer classic.

Interested in other sectors ✔
Feigned concern for the wider industry ✔
Potential to run in excess of 20 pages ✔
Barely disguised moan about the threat of sub removal ✔

Would anyone else like to join me in a game of BossFarmer bingo?

id assume profit figures would be interesting to most businessmen, please vote sensibly were all adults

 

[Henarar]

This has all the makings of a BossFarmer classic.

Interested in other sectors ✔
Feigned concern for the wider industry ✔
Potential to run in excess of 20 pages ✔
Barely disguised moan about the threat of sub removal ✔

Would anyone else like to join me in a game of BossFarmer bingo?

yep I thought it looked good and couldn't wait to join in as well

 

[Henarar]

id assume profit figures would be interesting to most businessmen, please vote sensibly were all adults

what about businesswomen are you doing a separate thread for them ?

 

[Cowabunga]

yes im aware that most farms will have drawings for partners AND substantial mortgages to pay out of the profit figure which is why it really needs to be 6 figures for most farms before removing support can be viable

Moving forward the six figure 'profit' before tax, capital repayments and personal expenditure looks likely to be the minimum necessary for future viability on any size of dairy farm. Bigger farms and bigger mortgages and costs, and/or more dependant older family members require even more profit to maintain or have a chance of maintaining a positive cash flow/bank balance [an overdraft that doesn't increase through normal trading].

 

[Bossfarmer]

y

Assuming someone's milk price has averaged 5ppl less than for farmers selling to another buyer this year. That means that one's gross is down some £65,000 compared to the other, assuming they sell the same litres 1.3 million litres, which is only slightly larger than the average dairy farm output. That makes a massive difference to the viability of their respective businesses. Assuming, for the sake of argument [don't assume anything else], that one makes enough profit to maintain a neutral cashflow for the year, if they had the missing £65000, they would have about £50,000 extra after tax to reinvest or pay back outstanding debts or reduce the overdraft.

There are 5ppl differences between buyers locally, so this is not just theoretical.

yes im aware of the vast differences between dairy contract prices it must be fustrating for those on the lower prices, but equally as good farmers

 

[Bossfarmer]

Moving forward the six figure 'profit' before tax, capital repayments and personal expenditure looks likely to be the minimum necessary for future viability on any size of dairy farm. Bigger farms and bigger mortgages and costs, and/or more dependant older family members require even more profit to maintain or have a chance of maintaining a positive cash flow/bank balance [an overdraft that doesn't increase through normal trading].

i would agree as the majority of progressive dairies have mortgages, usually for upgrading facilities and by the time these are paid up they are often in need of redoing or expansion

 

[Cowabunga]

i would agree as the majority of progressive dairies have mortgages, usually for upgrading facilities and by the time these are paid up they are often in need of redoing or expansion

It is very common to find dairy farms with £8000 or more debt per cow. So a 250 cow herd with £2m debt. There are some in much more deeply than that.

 

[Henarar]

I must say @Bossfarmer your confidence in the beef and sheep sectors that non are making a loss is far better than mine

 

[Cowabunga]

People filling in the survey and looking at the results should appreciate that they should consider taxable profit as calculated for accounts, not net annual cash flow