glasshouse
Member
- Location
- lothians
But we are not talking about making money, we are talking about survival post brexit.
Regrexit
- Thread starter llamedos
- Start date
Do you make any money from your farming or is it just subs and development ? perhaps that's what your worried about
Bossfarmer
Member
- Location
- between Perth and Inverness
to survive you need to make money and pay bills, if its easier for a small farm to survive the larger one can rent half out and farm the other half
Bossfarmer
Member
- Location
- between Perth and Inverness
we had three mortgages on land at the same time at one point, the development cleared one of them, admittedly without subs this would have been harder to do but that's the same for everyone
not if you haven't got a mortgage
Bossfarmer
Member
- Location
- between Perth and Inverness
?
- Location
- Limousin, France
Again;
FARMER BOB,
I would quite like to expand but I am often coming up against contract farmers who seem to want to farm half the world and will pay stupidly high rents to do it. In my view if the rent doesn't stack up on its own its too dear.. end of. I'd rather they make a loss than me!
So lets take our (very lucky!) farmer who owns a 1000ac with no borrowing and insert some basic figures. I will call him Bob and I will assume a uniform (very optimistic!) profit level and that economies of scale are already achieved at the 1000ac level so there will not be any real cost benefits of increasing in size.
So,
Things are going well for Bob and he makes £200/ac profit after all fixed/variable costs on average across his 1000ac giving him a total profit of £200,000 a year.
1000ac next door comes up for rent at £120/ac, he'd be a fool not to take it!, so Bob does and spreads the rent of £120,000/yr across his 2000ac. Works out at £60/ac and assuming that everything is still going great and he makes a profit of £140/ac across both units and earns a very tidy £280,000 a year. His percentage profit has dipped and he is doing more work, but hey lets not worry about such things his turnover's gone up and he has more land than any of his neighbours!
Through kissing some land agent's behind he then gets his big chance, 2500ac almost half the local estate! Its £200/ac with no sfp. Bob's pleased, he would have gone to £300/ac, the lands worth £12,500/ac after all and his Grace deserves to make money as much as the next guy (Bob doesn't realise that his Grace's family got the land many years ago for killing one of the King's rivals so it didn't really cost them anything). He will now have 4,500ac! So Bob dives right in on a 15 year lease!
Bob now has 4500 ac, more land than anyone in the county. He has a total rent now of £620,000/yr or £137/ac. So what?!? £137 is less than a tonne of wheat so it doesn't matter.
Conditions remain the same in year three, so he makes a profit now of £63/ac across all 4500ac, a tidy profit of!!... £283,500... hhmm. Bob is only making £3,500 more than last year on 125% more turnover.. But so what! Bob now has 4,500ac and he just bought 2 Lexion 770's... and built a new £500,000 grain store, he's now got a website and gives talks to fellow farmers.. he's the envy of all his neighbours... And he's on Mr Claas's xmas card list! He gets to shoot with his Grace! (even if it is just the keepers day) His Grace loves Bob, (he calls him his 'tame farmer') he has never had so much spare cash and doesn't have to deal with those pesky tenants anymore! If Bob keeps in with him he might get the rest of the estate, Bob will definitely go to £300/ac to get all that land, Bob'll have 7000ac soon!
Year 4 comes along, its a wet one, the crops were sown in poor conditions and come harvest he is struggling to cut 4500ac.. even with his two Lexion 770's! in his head he would have been done combining in less than 15 days cutting (even with all those small fields and road miles required) but they won't cut much when its raining or their bogged or got a power washer up their spouts to wash the mud out.
The wheat price has also dropped, and that combined with slug pellets costs and breakdowns means that his notional profit before rent comes back to £100/ac, and at the end of the year he goes from a £63/ac or £283,500 profit in year 3 to a loss of -£37/ac and a total loss of -£166,500 in year 4.... and thats before taking into account the Lexion 580 that he had to buy to get the wheat cut before it sprouted... but thats not too important it only cost £180,000!?!.. All that for about 4 times the work he used to do!! He decides to pass on the rest of the estate.
The cereal market then gets more volatile for the next few years (unfortunately Bob has to sell forwards every year to keep the bank manager happy so he can't be fussy about prices) and other costs go through the roof, he's still got 13 years of his lease to go and wishes he had never seen the 2,500ac. When he eventually gets out of the lease he now owes the bank so much that they tell him if he ever tries taking on more land they will call in the loans and shut him down. His Grace gets some new tenants, hopefully they won't mind the derelict steadings.. Progress eh!
glasshouse
Member
- Location
- lothians
you must have posted that before somewhere, its spot on.
Anonymous...
Member
Yes I've seen this before, and agree it's bang on
Bossfarmer
Member
- Location
- between Perth and Inverness
Thats if Bobs an idiot, redo it all for if he got the extra ground at £150/ acre with sfp
- Location
- Limousin/Charentes toad land
and wheat goes back to 70 quid (it wasn't that long back)
No, not at all. Apologies if it came across that way. In terms of whingers, yes I can think of a couple. One admits to losing half his sub through his 'farming'. Works all year like a dog to lose half his free cash. Only way forward is to have more land which would double the mistake but I suppose double the income, for now. From what he told me his net profit is about £50 p/a after BPS and low input CS / HLS schemes etc. Not going to finance much expansion.
Well, frankly, he needs to get a grip and sort his business out. He's not gonna be asset stripping anywhere if he keeps that up. Working yourself to death to lose money impresses no one.
and they cut or take away the sfp/bps
Bossfarmer
Member
- Location
- between Perth and Inverness
wheat was 200 quid not long ago either
Bossfarmer
Member
- Location
- between Perth and Inverness
the realities of a poor harvest year and growing a suckler herd, I never told you what I can make in a good year
- Location
- Limousin/Charentes toad land
Exactly. This game makes about as much sense as walking into a casino
Bossfarmer
Member
- Location
- between Perth and Inverness
just to keep all the brexiters updated;
looks like Londons predicament of being outside the EU now has created a lot of poaching across Europe
Frankfurt and Paris have already begun lobbying hard to wrest back control of the multi-billion-dollar euro-clearing industry from London. Paris believes that as many as 30,000 financial services jobs are up for grabs when the UK leaves the EU.
Pécresse told Bloomberg: “We’re the only truly global city seeking this business. Frankfurt doesn’t have our depth, Dublin is on Europe’s periphery.”
in other news: The UK's biggest law firms have been registering solicitors in Ireland so they can continue to practise in European law after Brexit
looks like Londons predicament of being outside the EU now has created a lot of poaching across Europe
Frankfurt and Paris have already begun lobbying hard to wrest back control of the multi-billion-dollar euro-clearing industry from London. Paris believes that as many as 30,000 financial services jobs are up for grabs when the UK leaves the EU.
Pécresse told Bloomberg: “We’re the only truly global city seeking this business. Frankfurt doesn’t have our depth, Dublin is on Europe’s periphery.”
in other news: The UK's biggest law firms have been registering solicitors in Ireland so they can continue to practise in European law after Brexit