50% of beef farmers with cash flow problems sell cattle to alleviate issue

Three out of every 10 beef farmers admit that they experienced cash flow difficulties in 2013/14, according to an AIB report on the beef sector.

The report shows that farmers aged between 35 and 55 years are twice as likely to have experienced cash flow difficulties as those aged over 55 years (44% compared to 22%).

Further, farmers in Connacht/Ulster are most likely to have experienced cash flow difficulties (35%) in 2013/14.

However, it shows that households with an off-farm job are twice as likely as those with no off-farm job to have experienced financial difficulties (39% compared to 19%).

Where cash flow difficulties occur, the survey found, an overdraft is typically used to alleviate the problem. In addition to the overdraft, a number of other approaches are also employed as 58% of farmers use personal savings to alleviate cash flow difficulties while 45% reduce living expenses.

It also shows that half of farmers sell livestock and the same proportion delay carrying out maintenance and repairs at times of cash flow difficulties. For 37% of farmers, the approach to dealing with cash flow problems is to delay paying bills while 36% extend merchant credit.

  • 61% of farmers aged between 35 and 55 years sell livestock to alleviate cash flow problems compared to 42% of those aged over 55 years. Similar trends are evident in terms of delaying maintenance and repairs (62% of those aged 35-55 years compared to 41% of those aged over 55 years);
  • Some 68% of suckler to store producers sell livestock to address cash flow problems
    compared to 32% of those who purchase cattle for finishing; and
  • Suckler to store producers are most likely to increase merchant credit (48%) and suckler to finisher producers least likely to do so (23%) at times of financial pressure.

Those who experienced cash flow difficulties in 2013/14 are twice as likely to consider changing enterprise as those who did not experience cash flow difficulties (40% compared to 18%), the survey found.

It also showed that farmers who experienced cash flow difficulties in 2013/14 are less likely to utilise measures of performance such as: sale price; profit/head; liveweight gain; stocking rate; or days at grass than those who did not experience any difficulties.

ACCESSING FINANCE

Some 28% of beef farmers have no borrowings or outstanding farm business credit and the proportion of farmers with farm borrowings increases with farm size (63% of those farming less than 30 hectares compared to 82% of those farming over 50 hectares).

Farmers who are fully dependent on the farm income are less likely to have business borrowings than those with an off-farm job (farmer and/or spouse) (60% compared to 80%).

Over half (53%) of farmers have a farm business overdraft, 40% have a farm bank loan and 27% have merchant credit.

Just over one third (36%) of those farming less than 30 hectares have a business overdraft compared to two-thirds (67%) of those farming over 50 hectares. Similarly 29% of the smallest farms (less than 30 hectares) have a farm business loan compared to 55% of the largest farms (over 50 hectares).

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