Fodder, finance and cashflow

The View from Teagasc: A fodder census of 1,240 farmers in September 2013 showed an overall average fodder surplus of eight per cent. Farmers have assumed an aveage 140-day winter feeding period, which does not allow for an early winter or late spring. One in five farmers is still short 20 per cent of their feed requirement: are you one of those farmers?

For those farmers still short of feed:
1. Do a fodder budget now and establish the extent of your deficit.
2. Examine the options of buying forage, buying concentrate feeds,setting up for early turnout in spring and selling stock.
3. Don’t ignore the risk of an early winter or a late spring. Build a reserve into your feed budget: a surplus of two bales of silage per livestock unit at the end of the winter is a
valuable asset.
4. If cash flow is an issue, act now. Draw up a plan in conjunction with your Teagasc adviser, consultant or accountant, and don’tbe afraid to submit an application for money to your financial institution.

For those farmers who have just enough feed:
1. Don’t ignore the risk of an early winter or a late spring: a surplus of two bales of silage per livestock unit at the end of the winter is a valuable asset.
2. Start your fodder management plan from day one of the housing period:
a. if you have planned on a short winter, stretch the silage – for example, if you’ve planned a four-month winter, budget to stretch the silage for a five-month winter;
b. use meals and other forages to stretch silage; and,
c. revise the fodder budget regularly throughout the winter.

Be conservative in planning the length of the winter.

Example: suckler farmer short of silage
A farmer with 40 suckler cows and all followers has a fodder budget completed. He needs 750 tonnes of silage. He has the equivalent of 590 tonnes of silage in the yard, made up of 500 tonnes of silage in the pit and 100 bales of silage (4×4). Therefore, the deficit is 160 tonnes of silage or 21 per cent. This percentage tells us that the deficit can be filled by either forage, concentrate, or a combination of both, depending on what is good value locally and how well set up the farmer is to feed concentrates, i.e., feeding space. So, how does he make up the deficit? He uses a combination of restricting silage and feeding meals, planning for early turnout and selling empty cull cows before the winter.

Strategy to fill the fodder gap

1. Feed 40 cows and 40 weanlings 60 per cent silage + 3kg meals for six weeks. Save 66 tonnes
2. Plan for turning out cows and weanlings one month earlier than normal. Save 84 tonnes.
3. Sell four cull cows before the winter. Save 28 tonnes

This equals saving of 178 tonnes of silage.

A quick guide to managing finances

The last 12 months have been difficult in terms of managing the farm finances. If you find that you are in a particularly difficult situation, help is available to allow you to develop a plan to get your finances back on track.

It is important to:

  • act early;
  • consult and draw up a plan with your Teagasc adviser, 
  • agricultural consultant or accountant;
  • be realistic and up front;
  • inform your bank early of your financial situation;
  • agree a payment plan with your creditors
  • don’t ignore the problem;
  • delay non-essential investment or expenditure on the farm
  • review the main efficiency factors on your farm.

The main priority is to minimise ALL spending until such time as cash flow improves. The following are the main areas to examine to try and bridge the gap between income and spending:

1. Prioritise essential living expenses.
2. Eliminate all non-essential expenditure – both farm and personal spending.
3. Contact your bank about the possibility of amending your current debt repayment amounts and to consider if the following options are available to you:

  • investigate ‘interest-only’, but watch that the interest rate is competitive and ensure that any preferential rates, e.g., trackers, are maintained; and,
  • consolidate/restructure several loans over a longer term.
  • investigate ‘payment holidays’ on machinery lease payments.

4. Talk to your accountant NOW about your potential tax bill, which is payable by 31 October – plan now to avoid another cash flow shock.
5. Involve all family members in analysis and solutions where possible.

Methods to bring in cash

A. Sale of trading stock:

  • Target beef cattle/stores for sale/early sale of cull stock,  especially where you may be tight for fodder.

B. Off-farm income for either farmer or spouse.

C. (i) Consider availing of Farm Assist:

  • contact your local social protection office;
  • over 11,000 farmers are already availing of this payment.

(ii) Family Income Supplement:

  • This may be an option where there is off-farm work of greater
  • than 19 hours per week;
  • The payment is based on the number of qualified children you
  • support.

The latest fodder advice from Teagasc, out last week, is available here.

 

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