Think

Plan
Do

Contact Details:
Teagasc Head Office
Head Office, Oak Park, Carlow
Tel: +353 (0) 59 9170200
Fax: +353 (0) 59 9182097
Email: [email protected]

My Farm, My Plan
June 2014

www.teagasc.ie

- Planning for my Future

Untitled-2.indd 1 12/06/2014 11:15:54

 My Farm, My Plan
- Planning for my Future

Name:

Address:

Untitled-2.indd 2 12/06/2014 11:15:56

Contents

Benefits of completing a plan for my farm 1

The Farm Plan 3

Stage 1: Thinking about where I am going 3

Stage 2: Thinking about what I have to do 5

Stage 3: Estimated extra costs, extra revenues and risks 15

The Financial Plan 23

Stage 4: Developing a full financial plan for my farm 23

Appendices 25
Benefits of completing a plan for my farm

My farm – I will plan the changes to my farm and my farming system

Infrastructure - I decide when new or additional infrastructure is put in place

Costs - I know in advance the cost of putting your plan in place

Extra income - I know what extra income will be generated

Labour – I know in advance what extra labour will be required

Cash – I know that I will have enough cash to keep farm, family and
repayments met while putting my plan in place

Banks – I can use my plan to help deal with my bank

Planning leaves you in control

Completing the workbook

This workbook contains a number of worksheets for you to complete before

preparing a financial plan. These blank worksheets are accompanied by
explanatory text to assist with their completion. Further blank copies are
available in the appendices.

1
 Planning for success

There are two essential steps in the planning process. The first step is the
“thinking process” behind what you are intending to do. In this workbook
this is referred to as the farm plan. The second step is the “financial
process” where all your financial details are analysed for your farm and
family circumstances to examine if your proposed farm plan is actually viable.
This is referred to as the financial plan.

The farm plan

This must be completed by the farmer before a financial plan can be

completed. It involves asking yourself a series of questions on where you are
going, how you will get there and what extra profit or benefits your plan is
expected to generate. Many of these ideas are already in your head but
writing them down will help clarify them for you. It will also help in preparing
your financial plan and give you a much better understanding of the
background to the figures in your financial plan.

Stage 1: Thinking about where I am going

1. Why am I farming?
2. What am I thinking of doing?
3. How is this going to deliver on my reasons for farming?

Stage 2: Thinking about what I have to do

1. Where am I now?
2. What are the main issues I must focus on?
3. What do I have to do to get there?
4. When will I make these changes?
5. How will my plan affect my working day?

Stage 3: Extra costs, extra revenues and extra risks

1. What are the extra costs?

2. What extra revenue will be generated?
3. What could go wrong?

The financial plan

Stage 4: Developing a full financial plan

Following completion of the farm plan, you and your adviser can then prepare
a financial plan (annual cash flow, Profit and Loss and Balance Sheet) to fully
examine the financial viability of your proposals.

2
Stage 1: Thinking about where you are going
There are three steps in completing Stage 1 of the farm plan.

1. Why am I farming?

Most farmers know what they do…many know how to do it…but very few are
clear on why they do what they do. It all starts with clarity…you have to know
why you do what you do. Your inspiration comes from the clarity of why.

Once you know why you do what you do, you can decide on the actions you
will take to achieve your desired future position (the ‘how’). The ‘what’ is the
result of those actions.

Too many people start with the ‘what’, then the ‘how’ and leave the ‘why’ until
last or ignore it altogether. Without clarity, there will be no motivation for
action.

Some reasons for answering the ‘why’ may include: maintaining or increasing
income, to match input price inflation, for retirement, to cope with milk or beef
price volatility, for farm transfer / succession, for expansion, to employ labour,
for family life, for lifestyle, etc

Use the first part of this worksheet to record your vision statement (your
‘why’). Involve you family at this stage, which could include your parents,
your spouse and relevant children where applicable.

2. What am I thinking of doing?

Farmers are continually changing. Everybody has their own idea or vision of
where they are going. It could involve changing enterprises, renting extra land,
increasing or reducing stock numbers, retiring from farming, employing labour,
building new facilities, re-organising farm finances, setting up a new farm,
increasing farm stocking rate or a combination of any of these changes.

Whatever your situation, your plan must take into account your current
position, your desired future position and how you are going to get there.
Focus on the outcome you want, not on what may happen due to external
influences or your current position. Don’t confine yourself or limit your thinking
to where you are now. Similarly, don’t make changes on impulse; you must
have sound reason for what you are going to do.

Complete the second part of the worksheet by outlining what you are thinking
of doing in the next 5 to 7 years.

3. How is this going to deliver on why I am farming?

Having completed the first two parts of the worksheet, you should check that
what you are thinking of doing will enable you to meet your vision (will your
planned changes allow you to meet your ‘why’?).

3
 Why am I farming? What am I thinking of doing?

Why am I farming?

What am I thinking of doing? What are my plans for the next 5 – 7 years?

How is this going to deliver on why I am farming? Does it fit into my

major plans?

4
Stage 2: Thinking about what I have to do
There are five steps in completing Stage 2 of the farm plan.

1. Where am I now?

Before setting out on a journey, you must know where you are leaving from.
Similarly with a farm plan, you must start by clearly understanding where you
are now (your starting point). Every farm has its own unique characteristics,
which vary from financial efficiency, physical resources, capital resources,
labour and family circumstances. Your plan must take these into account.

Current stock: What are current stock numbers? What animals can be sold
to help finance your plan? Increasing breeding herd size requires suitable
replacements being available. How many have you?

Land: How much of your farm was soil sampled? What about soil type? Does
drainage work need to be carried out? What is your current farm stocking
rate? How secure is your land base? What is your cropping rotation & crop
mix? What options have you looked at to increase land area?

Current equipment and facilities: What is the current position with slurry
storage, winter accommodation, handling facilities and milking facilities? What
about your grazing infrastructure (water, fencing and roads)? What equipment
and machinery is on farm and when should it be replaced or upgraded?

Labour and farm information: In addition to yourself who is doing the work
on your farm? Your farm plan must be based on solid information coming from
you farm. What information do you use?

Financial: Use Teagasc eProfit Monitor to get the cost of producing a unit of
output on your farm. This could be per kg of beef or lamb produced / per litre
of milk / ton of grain. Your profit monitor will also tell you the profit per hectare
from each enterprise.
What savings are available for investing in your plan and how much would you
be prepared to use for any planned farm investment? What is the current level
of repayments per annum and when will these finish? Debt per breeding
animal or livestock unit is a measure that can indicate if you can afford to
borrow more money for further development.
In general, at low costs of production farms can carry higher levels of debt per
production unit whereas at high costs of production there is little scope to
carry additional debt per cow or livestock unit. Use Appendix 6 to help
calculate total farm debt.

What is my previous history of change and progress?

Can you show to yourself that you have made changes in the past? Did you
increase technical efficiency? Did you successfully repay loans?

Do I enjoy what you are currently doing? If you find it difficult to answer this
question then you should carefully consider what you are planning.
5
 Where am I now?

Stock
Breeding stock numbers (cows, sucklers, ewes)
Output milk, beef, sheep (kg milk solids, kg beef, etc)
No. of replacements (0-1) (1-2)
No. of cattle (0-1) (1-2)
No. of replacement ewe lambs
No. of animals (and value) to sell to finance plan

Land
Land – owned (ha)
Leased land and length of lease(s) Ha yrs
Conacre land (< 5 years) and length farmed Ha yrs
Share farmed land and length of agreement Ha yrs
Whole farm stocking rate (LU/ha) LU/Ha
Milking platform - dairy (ha) & stocking rate Ha LU/Ha

Soil Health (tick)

Unknown low avg. high
% farm soil sampled in last four years
Soil P, K, pH status
Soil type / drainage requirements
% farm reseeded in last four years

Facilities & equipment (tick)

short ok excess
Housing for current stock
Slurry storage for current stock
Dairy - Parlour for current cow numbers
Handling facilities for stock on farm
Grazing infrastructure
Machinery & equipment

Labour and farm information

Number of years you will continue farming
Labour units on the farm
Discussion group member (Yes/No)
HerdPlus member(Yes/No)
Annual cash flow budget/monthly recording (Yes/No)
Teagasc Profit Monitor completed (Yes/No)
Written action plan(s) completed (Yes/No)

Financial
What is current total cost of production per unit?
How much cash is available for future investment?
What is current and future level of direct payment?
Current farm repayments per year and finish date?
What is current debt per hectare?
6
1. What are the main issues I must focus on?

Once you have fully evaluated your current situation, it is useful to look at the
strengths (S), weaknesses (W), opportunities (O) and threats (T) for your farm
as it is currently operating. You can complete the SWOT analysis for yourself
(personal), your business (farm) or a combination of both. Completing this
exercise honestly will help you to build on your strengths, take advantage of
opportunities, correct your weaknesses and avoid threats.

Fill in the next worksheet. If you would like somebody else’s view, ask a
family member, friend, or fellow discussion group member to fill it in for
you.

Strengths What is working well on the farm?

What are you good at?
What are the positives about the farm?
What advantages do you have?

Weaknesses Where can improvements be made on the farm?

What is limiting production or profit?
What is not working on the farm?
What personal traits/ skills do you need to work on?

Opportunities Where do you see opportunities for yourself and your

farm?
What trends can you take advantage of?
How can you take advantage of your strengths?

Threats What are the big external threats/ trends that could harm
your current farming system?
How could these affect your plan?
How could your weaknesses expose you to these harmful
threats?

On completion of your SWOT analysis, you should identify four key

focus areas for attention if you wish to succeed in your plans. These can
be for you (personal) or for the farm business. These are the areas that
you need to work on – that you must become really good at - over the
coming years.

Your focus areas should be more than just the elements of good technical
farming i.e. grassland management, breeding, nutrient management, stock
management. Technical competence will not be enough in the future. Think
of the other skills which you will need in the future e.g. negotiation, cash flow
budgeting, forecasting, networking, managing labour/ contractors. Ask
yourself if you need to focus on some of these areas.

7
 Complete a SWOT analysis for your farm

What is working well on the farm?

Where can improvements be made on the farm?

Where do you see opportunities for yourself and your farm?

What are the big threats to your current farming system?

What are the four key areas that you need to focus on in your plan?

What are the major changes you have implemented on the farm in the
last 5/10 years?

8
2. What will I have to do and how much will it cost?

Every plan will require changes to be made to your farming system. Some
changes are operational e.g. calving date; and others are physical e.g. a new
shed. Some have a direct, immediate cash cost e.g. buildings; others affect
cash flow throughout the years. Both must be part of your farm plan.

Usually it is the big developments that spring to mind, like a milking parlour,
new shed, land purchase, employing labour, when you think about the cost of
your plan. These are significant investments and should be costed (with
quotes) in advance. To assist you with some of the physical costs use
Appendix 1 as a guide.

But there are also other costs that a plan needs to take into account. These
may not be as large but can have a large impact on cash flow if not taken into
account when looking at the overall plan.

These could include:

• Stock purchases and building up stock numbers
• P,K, lime applications where soils are deficient (see Appendix 2)
• Soil testing (€30/sample)
• Reseeding (€400-€520/ha)
• Increased use of AI – extra cost of straws per annum (€22/straw)
• Renting land
• Purchasing additional feed
• Extra variable costs like contractor, vet, etc

Complete the worksheet on the opposite page. Specify the cost of each action
and whether it is an estimate or actual quote. The easy way is to use
estimates but you will be in more control of your plan if you have quotes for
your development. Some items may need to be financed by borrowings;
indicate which ones.

Dairy: Many dairy farmers are planning to increase cows numbers on the
milking platform. If this is part of your plan you must take into account the
ability of your milking platform to feed these cows and that there are sufficient
outside blocks (owned or leased) which will provide adequate winter forage
for the herd and rear all replacements. The ability of the milking platform and
the outside block to produce adequate grass may be constrained by soil P, K
or pH levels and the requirement for drainage and/ or reseeding. If this is the
case these issues must be addressed in your farm plan. The cost of such
improvements should be treated as a capital cost and budgeted accordingly.

9
 What will I have to do to get there?

Item Unit Cost/unit Tick if Financed by Net cost

actual (own cash
quote or
borrowings)
Example – fencing 1000m €1.5/m X cash €1,500

Contingency (10-20%)

€
Total Cost

Estimated own cash to be used €

Estimated total borrowings required €

Warning: Always include a contingency figure for any development. This

could be 10-20% depending upon how many quotes are available and your
knowledge of the development
10
3. When will I make these changes?

I have already identified where I want to go and what I have to do to get there.
Another major decision is the timing of when these changes will take place.

An action plan will answer the “What / When” questions relating to your
proposal. Completing this worksheet will allow you to set out a schedule or
timeframe for the implementation of your plan.

This worksheet should

• Outline the key actions required to implement the overall plan
• Show a work schedule and timeframe (begin/ end) for each of these
actions e.g. begin building a milking parlour in July 2015, finish building
in December 2015
• Indicate when borrowings need to be drawn down

Include all issues that you costed in the previous worksheet and any other
changes to your farm that are relevant to your plan.

Any change from your current farming system should be included, regardless
of whether they are a cost or not. Some changes may be operational, but you
need to write them down to get a full picture of how you will implement your
plan. An example in this category would be the plan to reseed a proportion of
the farm every year over the period of the plan or to spread P, K or lime on a
proportion of the farm on an annual basis.

Note: For larger and more complex projects, it is advisable to complete a full
project management plan in addition to your financial plan.
See Teagasc Dairy Levy Series No. 15 at
www.agresearch.teagasc.ie/moorepark/publications/publications_d.asp

11
 Action Plan

Year Month Actions required Borrowings

(begin/ end) required
Example July - Dec Commence building works for new parlour in €80,000 drawn
2015 July down by July.
Complete by December

20___

20___

20___

20___

20___

12
4. How will these changes affect my daily workload when my plan is
implemented?

When your work life and personal life are out of balance, your stress level is
likely to soar. Achieving a satisfactory work/ life balance can be challenging
for self-employed farmers as the boundaries between work and home can
become blurred. If you spend most of your life farming, your home life will
lose out. The situation is similar with part time farming. A balance between
job, family and farming must be found, if your new farming plan is going to
make this balance unstable – think about it again.

Answer the questions in the worksheet. If you do not answer yes to all
questions you may be under pressure and unable to take control of the
proposed changes in your plan. You need to reassess what you are currently
doing. Talk to your Teagasc Adviser or another professional or bring it up at
discussion group to get ideas and support in making the changes necessary.

Ask yourself the following questions:

• How will my daily workload change when my plan is in place?
• Will it mean I will spend more/ less time in the milking parlour?
• Will I spend more time herding and feeding?
• Will I have to employ labour or rely more on a contractor?
• Will I be able to cope with the peak labour demand in the spring?
• Will there be a bigger labour/ contractor bill? How much?
• Can my plan be sustainable from a daily workload perspective?

Another interesting exercise is to complete a ‘Start doing/ Stop doing’ list to

identify those tasks which you must spend more time at (‘start doing’) and
those which you must spend less or no time at (‘stop doing’) in order to
achieve your ambitions. After all, how can you expect different results, if you
continue to do the same things?

13
 Am I satisfied with my current work/ life balance?

Yes/No

Overall, do I enjoy what you are doing?

Do I spend enough time with my family (wife/ partner/ children)?

On average, do I finish work by 6pm (outside of the calving and

lambing season)?

Do I use a contractors, employ labour/ and/or new technologies to

reduce your workload at busy times?

To achieve my plan, there are things I must…

Start doing Stop doing

How will my daily workload change once my plan is implemented?

14
Stage 3: Extra costs, extra revenues and extra risks
Only a full financial plan will show projected cash flow and profit each year for
your proposal using the data you have supplied. Such a financial plan would
take into account stock sales and purchases, all cash in and all cash out
including loan repayments, drawings and taxation. It also allows for different
scenarios to be evaluated e.g. impact of changing milk price.

However it is possible to have a quick look at the financial impact of your

planned changes using a partial budget. This looks at the planned extra
costs (or reduced revenue) and the expected extra revenue (or reduced
costs). It is a quick way to see if your plan appears profitable, break even or
shows a potential cash deficit.

Having completed your partial budget, you have to examine the net position
and decide whether your plan is worthwhile. You also need to look at the
risks to your plan.

There are four steps in completing Stage 3 of the farm plan.

1. What are the extra costs (or reduced revenue)?

1. Annual repayments if a new loan is required. Use Appendix 3 to

estimate annual repayments.

2. Where own cash (savings) are used in the plan, there is a cost by
foregoing the interest this money would make if invested elsewhere.

3. Additional land rental if extra land is rented.

4. Additional labour costs if additional labour is employed.

5. Additional variable costs if additional cows are milked. Use your farm’s
variable costs per cow/ewe/livestock unit from Profit Monitor or
guideline figures in Appendix 4.

6. If overall farm stocking rate increases there will be an added cost to

provide additional feed (grass, silage and/ or concentrates). This may
be produced on farm by investments in soil fertility, reseeding,
infrastructure and drainage or from additional purchased feed if grass
growth cannot be increased. See Appendices 2 and 5 for guideline
figures.

7. Loss of other stock sales. For example, if cattle are displaced, this will
be an annual loss of revenue from cattle sales each year.

15
 What extra costs (or reduced revenue) will be incurred?

Total No. of years Cost per

annum

Extra borrowings

Annual
Own cash (savings) used interest
foregone

Extra land rental

Extra labour per annum

Extra Costs

Additional variable costs for extra stock or crops

___________cows/ewes/cattle (extra) x _______ €/animal

___________tonnes grain (extra) x ________ €/tonne

Extra feed costs - if farm stocking rate increases

From Appendix 2: _______Ha (/annum) x _______ €/Ha

And/or

From Appendix 5: _______cows (total) x _______ €/cow

Other

Loss of revenue (stock sales/crops) – if an enterprise is

reduced/eliminated
Loss of revenue

_______hd x €________/hd

_________tonnes X €______tonne

Other

Total extra costs (or reduced revenue) per annum

(A)

16
2. What extra revenue (or reduced costs) will be generated?

Where do you see the additional money coming from when your plan is
complete? It could be extra production from existing stock, less spending
(efficiency), increased output from the extra cows or reduced labour (less
wages paid).

There may be other savings which are more difficult to quantify. For example,
your proposed plan may involve building a new milking parlour or new beef
shed. Its major benefit may be to reduce the length of the working day, which
is not a direct cash benefit. Similarly other investments may apply to the whole
farm rather than just the changes in your proposed plan.

1. Extra milk receipts sold from existing herd. Longer lactations, a more
mature herd, better genetics, investment in grassland (lime, P, K,
reseeding) may all contribute to increased production from the existing
herd. An extra 100 litres delivered would generate €30 extra receipts
per cow where milk price in your plan is 30 cent per litre

2. Additional cows will produce extra milk. Put a value on this milk based
on your current milk solids and predicted milk price. As a guideline use
a base price of 28 cent per litre (2014) for 3.3% protein and 3.6%
butterfat. For each 0.1% rise in protein and butterfat (combined),
increase milk price by one cent per litre. Heifers will yield 75% the
volume of mature cows, so if additional cows are heifers initially, there
will be increased pressure on cash flow (reduced milk receipts) until the
herd matures.

3. Extra livestock sales, increase in calf sales, weanlings, cattle sales and
sheep sales are included here where they are part of the plan.

4. If the plan involves savings as a result of expected improvements in

efficiency, include as a cost saving over the whole herd.

5. If paid labour is reduced by your plan, then include as a cost saved.

6. If other enterprises are reduced/ eliminated, there will be a variable

cost saving as the cost of keeping the other enterprise is reduced or
eliminated. For example, if a cattle enterprise is eliminated and 20 head
of cattle are no longer reared, then there is €7,200 (20 head x €360
variable cost/head) less costs incurred on the farm. Use your own
figures where available from your Profit Monitor or guideline figures in
Appendix 4.

17
 What extra revenue (or reduced costs) will be generated?

Revenue
per
annum

Extra milk receipts – extra milk sold from existing herd

____ cows(existing) x ____ litres/cow x ___ cent per litre

(milk price)

Extra cows – extra milk sold

Extra Revenue

____ cows x ____ litres/cow x ____ cent per litre (milk

price)
(Warning: don’t overestimate in the initial years of your plan.)

Extra sales _______unit x €________/unit

Extra cost efficiency

Other

Other enterprises reduced/eliminated - less variable costs

€________hd or ha x €______ variable costs/hd or ha

Reduced costs

Land – reduced rental

Labour saved

Other

Total extra revenue (or reduced costs) per annum

(B)

18
3. Is it worthwhile?

Look at the extra money to be generated and the extra expenses to be

incurred. What do you think? Are your planned changes worthwhile?

In addition to the projected cash position identified you need to take into
account:

• taxation;
• labour and workload;
• changes in stock numbers;
• net worth changes; and
• when loan repayments will finish.
• Time availability for your proposal

While a partial budget can give you an indication of the financial viability
of your proposal, it is strongly recommended that you complete a full
financial plan for your proposal. This will take into account such items as
taxation, inventory changes, net worth changes and loan repayment
schedules and more fully evaluate your proposal as well as showing the
peaks and troughs of cash flow over a six-year period.

You should contact your Teagasc Adviser/ private consultant to get a full
financial plan (annual cash flow, Profit and Loss and Balance Sheet for six
years) prepared to fully examine the financial viability of your proposed plan.
Alternatively you could purchase financial planning software yourself and
complete your own financial plan. It is likely that your bank/ financial institution
will request such a document if you are seeking finance for your plans.

19
 Is it worthwhile?

Expected extra costs (or reduced revenue) (A) €

Expected extra revenue (or reduced costs) (B) €

Estimated net position (B - A) €

Is it worthwhile?

What other non-financial benefits will arise as a result of my planned

changes?

20
4. What could go wrong?

With opportunity comes risk. In general, the bigger the opportunity, the bigger
the risk. Risks are personal to the individual farmer – what is risky for one
farmer is not for another farmer. Planning helps to manage risk so that it is
set at a reasonable level. Farmers need to identify the risks they are carrying.

You have to consider the impact of volatility in product prices (milk, beef and
lamb) and input prices over the planning period. What impact will a 3 cent per
litre drop in milk price have on your bottom line? Or a 10% change in
beef/sheep price?

Where are the other risks? These could include:

Production Risk: Poor weather affecting production

Animal disease
Reduced milk yield per cow while scaling up

Market Risk: Reduced milk prices (price volatility)

Production cost increases

Human Risk: Owner manager health issues/ stress

Employee issues
Supplier / contractor issues
Complicated system of production

Financial Risk: Interest rate increases

Cash flow shortage (overdraft or merchant credit
restricted)
Failure to control investment costs
Inefficient/ unprofitable production system

Contributing factors: These are farm factors which can increase the impact
that an overall risk will have on your farm business. For example, you may
consider wet weather as a significant risk to your farm enterprise, but
contributing factors could include poor roadways, heavy soils, low silage
reserves. Minimising these contributing factors is key to reducing the impact of
the risk.

Managing risk involves controlling exposure to the risk or controlling the

impact of the risk. Examples of risk management strategies include: building
key reserves of feed and cash or vaccinating animals against the risk of
disease.

Improving efficiency is a pretty much riskless strategy. With a sound efficiency

platform in place, you can set yourself up for the future. Simply put, efficiency
first followed by expansion.

21
What could go wrong?

A change in milk price (or cost of production) of 3 cent per litre on my

expected production (__________litres ) will affect my business by
€__________ in any year.

A change in beef/lamb price (or cost of production) of 10% on my expected

sales will affect my business by €__________ in any year.

Risk Contributing How will you minimise the effect

Factor(s) of this risk on your farm
Example: Heavy soils Install new roadways to paddocks 9 – 15
Poor weather Poor roadways Clean existing drains in paddocks 16 - 22

22
Stage 4: Developing a full financial plan
After completing your farm plan, the next step is the financial plan. This is
where all your financial data is used to calculate cash flow for six years based
on your farm plan. It takes into account variable and fixed costs, inventory
changes, total repayments, family living expenses and taxation. If your
proposed plan cannot meet all the cash outflows then you must go back to re-
think your farm plan to see where it can be changed and improved.

Your financial plan will help you to:

• Assess the overall financial viability of your proposals;

• Examine the impact of changes in key variables e.g. milk price, fertiliser
price, interest rate;
• Negotiate with and secure finance from your bank/ lending institution; and
• Understand where you cash is coming from and going to each year during
the critical transition phase of your plan.

Completion of this workbook is an important, and necessary, first stage in the

planning process. You now are in a better position to seek assistance in the
preparation of a financial plan for your farm.

You now have completed the ‘thinking process’ and have a farm plan for your
idea. It is up to you now to take the next steps towards making your plan a
reality.

Good luck!
My Farm, My Plan

Six year
Profit financial
Monitor plan

Cost
Control
Planner

23
The following is an example of the annual financial plan for a seven year
period from the Teagasc Farm Business Planner. You will have a full
understanding of the financial data in this financial plan by having completed
this workbook in advance

Financial Plan – annual financial plan based on my farm plan

Farm Business Planner

Receipts

Farm
Payments

Investments

Bank
Repayments

Drawings

Annual
Cash flow

24
Appendices
Appendix 1

Guideline building costs (2014)

Items Units used Cost per item, €

Cubicle shed + slatted tank per cow 1,000 + 500
Topless cubicle + lined lagoon per cow 400 + 300
Lined wintering pad + lined lagoon per cow 250 + 300
Silage slab per cow 95 -125
Specific building items
Roof m2 50
Slatted tank (16 wk storage for 100 cows) m3 80
Stanchion bases each 25
Cubicles and cubicle beds each 190
Concrete floors m2 22
External walls linear metres 140
Feeding barriers per bay 180
Automatic scrapers per passage 2,800
Electrical work per bay 250
Cubicle mats each 46
Dairying
Building milking parlour (shed, yard, per unit 4,000 - 5,000
d i ) machine
Milking per unit 2,000 - 8,000
Bulk tank per litre 1.70 - 2.50
Other
Land drainage – shallow system per hectare 125-3,500
Land drainage – groundwater system per hectare 3,700-8,600
Water pipes per metre 1.50-2.00
Farm roadways per metre 15-30
Water troughs per litre 0.25-0.50

25
 Appendix 2

Land improvement costs (2014)

The following table gives guideline costs per hectare on the annual cost of
improving soil fertility. For example, one hectare with soil index of 1 for P and
K would require €100/ha (€60 + €40) of additional P/K fertiliser for 3-5 years of
the plan to raise the fertility level. This additional cost is above the normal P &
K requirements needed for current farm stocking rate.

Lime requirement could add a further €110-220/ha to this cost.

Guideline € per hectare cost for meeting soil fertility and lime requirements
Annual € cost per ha of building soil fertility to Index 3

P K Years
Current Soil Index 1 €40 €60 3-5
2 €20 €30 2-3

Total cost € per ha of meeting lime requirements

Lime Requirement (5-10 t/ha) Low Medium High

€110 €165 €220

Failure to build up soil fertility where stocking rates are increasing will result in

(a) Excessive feed bills (silage/meal) and/or

(b) Reduced animal performance
(c) Reduced crop yields

26
 Appendix 3

Annual Repayments (Inclusive of interest) per €1000 borrowed (€)

Interest Rate

Terms 3% 4% 5% 6% 7% 8% 9% 10% 11% 12%

in
Years
3 354 361 368 375 383 389 396 404 411 419
4 269 276 283 289 296 303 310 317 324 332
5 219 225 232 238 243 251 258 265 273 280
6 185 191 198 204 208 216 223 231 238 246
7 161 167 173 180 184 192 199 207 214 222
8 143 149 155 162 166 174 181 189 196 204
9 129 135 141 148 152 160 167 175 183 190
10 117 124 130 137 141 149 156 164 172 180
11 108 114 121 128 133 140 148 156 163 171
12 101 107 113 120 125 133 141 149 156 164
13 94 101 107 114 120 127 135 143 150 158
14 89 95 101 108 113 121 129 138 145 154
15 84 90 97 104 111 117 125 133 141 150
16 80 86 93 100 106 114 122 130 138 146
20 67 74 81 88 94 102 110 119 128 137

Use this table to calculate annual repayments. For example, €100,000

borrowed over 10 years at 7% interest will require an annual repayment of
€14,100 (141 multiplied by 100)

27
 Appendix 4

Variable costs of production for different enterprises

These guideline costs are an indication of the variable costs you can expect to
incur or save when exiting or starting a new enterprise. Your own costs, for
example from a profit monitor, are the most accurate, so use these as
guidelines only

Enterprise Unit Variable cost

Dairy per cow €640
Suckling per cow €486
Cattle per livestock unit (LU) €361
Sheep per ewe €55
Spring Barley per hectare €608
Source: National Farm Survey 2011

28
 Appendix 5

Increased feed costs if overall farm stocking rate is increased without

increasing grass growth

Increasing farm stocking rate without making provision to grow additional feed
(reseeding, soil fertility, Nitrogen, drainage) will either substantially increase feed
costs or reduce animal performance and output. The following table shows the
additional feed cost per dairy cow (5,500 litres) at different stocking rates for
three grass growth levels where no additional feed is made on the farm.

Annual Grass Dry Matter Production (t/ha)

Medium
High growth growth Low growth
potential potential potential
Stocking Rate (14.5 t/ha) (11.0/ha) (8.5t/ha)
2.00 Base Base Base
2.25 +13 +32 +69
2.50 +25 +97 +136
2.75 +43 +155 +204
3.00 +88 +195 +240
3.25 +133 +255 +298

For example, take a farm that has an average grass growth potential of 11t/ha
and is currently stocked at two livestock units per ha. If this farm plans to
increase stocking rate from 2.0 to 2.5 LU/ha, without making provision to grow
the extra feed, then the extra feed cost per cow is €129 (€32 + €97). For a 40
ha farm (100 cows) this is equivalent to €12,900 of additional feed that must
be purchased.

*For every additional 500 litres above 5,500, add a further €90 cost per cow.

29
 Appendix 6

Debt calculation worksheet

Current loan details

Lender Original Length Interest Annual Years Principle
Details Amount of Loan Rate % Repayments Left &
Borrowed (yrs) (A) (B) Interest
yet to be
Repaid
(A + B)

Total

Overdraft

Total
debt

30
 Appendix 7

Why am I farming? What am I thinking of doing?

Why am I farming?

What am I thinking of doing? What are my plans for the next 5 – 7

years?

How is this going to deliver on why I am farming?

31
 Complete a SWOT analysis for your farm

What is working well on the farm?

Where can improvements be made on the farm?

Where do you see opportunities for yourself and your farm?

What are the big threats to your current farming system?

What are the four key areas that you need to focus on in your plan?

How will focussing on these areas allow you to meet your why?

32
 Action Plan

Year Month Actions required Borrowings

(begin/
end)
Example July - Dec Commence building works for new parlour in July €80,000 drawn
2015 Complete by December down by July.

20__

20__

20__

20__

20__

33
 Am I satisfied with your current work/ life balance?

Yes

Do I enjoy what I am doing?

Do I spend enough time with my family (wife/partner/children)?

On average, do I finish work by 6pm (outside of the calving season)?

Do I use a contractor/labour to reduce my workload at busy times?

To achieve my plan, there are things I must…

Start doing Stop doing

How will my daily workload change once my plan is implemented?

34
 What can go wrong?

A change in milk price (or cost of production) of 3 cent per litre on my

expected production (__________litres) will effect my business by
€__________ in any year

Risk Contributing How will you minimise the effect

Factor(s) of this risk on your farm
Example: Heavy soils Install new roadways to paddocks 9 – 15
Poor weather Poor roadways Clean existing drains in paddocks 16 - 22

35
 Think
Plan
Do

Contact Details:
Teagasc Head Office
Head Office, Oak Park, Carlow
Tel: +353 (0) 59 9170200
Fax: +353 (0) 59 9182097
Email: [email protected]

My Farm, My Plan
June 2014

www.teagasc.ie

- Planning for my Future

Untitled-2.indd 1 12/06/2014 11:15:54