Creating a farm plan that secures your future in farming
Sometimes in order to be successful, a business must reset – Bob McNair. Farmers are a resilient breed - they have faced many challenges over the last few years. Farmers who hope to improve their business must plan. Farm Management Specialist James McDonnell has some advice and guidance
Farmers are a resilient breed; they tend to cope with whatever comes up and manage to continue to stay in business. There have been many challenges over the last few years, weather, Brexit and Covid are a few and with CAP negotiations ongoing and a new deal to start in 2023, it has never been a better time to review your farming business. Like all successful businesses, farmers who hope to improve their business must plan.
For example: Matching the correct fertilisers to the requirement for the soil and the planned stocking rate. By maximising the cheapest feed, which is grass, by applying the correct nutrients at the correct time in the correct quantities, which will help you to protect the environment and your pocket from losses. Secure the correct inputs and avoid last minute purchases and the need to take what is available on the day.
The next 10 years will see many changes, and will challenge us all; farmers, advisors and industry partners. Most of us still only think about maximising production and efficiency, and have never really thought about the cost to the environment, and have only thought of these costs in terms of compliance with new laws. Ireland is struggling to improve water quality; our emissions need reducing, some of our soils are becoming degraded and this trend needs reversing. So as farmers and advisors, there is no better time to start than now, at the beginning of a new year.
Taking a look from two perspectives - short term and long term
By short term, I mean what you are going to do on the farm over the next 6 months. Most of you can answer that by listing off a number of jobs, some of which are good practice, and some are “must do” for example:
- Order fertiliser, concentrates, seed and sprays for the season ahead, completing it in bulk early before the demand rises and drives price up.
- Clean out the sheds before lambing/ calving; give booster vaccines to animals prior to calving / lambing.
- Review the 2020 year by completing the Teagasc Profit monitor, and write a budget for 2021
- Keep doing the ongoing daily tasks of feeding animals, and servicing machinery in preparation for the sowing season ahead.
- Complete a few grass measurements (ideally on PastureBase), so that the spring rotation plan can be worked out.
- Complete some soil tests prior to spreading Lime, P and K. (remember up to 7:1 return on investment)
So short term planning should involve writing out a plan and a financial budget to keep your business trading for the next while, with no major investments made without writing a long term plan.
5 minute cash flow plan
In most farming systems, the main spending takes place in the springtime, so now is the best time to put a budget together. Any attempt is better than no attempt at this process and if you need help please consult your advisor. Perhaps using the simple “5 minute cash flow plan” from Teagasc can help you with this. Find out more here
The long-term plan:
The average age of famers in Ireland is now close to 60 years, so for many reading this piece, farm retirement and succession planning might be part of the process. Planning a long distance into the future is difficult and you might find yourself making many assumptions. Completing this exercise will be a learning experience and once completed, a regular review and making adjustments will help you achieve your plan. In farming, there are constantly risks that need to be dealt with; poor weather, prices, new regulation, poor health, interest rates are some. Writing a long-term plan allows for these risks to be mitigated.
In order to achieve a long-term plan, first you must ask yourself some questions for example:
- What will the farm look like in 10 years’ time?
- What will my day-to-day work schedule look like?
- Will I be working longer or shorter hours?
- What will the expected income be like and will it be enough to meet my requirements?
- Is the current farming system on the farm suitable to deliver on my needs
- Will there be significant investment needed to achieve this?
- Will it involve a significant shift in the direction of the business (intensity/ enterprise etc)?
- Who should I include (family/ advisor/ accountant) in this discussion?
Teagasc produced a simple planning workbook to help you through long term planning. This workbook is called “My Farm, My Plan, Planning my Future” and is available to download here or from your local office. This workbook will help you to put your plan together.
The next part of the process is to include some of the long-term tasks into the short term list, so that as time passes all the tasks are completed in the allocated time. This process will be simple enough if the long-term plan is not too ambitious. However, if changing enterprise, or moving to a different system (eg organic farming) you will need to develop a transition plan. The reason for this is that there might be no relationship between the short-term tasks in the operation of the farm and the ultimate future farming operation.
The planning process can be summarised into three questions:
- Where am I ?
- Where do I want to go?
- How will I get there?
Teagasc advisors spend the early part of the year, completing Teagasc Profit Monitors to help farmers answer the first question. They are available to help you answer the other questions also, so please pick up the phone and have a conversation about your future.
As the Spanish writer, Miguel de Cervantes said, “Forewarned, forearmed; to be prepared is half the victory”.