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Winter Feed Situation Impacting on Farm Cash Flow

Unfavourable weather conditions, both in summer 2012 and spring 2013, has led to increased costs on many farms. Poor quality forages and now a shortage of grass and forage has led to increased feed bills. Poorer than usual animal performance, has impacted on farm receipts. This has already had implications for cash flow on some farms, and will continue to impact on cash flow through the remainder of 2013.

Dr Tom Kelly Director of Knowledge Transfer in Teagasc advised farmers in this situation to take action and talk to their farm adviser and bank manager to work out a plan.

He said: ”In many cases, the farm is experiencing short term cash flow problems. This will recover when conditions improve as the underlying farm business is essentially sound. Such farmers need short term access to additional cash to tide the business over and the farmer’s track record would support a high level of confidence in paying off this short-term debt when conditions improve.”

Farmers should act now and involve their advisers at an early stage. Delay in taking action will only magnify the problems. You can be certain that you are not the only farmer in that situation, but you can also be assured that help is available. The implication of the current cash flow situation is likely to extend throughout 2013. In many cases it may not be possible to resolve current difficulties in 2013 and a planned approach extending into 2014 may be the most prudent way of resolving problems.

Teagasc are encouraging farmers experiencing cash flow difficulties to take the following steps:

  • Act early, even the best farm plans and schedules are in need of adjustments. Delay will only magnify the problem. It will not solve it.
  • Know your debt, put together a list of all your debts; who you owe, how much you owe and the interest rate and term.
  • Consult and draw up a cash flow forecast for remainder of 2013 with your Teagasc Adviser or Agricultural Consultant. They have the expertise and experience to help you present tailor-made proposals to your bank and/ or your merchant/ farm input supplier.
  • Arrange a meeting with your Bank Manager. Take time to prepare the appropriate information for this meeting including (1) a recent set of farm accounts/ Profit Monitor; (2) a statement quantifying the impact of 2012 weather related issues on your farm business; and (3) a cash flow forecast for the remainder of 2013.
  • For those with short term cash flow problems, an extension to an existing overdraft facility or a new overdraft facility may be all that is required.
  • Be realistic. Banks will respond to realistic budgets and up-to-date cash flow projections, supported by the farmers own records and accounts.
  • Arrange a meeting with your main input suppliers and those to whom you owe money. Explain your situation and offer a repayment schedule to them which you can realistically meet.
  • In more severely affected farms, the farm household income will be insufficient for living expenses, check out your entitlement to income supplements like Farm Assist and Carers Allowance.
  • Remember, help is available. Contact your Teagasc Adviser, Agricultural Consultant, Bank Manager, farm organisation representative, family or friends or other organisations.