How to Finance your way out of the consequences of extreme weather

  • How to Finance your way out of the consequences of extreme weather
    FarmIreland.t. E.
    A couple of weeks ago it seemed to me that I live in two parallel universes. My conversations with non-farm neighbors and friends were wonderful about summer and as the sun lifts the mood of everyone that it does, if it does not threaten our lives.
    https://www.independent.ie/business/farming/agri-business/finance/how-to-finance-your-way-out-of-the-fallout-from-the-extreme-weather-37233717.html
    https://www.independent.ie/business/farming/article37233716.ece/7ec01/AUTOCROP/h342/2018-08-21_bus_43305971_I1.JPG

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A couple of weeks ago it seemed to me that I live in two parallel universes. My conversations with non-farm neighbors and friends were wonderful about summer and as the sun lifts the mood of everyone that it does, if it does not threaten our lives.

Compare this with my conversations with my cattle clients that were all that is necessary for rain and the consequences of it not arriving in significant quantities or all of it to forget to stop now that she started.

Recently the farmer, the client noticed that the only thing that grew on his farm during the summer was his co-op bill to feed.

People often use the term ‘perfect storm’ to describe the situation is especially bad due to a combination of adverse circumstances. Over the past nine months, farmers have to bear the consequences of hurricanes, heavy snowfalls, prolonged periods of rain and drought, the like of which have never experienced in this country.

I think it’s safe to say that all this adds up to the perfect storm.

As with any catastrophic weather phenomenon, this result is evident in the trail of damage he leaves in his path. It remains to be seen what the final number of this ‘perfect storm’ will be, but we are seeing a reduction in milk output, poor spring barley yields, open silage pits and bare pastures, not to mention the rapidly growing merchant and co-OP supply account. The question of the supply of winter forage case-not to mention the war.

CASH FLOW PLANNING

Before we even consider the probable scarcity of feed for the winter, with the beginning of the year income was affected considerably and cash flow is under pressure. This situation contributes to a wrong decision and no one can over emphasize the critical importance of resolving the situation in a timely, comprehensive and planned basis.

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Keep it simple… to ensure a thriving beef, sheep, pig and tillage enterprises

Simplicity is key,” says farmer Thomas O’connor. There aren’t too many farms in Ireland, where you will see over 100 young Bulls grazing together in harmony in one enclosure, but it is this unique approach that gives the O’connor family the edge when it comes to successful farming.

Partner banks in this impending crisis and will have to be patient and resourceful in easing farmers through the fall period. I believe they will.

Based on my dealings with them in recent years, they are ready to have a long term vision with people who have a fundamentally good track record, but hit turbulence for some reason.

Contact the consultants or a consultant now and address what you think your needs will be from now until the end of next winter, taking into account all your current debts. Remember, winter can’t end, when you would like it to end, so be careful with predictions.

Do not use your co-operative or merchant as a source of credit, you will pay the loan, the goods bought at the price of the loan. You can also be at their mercy when it comes to paying bills.

FUNDING LOSS

I’m not one of those prophets of doom who predict that the worst effects of climate change only came in 2018 and is here to stay. If I believe that I could pack my bags and head for the hills like most of my clients.

No, 2018, similar to 1976, can be very dry summer that comes our way every few decades.

Consequently, the financing of costs of depositions should only be done during the year and no attempt to clean it by short-term lending. Again, your Advisor farm to assess what you can realistically afford to repay per year and he/she will recommend the most appropriate term for which you need to repay. It is difficult to overestimate the importance of inclusion of all current debts in any re-financing offer.

PLANNING DECISIONS

Many farmers, especially dairy farmers, are faced or perhaps is currently experiencing a shortage of fodder. Second cut silage, if any, will come later with the Bulk and the quality is what you would expect in a normal year.

This combined with the fact that the first cut silage pits, perhaps, would suggest that a victory

the shortage of feed Ter is inevitable. Before any hasty decisions are made on the purchase of expensive replacement of feed, make a budget of food.

Your situation may not be as bad as you think. If your food deficit is below 30%, not to panic to purchase a low energy feed, but rather up for the shortage of concentrates and straights.

However, if the deficit exceeds 30%, than some form of roughage needs to be purchased if you want to avoid truncation.

One of the options you can consider planting harvest, catch, or vigorously growing grass varieties.

In addition, the best way to preserve what you have silage for the winter can be to reduce demand for it by selling shares.

In America and New Zealand during such a crisis, the first thing the farmers do is reduce livestock this year and recover next year.

Many farmers could select 5-10% of the herd without any noticeable impact on overall profitability.

If ever farmers need seeks professional help this time. The country is well served with agricultural advisors whether it be a Private Committee or the ones attached to the co-operative and merchants.

Act now and don’t let this issue to be on top.

Martin O’sullivan is the Author of Handbook of PMA farmers. He is a partner at O’sullivan Malone and company, accountants and registered auditors; www.som.ie

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