Speaking at last night’s ‘Your Farm, Your Business’ seminar in Carrigaline Court Hotel, Co Cork, Mr Brady said dairy farmers were the only ones whose businesses stood a realistic chance of profitability once EU subsidies were removed from the equation.
“The single farm payment will be around at least until most of the farmers working today have reached retirement age, but I encourage people to analyse how profitable their business would be without their farm payments.
“Teagasc’s latest National Farm Survey put the average farm income at around €24,500. Out of that, you have to live and repay your loans. Dairying was the strongest sector in 2011, making €68,570. Take the €23,361 direct payment out of that, and that farmer only made €45,000. Dairy was positive, but cattle and sheep made negative incomes.”
He said 65% of all farmers earn less than €20,000 per year; 20% earn €20,000 to €50,000; 10% earn €50,000 to €100,000; and 5% earn over €100,000.
“To be a full-time farmer, you need to be making over €50,000. For me, that’s the cut-off point, and only 15% of farmers are making more than that,” he said.
“As a business decision, dairy is the optimum choice. Some people have been expanding since 2007, which has created superlevy problems, but the end is now in sight. We are doing a lot of business plans with people now who are looking for the banking finance to expand.”
He advised farmers to present a credible plan to their bank. Farmers should view their agri consultant, accountant, and solicitor as an advisory, urging co-operation between all three.
His talk covered the main financial challenges facing farmers over the next 10 years. Chief among these are the imminent decisions that will form the basis of Budget 2013 and farm funding in the new CAP.
Mr Brady urged “efficiency before scale”. He advised farmers to plan for greater price volatility, noting that while pig and grain farmers are used to this challenge, it will be relatively new to dairy and beef farmers.
Last night’s event was addressed by Agriculture Minister Simon Coveney, who updated farmers on progress with the CAP negotiations, as well as imminent changes such as new “greening” measures aligned to future farm payments.
The packed attendance also heard insights on a lifelong model for tax efficiency, corporation tax, and Budget 2013 from accountant Michael Mullins, a partner in Moore Stephens Nathans.
The Irish Examiner was media sponsor of the event.