Don’t make unnecessary expenditure, farmers told
However, not all spending is ruled out by Teagasc Specialist Advisor, Tom O’Dwyer. “Investment in additional quota still represents good value for money”, he advised in the Todays Farm specialist publication for Teagasc clients.
“Unnecessary capital expenditure must be avoided at the moment. Farmers need to think very carefully about entering into new leasing, hire purchase or loan arrangements at present. While new machinery or buildings may be beneficial, the liability will still remain at the end of the year, and the repayments will still have to be met in the future”.
He suggested that money can be saved through a sensible approach to all expenditure on plant and equipment. Farmers should consider if the existing machine can be repaired at less cost, is there a contractor available locally to do the job, and do they really need the top of the range four wheel tractor or jeep.
“This is not a good year to replace fencing, gates, old sheds, or machinery, unless necessary”, he said.
“Make do with what you have for now. There will be better times for on-farm investment in the future“.
He said merchant credit should be watched closely. Many co-ops offer interest free terms, provided the farmer pays before the end of the month following the month of purchase. If this is not available, a stock or term bank loan may be a better option to pay for necessary purchases such as fertiliser, rather than incur a monthly credit charge on a trading account. He warned, “Ignoring a financial problem will not make it go away. It generally makes it worse”.
