The year 2018 is still very fresh in most farmers' memories. We went from a fodder crisis to a drought, resulting in massive fodder and concentrate bills and the resultant pressure on incomes and cashflow.
Many of my clients are still in financial recovery from that period, and now we are facing into another very uncertain time.
Already we are seeing beef prices at a 10-year low, and predictions for peak production milk price are far from encouraging.
Nobody knows how long the impact of the pandemic will last, but we do know this is a worldwide crisis and its fallout is certain to impact negatively on farmers' incomes in the short to medium term.
This is the first part of a two-part article dealing with the various cashflow preservation measures that can be implemented to ensure the ship stays pointed in the right direction and that the captain and crew sleep peacefully at night.
Now is the time to start planning your financial strategy to ensure you preserve your cashflow.
Don't wait until a problem emerges to start this process. You may have limited scope to control your profitability in times of falling prices, but maintaining your cashflow is something you can have control over.
Cashflow is king in a time of financial turmoil, and maintaining it may preserve your sanity as well as your farm business.
As sure as night follows day, this crisis will pass and farmers are lucky insofar as they are in the business of producing the most essential commodity of all - food.
We may be facing a rocky period but markets will recover and normal service will be resumed, and you want to be in a position to avail of the upswing.
Predicting cashflow demand is a simple exercise of estimating what money will come in and what money will have to be paid out over a set period. In the current situation, you need to be planning for at least a year ahead.
Enlisting the assistance of your Teagasc advisor or your local ACA farm consultant may be the best money you will spend this year.
If your business is particularly hit by the Covid-19 pandemic you may be eligible for the Business Continuity voucher worth up to €2,500 from your Local Enterprise Office. You may not need to implement any of the planned measures straight away but having a plan will give you peace of mind.
Cashflow preservation can be achieved by a combination of measures such as:
The first two are probably the most urgent.
A number of Covid-19 supports have been put in place by the government.
In cases where farmers, particularly certain niche-market producers, are unable to trade and their trading income has collapsed to the extent that they would be available to take up other full-time employment if it was available to them, then they would be entitled to claim the Pandemic Unemployment Payment. This amounts to €350 per week.
If you have employees and if it becomes evident that you cannot afford to fully pay them because of the Covid-19 crisis, but you keep them in employment, you will receive a subsidy of up to 70pc (or up to 85pc from May 4) of their net wage subject to a maximum of €410 per week.
If you are trading as a company and paying yourself through the company payroll you may also be eligible.
You will need to prove to Revenue that you satisfy the conditions of the scheme, the main one being that you can show that your business has suffered a severe financial impact from the pandemic. One such indicator is that your turnover has dropped by 25pc as compared to the most recent relevant comparable period.
Alternatively, where you need to lay off staff, they will qualify for that Covid-19 Pandemic Unemployment Payment of €350 per week. Where an employee is diagnosed with Covid-19 they will receive the €350 payment for the duration of the scheme or until they return to work.
Where an employee is suspected of having Covid-19 and is medically required to self-isolate, he or she will also qualify for the €350 for the two weeks that they are self-isolating.
The main pillar banks and indeed some of the much-maligned vulture funds have indicated their willingness to offer a three-month moratorium on repayments of mortgages, loans and finance.
One suspects that if the fall-out from the crisis extends beyond three months the moratorium may have to be extended in some instances. This could represent a significant cashflow saving for many farmers and will not impact on your future credit rating.
Certain payments such as personal pensions could be deferred for a period of time.
Hopefully, there will be ample opportunity in the future to make up the lost ground.
The position on private health insurance is still somewhat unclear in regard to the impact on premiums resulting from the effective temporary takeover of the private hospitals by the HSE.
The message here is to keep an eye on developments as presumably, the government will not permit the private health insurance providers to continue to charge full premiums for a much-reduced range of private medical services.
Farmers who have difficulties in clearing outstanding tax bills should contact Revenue, who have promised to work with businesses experiencing trading difficulties arising as a result of the coronavirus.
Presumably, that can be interpreted to mean that they will accept phased or delayed payment arrangements.
Revenue debt enforcement activities have been suspended, and interest on late payment of VAT and Paye/Prsi currently due have also been suspended.
Also, current tax clearance status will remain in force so a farmer seeking a tax clearance cert does not have to re-apply.
Availing of any or all of the foregoing cash flow preservation measures could make a huge difference to your financial profile over the coming months.
Speak to your accountant or your agricultural advisor as soon as possible.