Farm Ireland

Friday 20 April 2018

Weather woes and tax bills will pose big challenges over the autumn

Peter McDonald from Mullinavat Co. Kilkenny competing in the Vintage Single Furrow class with his 1950 Steyr single cylinder tractor at the National Ploughing Championships. Photo: Gerry Mooney
Peter McDonald from Mullinavat Co. Kilkenny competing in the Vintage Single Furrow class with his 1950 Steyr single cylinder tractor at the National Ploughing Championships. Photo: Gerry Mooney

With the rain pouring down here, weather woes are becoming an increasingly bigger issue in Kerry and other western counties.

October grazing could be seriously challenged alongside a mounting pressure to house cattle. We really need a spell of drier weather. It's hard to believe that some areas had experienced dry to drought conditions in August, as they haven't been seen here where 90mls of rain has fallen in the three weeks to September 21, bringing our annual rainfall to 976ml. Enough said.

However, having visited the ploughing and having seen the squelch of mud visible even on the Tuesday, I think many appreciate that ground conditions aren't as desirable as they could be for September.

The challenges ahead are extending the grazing rotation and getting slurry out. On the other hand, grass growth has remained strong, especially on farms where dry conditions were limiting growth. The rain brings on a lush green growth, but even on our ground, grass growth for September has averaged at 65kgDM/ha/day for the last three weeks.

So extending the rotation and building up pasture hasn't posed a massive uphill challenge. As long as the rotation length, in terms of the area grazed, by now has exceeded 35 days (1/35th), generally you should be in or around target for pasture cover. If not, a small increase in supplementary feeding may be all that's needed.

At this stage in the season, especially with wetter conditions, the 12-hour wire for grazing should be in daily practice. The next obvious step if wet conditions continue is on and off grazing using sheds and roadways as stand-off areas.

The autumn and winter months often provide the opportunity to do maintenance jobs and to make capital investments around the farm.

The Ploughing coincides nicely with these thoughts as the farmer can peruse isles of stalls selling machinery and services. Although there seems to be some hints of improvement to milk prices, these haven't yet been significant enough to ease cash-flow pressures.

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I am sure many a dairy farmer is still working within their overdrafts in a month when they were often well cleared. Therefore I suspect this year, except for enthusiasm, many came away from the Ploughing empty handed.

The lifts in milk price will need to continue before dairy farmers have either the money or the confidence to invest in capital items, especially out of cash flow.

The farmers I work with seem to have done all they can to reduce the cost of production and have deferred some costs to future years. It's a year for sitting on your hands and being patient, even if it is somewhat frustrating.

We all have jobs around the farm and the yard that need the odd couple of grand here and there but all spends this year must be a pure necessity, with the wants having to be put on the long finger. The other challenge of the autumn is paying the tax bill. It's that old age problem of paying for a good year's tax out of a bad year. However, I feel that farmers need to be a lot more pro-active in managing their cash flow.

Two methods that I have useful for cash flow management are:

* Get an estimate of your tax bill and pay your tax on a monthly basis;

* Set up a savings account to finance capital spending.

While your first thought may be that these options, especially in a poor year and increasing your spend on a monthly basis, may make things worse, what they actually do is put the current account under pressure. If pressured for cash it makes you question all items upon which money is being spent from the current account.

Meanwhile a pot of savings is mounting. This can be tapped into if your back is truly against the wall, or when the cash flow returns to a healthy position, and used with more certainty that you can afford it. Obviously by paying your tax monthly you've also avoided the October cash-flow challenge. The hardest part is just getting it started.

Mary Kinston is a discussion group facilitator and consultant, and farms with her husband in Co Kerry

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