'We are scraping by on a small farm income. What can we do?'
Q My wife and I have been farming since we got married almost 10 years ago. We have three young children and at present we are scraping by on the small income the farm is making. We are facing the reality that it is not practical for my wife to return to work off-farm as the childcare costs would wipe out any income she would make. I keep hearing about the economy improving but we are finding the reality is very different, waiting for the Basic Payment Scheme cheque to meet our debts and bills. What can we do?
A As the economy recovers, it is important to remember that the rising tide has not risen all boats. Average 2017 incomes on some farms are not projected to be any higher than 2016 and may even be slightly less this year. Last year was a very mixed year for Irish farming, with difficult weather conditions affecting harvests, grass growth and other crop yields. Added to this were lower product prices in the dairy and beef sectors.
The Teagasc National Farm Survey for 2016 put the average farm income at €12,900 in the case of suckler farms and €16,000 on sheep farms. With the average industrial wage sitting at €37,000 at present it is clear that it would be impossivle for many farmers to survive without an off-farm income.
Managing borrowings and debt
Like any business a farm is likely to be carrying debts and borrowings at some level. In bad years it is essential to manage these as they can end up costing a lot just in interest. Bear in mind that average interest rates for existing lending are between 4 and 4.5pc while interest rates on new borrowings sit above 5pc in many cases. If you are carrying significant borrowings you should shop around for the better interest rates and consolidate borrowings if necessary.
Also, watch for new schemeslike the agri cashflow loan which came on stream in early 2017 to strong demand and had an interest rate of 2.95pc. It could help keep down the cost of new finance and even assist with existing expensive borrowings. For many families there is also the common issue of managing credit card debt.
Again, if you find that you have built up credit cards debts with resulting very high interest rates you should look at the possibilities around debt consolidation and taking out a manageable interest rate loan to clear the cards.