Current Edition: 17 April 2004
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Positive thinking a surefire winner!

On farm with ... Jim McCarthy

Some years ago, Jim McCarthy's wife, Attracta, gave him a book called ‘The Power of Positive Thinking'. Rather than simply read it, he must have eaten it, such is the passionate enthusiasm he exudes.

Cloyne, Co Cork-born Jim McCarthy is well known as one of Ireland's largest tillage farmers. He grows about 2,000 acres of crops, but what makes him different is that he owns no land. He is currently immersed in building his first house near Castledermot, Co Kildare, where his operation is based.

He has invested astutely off-farm over the years and has interests in a diverse range of ventures, including investment property and shares. He's also getting involved in dairy farming via the equity partnership route.

Not surprisingly, he is asked to speak at a large number of farmer meetings, doing about one per week during the winter. Lighting a spark in someone's mind gives him great satisfaction. He cites the example of a card received one Christmas from a young farming couple. They had bought three houses in the five years since his talk inspired them to look outside the farm gate to secure their financial future.

Even though his parents weren't farmers, Jim always passionately wanted to farm from a young age. In an ultimately futile attempt to quench this desire, his parents sent him to the ‘North Mon' secondary school in Cork city. He recalls that from his classroom window he could see the farms in the distance and knew what was going on in every field.

After a year at Clonakilty Agricultural College, he joined the three-year Farm Apprenticeship course. At 23 years of age, he was appointed farm manager for Mrs Wright in Castledermot. Jim highlights the influence of his local adviser at the time, Derek Jeffers.

"Before I spent any money, I had to prepare a budget and show him the projected return on investment. I remember assessing plans for building a cattle yard. The expected return was only 6%, while interest rates at the time were 12%. That lesson stuck.''

Another local who lured him back to Leinster was Attracta, now his wife. He acknowledges that she has been a huge positive influence and plays a key role. "We're both ambitious and industrious, which is very important,'' he says.

Son Liam (18) and daughter Emma (13) complete the family picture.

"What has set us apart is our willingness to change. In the mid-1980s we started renting land. We could never see a lot of opportunity in buying land,'' Jim says. He was underbidder for one farm, but then "a clear decision against land purchase freed up energy''.

Strategic planning is crucial, he says. It involves examining where you are today and where you want to be at some future point in time. "Insanity is doing the same thing over and over and expecting a different result!'' he quotes, laughing.

When they were 40, Jim and Attracta prepared a strategic plan to bring them to age 55. The initial years of the plan are detailed, the long-term just has key targets.

He believes that his not being a farmer's son was a huge advantage. "We had none of the emotional baggage that's comes with farming at home.

"I've been accused of making no commitment to farming by not buying land. Most people inherited. I walked away from a university education and developing this business has not been easy.''

He has also gone against the grain by pioneering the concept of what is called "Eco'' or Minimum tillage. Basically, it takes the plough out of the tillage operation and Jim has advocated it with missionary zeal.

The practice continues to evolve, the aim being to increase the organic matter content of the soil. For Jim, it means that staff and machinery costs are cut dramatically. "People ask me what happened to yield. They never ask what happened to profit. I've yet to buy a drink for someone out of yield!''

He thinks for a while when I ask him for his philosophy of life. "We've only one chance at life and the most valuable thing we have is our time. We should spend it doing something that we enjoy. Farming must be fun. If it's not, you have to ask yourself why you're doing it. It's not an easy life, especially with the isolation nowadays.''

"Being positive is crucial. Avoid negative people - they drag you down. Concentrate on growth.'' He then quotes from another book: "The need for achievement is the mental driving force within us''. His emphasis on being positive reminds me of a story I heard him tell some years ago. He came into the kitchen one morning and Attracta said: "I hate you, Jim McCarthy.''

"Why?'' he asked.

"Because you come down the stairs singing on a Monday morning!''

In 1996, Jim was one of the first Irish recipients of a Nuffield scholarship. It allowed him 10 weeks of travel to study scale in farming. He describes it as "a wonderful voyage of self-discovery. It changed my outlook.''

"I met a 60-year-old farmer planting 6,000 acres of cereals in western Australia. I asked him if he was motivated by money. "Money?'' he said. "I'm doing this for achievement. Money is just a way of keeping score!''

Jim admits that farming in Ireland has been frustrating in recent years as the inability to grow and develop has all but removed a sense of achievement.

As always, though, he's positive about the future, especially with decoupled subsidies and grain in short supply around the world.

I ask him to define the Nuffield organisation. "Nuffield is about developing the messenger, not the message. It's about positive people, with a sparkle in their eye, a spring in their step and going places.''

Sounds a lot like Jim McCarthy.

Jim McCarthy on ...

Bureaucracy

"Bureaucracy drives me crazy. I define it as a system for turning energy into waste. We are being slowly smothered by it at every turn. An ever-decreasing productive sector in farming is expected to carry an ever-increasing bureaucratic sector.''

Civil service

"Something has to be done about the stranglehold of the civil service unions and, more importantly, their refusal to accept change. Once the stranglehold of the unions was removed from Aer Lingus, €350m of cost was taken out in two years.

Partnerships

"A good partnership is great and I think they will make a huge contribution in the future. They work well when they're well structured and the rules are well thought out and documented. Nothing can be left to chance.''

Sale of entitlements

"I've a huge problem with the sale of entitlements. If people aren't farming, their entitlements should go back into the National Reserve and be given to young people. "When we tendered for land, we sometimes got it even though we weren't always the highest bidder. People were happy with the undertakings we were prepared to make. The people who entrusted us with their land afforded us a great opportunity. I think it would be wrong for us to cash in now on the entitlements we generated on other people's land.

Land rental market

"The pressure on the rental market should be removed by the fact that farmers can take less land and still claim their full entitlements. However, there's still a lot of pent-up demand from people keen to expand, so it may not ease off immediately.''

Decoupled world

"I expect it to be a great change for the better. People will be freer, and commercial efficiency will be the most important, which should make for a vibrant industry.''

Agricultural education

"I passionately believe that agricultural education in this country must become more business-focused rather than farm management training. Running a farm is running a profit-driven business. It is very easy to learn about sprays and fertilizers, but how many students can read a balance sheet, or prepare a budget, for example?''

Off-farm investment

"Off-farm investment is not compulsory and is not for everyone. Stretch yourself but do what you're comfortable with. Don't confuse ambition with ability.

The power of compounding

"As farmers we have a habit of putting money into low-return areas. Never underestimate the power of compounding. If you invest €10,000 for 40 years at an annual rate of return of 5%, it grows into €75,000. If the rate of return is 15%, it grows into €2.5m. If an annual return of 19% can be achieved, that same €10,000 will grow into €10m after 40 years.

Identifying opportunities

"Opportunity comes to the prepared mind. Today a huge number of people believe there are no opportunities in farming. If you think that way, you'll be right because you will never see opportunity. But the opposite is also true.''

Motivation

"Be determined about achieving your goals - once you're sure the ladder is up against the right wall! Never give up. You can blame who you like but at the end of the day only yourself will beat you.''

Farm organisations

"I never really got involved. From a personal point of view, I've probably achieved more by staying outside, speaking at meetings and hosting farm walks, rather than getting involved.

"It's vital that we have a strong lobby, but my views have been so different from the general farm organisation beliefs that I wouldn't fit in. I've a huge problem with the tendency of farm organisations to always try to preserve the status quo. They have to offer leadership.''

Nitrates Directive

"It's absolutely frightening that bureacrats have abandoned science and replaced it with an attitude of ‘we know better'. We can only go forward on sound scientific fact.''

Dealing with banks

"It's vital to develop a good track record with a bank. Love them or loathe them, you can't operate without them. Generally, you'll find that if you adhere to your commitments, they'll be more than helpful. To ensure a good relationship, it's vital that you tell the bank if you have a problem. That way, they know you're on top of your business. Remember, banks are not in the risk business - they are in the money-lending business on a secured basis.

Efficiency

"Schemes and supports have led to so much confusion in farming. It makes it hard to measure efficiency. There are only three measures:

1: Profit. 2: Return on capital - the bank's money and yours

3: Return on equity - the return on the piece you own.