Habits are hard to break and while we usually think of habits as being bad, there are plenty of good habits to have also.
One of these is financial management and for Kilkenny farmer Padraic Brennan it’s a habit that he picked up early in his farming career that he still hasn’t lost.
The catalyst for Padraic to get on top of money management was the purchase of adjoining land in 2006. At the time, Padraic and his parents were milking 70 cows on a mixed farming enterprise at Clara, just outside Kilkenny city.
“Debt focused the mind so we brought in private consultant Richard Snell to help us with cashflows and do a business plan. The plan was to be at 200 cows by the time quotas went in 2015.
“Richard used to visit the farm every six weeks to check up on physical and financial performance and set targets for the next six weeks. It was great discipline in those early years because we needed to be prepared for him,” Padraic says.
Even though Richard went back to New Zealand in 2015, Padraic kept up financial recording, using the Teagasc cashflow forecast tool to set annual budgets which he now updates every two or three months.
An opportunity in 2016 to lease additional land has seen the farm grow further and this meant additional investment in milking parlours, housing and other infrastructure.
In 2018 Padraic took part in the Business Brush Up course run by New Zealand consultant Lynaire Ryan with help from Mary Kinston. For Padraic, this four-day course enabled him to take a step back and fully analyse the business and to anonymously compare his financial performance to other farmers on the course.
Padraic says doing the course gave him guidance and the confidence that he was going in the right direction.
Married to Aoife, the pair have three children so family life is busy and time off away from the farm is a key priority for the Brennans.
I’m not fully committed to once a day. I’ll know by October what impact it’s going to have on the farm finances
Now milking 400 cows and rearing all youngstock themselves, it’s a busy farm.
At the start of this year, Padraic made the decision to go once-a-day milking for the season.
“We always milked once a day for February and into the first week of March but this year I said I’d stay at it, for a variety of reasons. My father Tommy passed away last December which was a big loss as he gave great support and advice to us. Between that and the lifestyle benefits we said we’d give it a go.
“I’m not fully committed to once a day. I’ll know by October what impact it’s going to have on the farm finances. I was expecting to produce around 30% less milk and 20% less milk solids per cow when on once a day for about 10% to 15% less profit than if on twice-a-day milking but I won’t know that for sure until later in the year.”
The herd of Jersey crossbred cows delivered 430kg of milk solids last year and Padraic says they were on track for 20% less up to recently, but what impact the current dry spell will have remains to be seen.
The Brennan farm at Clara is particularly dry and when the Irish Farmers Journal visited Padraic in mid-August, he was already feeding silage and grass quality was poor.
“Having the confidence to expand the farm in the first place and then go once a day this year is definitely made easier by having a good understanding of the farm finances. It’s still very basic and I don’t think I’m doing anything special but if I didn’t update the cashflows every two months or so I would be getting a bit edgy,” he says.
Padraic has already booked into the strategic management seminar being run by Lynaire this autumn and recommends other farmers to take part in the courses offered by Lynaire;
“One of the most important things I learned on the course was about personality types and how they differ among people.
“It’s something I never really considered before but it’s something I always think of now when dealing with employees and other people,” Padraic says.
Why are some farmers making profits of €3,000/ha and others €1,000/ha – they are certainly not doing three times the work. It is because top farmers focus on a few key drivers of profitability and identify what they need to do to achieve top performance.
Then they make sure the important things are done extremely well. They focus strongly on the critical factors which result in profitability. They work smarter, not harder.
Understanding the why and how top farmers make more profit is one of the main outcomes of the Business Brush Up course. The course will help all farmers benchmark their business performance and identify what they need to focus on to consistently be in the top quartile of farm profitability. Why? So the farm profit delivers an enjoyable lifestyle, allowing more choices and opportunities for the family.
In Figure 1, farm consultant Mary Kinston has created the profitability graph using the 2021 accounts data from 115 discussion group attendees.
The top 10% of these farmers are achieving a comparable profit of €3,169/ha, while the average discussion group attendee achieves €1,990/ha, compared with €900/ha for the average Irish dairy farmer.
There is real opportunity for everyone to increase profitability. It really is possible as other farmers are already achieving this, and willing to share their knowledge to help others improve. We focus on this at Business Brush Up – a four-day course, held one day a fortnight, in four locations. The first thing we do it to identify where you sit on this graph.
Mary Kinston will analyse your 2021 accounts, and you will anonymously benchmark your data with other attendees.
The next step is to identify two or three things you could do to increase profit by €200/ha to €400/ha over the next one or two years, ie to move one or two bars up the graph. What do you need to focus on to do this?
To inspire these thoughts we hear from Dr Laurence Shalloo or Dr Brendan Horan who outline the key factors which drive profitability. Then three guest farmers, who are already achieving top financial results, share their experiences and tips.
What’s amazing is that they are already achieving the targets being suggested by research, so we can see it can be done. We are very lucky to be part of the dairy industry where research, discussion and ideas are freely shared.
What’s reassuring is that we don’t all need to be in the top 10%. That takes a lot of focus and determination, but if you can be in the top 25% it really opens up opportunities and choices for your farm and family.
Business Brush Up courses suit dairy business owners who are looking to become more familiar and focused with the financial performance of their business, and enjoy learning from other farmers’ experiences.
All benchmarking is done anonymously and in an informal environment. Over 300 farmers have attended Business Brush Up courses and rated it at nine out of 10, making a highly positive impact on their life and business. More information on the courses is available at www.macraskillnet.ie/business