Even in today’s environment of tight margins, many farms are exploring expansion options.

Many face the dilemma of wanting to expand, as they feel they can make more money.

This is a big decision that will affect the whole farm business and family.

It needs to be discussed as an open conversation as there are many factors to take into account when your partner is considering expanding your farm.

Efficiency

First and foremost, is the farm performing to the best of its ability? For dairy, is your farm hitting its KPIs or for tillage is it getting the maximum tonnage out of the crops in the most efficient way possible? It is often farmers struggling to make ends meet who suggest they need more cows/cattle/acres in order to make more money, but this can often be the opposite.

These questions need to be asked before even considering increasing the enterprise. If the farm is only performing to 70% of what it should be doing, taking on more land or cattle is only going to put more stress on these figures and possibly reduce performance further. I am a big believer in sorting out your own place first and then consider the next enterprise. You need to be confident your partner is running an efficient and financially stable business before they look into expanding to ensure the risks are limited.

Family

Family is also a huge factor. It is a decision that will have implications on everyone in the household. Do they currently see enough of the kids, is one person doing most of dropping off and collecting from school and other events? How much will the extra work affect your relationship? Again, it goes back to sitting down and having an open and honest conversation with your partner to see how it will affect the family physically, financially and mentally.

Thinking there will be more money in your pockets seems like a great idea but expansion may not have even crossed your own mind. You might be happy to keep going as is but hone in on inefficiencies in the current business and try to correct these without adding extra work.

It’s also important to take the farm’s succession plan into consideration. What age would you like your partner to retire at? Do they have someone in mind to take over the farm? If there is a successor, it might be a good idea to get their thoughts on the expansion plans.

Normally there is a large investment cost associated with expansion that they might be left paying off. You should also consider how many incomes are currently being provided by the farm business and if it is due to change over time.

Labour

There is a severe shortage of labour on farms at present, and this could have a massive effect on you and your partner’s future. Do you have staff?

Are they treated right, and would they recommend your partner as a boss?

If the answer is yes, then would it be an option to have the conversation with your staff?

An expansion plan may result in them taking on more responsibility, it is essential to scope their ambition within the farm and get their opinions on growing the business.

Capital investment will always be a stumbling block to expansion. Is the plan financially viable and has your partner covered all the bases?

There will always be overruns in terms of building a shed for extra housing or purchasing another tractor to get through the work. These need to be estimated as accurately as possible to give a clear indication of the financial outlay necessary to make this venture work.

There are EU and Government grants and schemes that might help offset the cost of developing or expanding your enterprise. Seek professional advice from your adviser on grants your farm might be entitled to.

More often than not, before any expansion can happen on a farm there is a necessity to increase efficiencies and carry these practices to a new venture if the expansion is still a possibility.

In summary

Efficiency, family, labour and capital are the main areas to consider when thinking about expansion and should be top of the priority list.

Sitting down at the kitchen table to discuss all of the options and then talking to an agricultural adviser or a professional within the area will give great insight as to whether your partner’s plan is within reach or they are bonkers!

Everyone has great plans but do they work in practice is the big question.

Jerry O’Neill is an ACCA qualified accountant working as an Agricultural Consultant with Brady Group Agricultural Consultants and Land Agents.

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