When I first visited Andrew and Jane in 2013, they were in the middle of a big building project. A new parlour was going in, along with sheds.
They have three children under the age of 12 and Jane worked part-time outside the home. Jane said that the bills were growing bigger and harder to pay. They were nearly disconnected from Bord Gáis and got a letter from Ulster Bank reminding them that they had missed a loan repayment. It was very stressful.
They had expanded numbers and spent a lot of money on the farm. Jane worried that they were taking on more loans and that these would get them into greater difficulty. She wanted more financial freedom for herself and her family.
Andrew quickly said that the cart was before the horse. Having taken over from his father, he had started to increase cow numbers. From 50 cows, he has nearly doubled to 95 cows during the last four years, buying milk quota and cows along the way.
Debt, up until last year, had been kept low, but it has played havoc with the cashflow as all spare money was sucked in. Now he has taken out a large loan for the building project.
It all had a knock-on effect on the household and it is why his wife Jane felt under such pressure. The lack of an overall plan for the farm with key priorities and goals jumped out.
Five priorities
After the first visit, we set out five priorities:
Priority one: Sort out the bank. The final part of the loan had not been approved and drawn down, putting pressure on cashflow.Priority two: Take control of the building project. Set a definite deadline as to when you will be in the new parlour and make the contractors agree to it.Priority three: Grass budgeting has to start. He was to pick a member of the discussion group who was best at it. Arrange to go to his farm and do his budgeting walk with him. Then ask him or your Teagasc adviser to walk your farm to budget. You needed to have a map with paddock sizes set out and pick a day each week to do the budget walk. He also needs to put in roadways and water systems.Priority four: Set out a cashflow budget for 2013 using the Teagasc cost control planner. Jane was to do this with Andrew and input the figures.Priority five: At the end of the year, we added one more priority. We set out a five-year plan for the farm – this was probably the most important step. The reason for this was that at the end of 2013 we had a conversation about why he was actually expanding in the first place. It was not about just milking more cows or even simply making more money. It was to hit the goals that the family were setting out. We teased some of them out at the end-of-year meeting. The first was to have more time off with the family and take a holiday. They also wanted to start an education fund for their children. So under the farm’s five-year plan they had set a goal of reaching 140 cows and we included personal goals that had to be hit too.
The first goal was to have a holiday in 2014, even a short break. Andrew also had to get a relief milkier in every second weekend to allow him to spend more time with his family. So we looked back at the plan and made changes to ensure their goals could be hit.
When I returned recently, things were looking a lot better. Farm roads were in and water troughs and systems were set up.
“How’s the grass budgeting going?” I asked.
“I’ve started but need to be more focused,” he admitted.
I was not there to teach him how to grass budget. After all, it is just a tool to your profit targets and it was up to him to realise that was the reason for doing it.
We revisited the five-year plan that they set out two years ago. They were on track to reach 140 cows in the next two years. They had reduced the loan from €180,000 to €140,000 but there was still a few contractors owned money. More impressively, they had actually taken a number of holidays in the last two years.
“We really enjoyed them,” said Jane.
They also had a relief milker in for three evenings a week and had got a student during the spring to reduce the workload.
What do you do when the relief milker is milking I asked?
“Normally catch up on herding or spreading fertiliser,” they said.
We talked about Andrew’s role on the farm.
“I’m still very busy doing all the day-to-day jobs and hardly get time for the paperwork,” he said.
“Why not commit one of the evenings the relief milker is in to use in the office,” I suggested.
“If you focused on not just catching up on paperwork but also on where the direction of your business is heading, then getting this right would pay much better.
“What about the other work?” he asked.
“Well, you have to continue to simplify your system. We can see a few beef cattle grazing one of the paddocks on the grazing platform outside. They should go for a start,” I said.
He didn’t disagree.
Finally, as we went through a few questions, one I asked made Andrew pause: “Are you happy with what you are doing now?”
He thought about the question: “Yes, but I used to be happier,” he honestly admitted. “All the stress of building and owing bills for the last few years has taken a lot of the pleasure out of it.”
Hopefully by focusing on his real goals – the personal ones as well as the farm ones – he will soon be back enjoying both the farming and the reason he is doing it. CL
When I first visited Andrew and Jane in 2013, they were in the middle of a big building project. A new parlour was going in, along with sheds.
They have three children under the age of 12 and Jane worked part-time outside the home. Jane said that the bills were growing bigger and harder to pay. They were nearly disconnected from Bord Gáis and got a letter from Ulster Bank reminding them that they had missed a loan repayment. It was very stressful.
They had expanded numbers and spent a lot of money on the farm. Jane worried that they were taking on more loans and that these would get them into greater difficulty. She wanted more financial freedom for herself and her family.
Andrew quickly said that the cart was before the horse. Having taken over from his father, he had started to increase cow numbers. From 50 cows, he has nearly doubled to 95 cows during the last four years, buying milk quota and cows along the way.
Debt, up until last year, had been kept low, but it has played havoc with the cashflow as all spare money was sucked in. Now he has taken out a large loan for the building project.
It all had a knock-on effect on the household and it is why his wife Jane felt under such pressure. The lack of an overall plan for the farm with key priorities and goals jumped out.
Five priorities
After the first visit, we set out five priorities:
Priority one: Sort out the bank. The final part of the loan had not been approved and drawn down, putting pressure on cashflow.Priority two: Take control of the building project. Set a definite deadline as to when you will be in the new parlour and make the contractors agree to it.Priority three: Grass budgeting has to start. He was to pick a member of the discussion group who was best at it. Arrange to go to his farm and do his budgeting walk with him. Then ask him or your Teagasc adviser to walk your farm to budget. You needed to have a map with paddock sizes set out and pick a day each week to do the budget walk. He also needs to put in roadways and water systems.Priority four: Set out a cashflow budget for 2013 using the Teagasc cost control planner. Jane was to do this with Andrew and input the figures.Priority five: At the end of the year, we added one more priority. We set out a five-year plan for the farm – this was probably the most important step. The reason for this was that at the end of 2013 we had a conversation about why he was actually expanding in the first place. It was not about just milking more cows or even simply making more money. It was to hit the goals that the family were setting out. We teased some of them out at the end-of-year meeting. The first was to have more time off with the family and take a holiday. They also wanted to start an education fund for their children. So under the farm’s five-year plan they had set a goal of reaching 140 cows and we included personal goals that had to be hit too.
The first goal was to have a holiday in 2014, even a short break. Andrew also had to get a relief milkier in every second weekend to allow him to spend more time with his family. So we looked back at the plan and made changes to ensure their goals could be hit.
When I returned recently, things were looking a lot better. Farm roads were in and water troughs and systems were set up.
“How’s the grass budgeting going?” I asked.
“I’ve started but need to be more focused,” he admitted.
I was not there to teach him how to grass budget. After all, it is just a tool to your profit targets and it was up to him to realise that was the reason for doing it.
We revisited the five-year plan that they set out two years ago. They were on track to reach 140 cows in the next two years. They had reduced the loan from €180,000 to €140,000 but there was still a few contractors owned money. More impressively, they had actually taken a number of holidays in the last two years.
“We really enjoyed them,” said Jane.
They also had a relief milker in for three evenings a week and had got a student during the spring to reduce the workload.
What do you do when the relief milker is milking I asked?
“Normally catch up on herding or spreading fertiliser,” they said.
We talked about Andrew’s role on the farm.
“I’m still very busy doing all the day-to-day jobs and hardly get time for the paperwork,” he said.
“Why not commit one of the evenings the relief milker is in to use in the office,” I suggested.
“If you focused on not just catching up on paperwork but also on where the direction of your business is heading, then getting this right would pay much better.
“What about the other work?” he asked.
“Well, you have to continue to simplify your system. We can see a few beef cattle grazing one of the paddocks on the grazing platform outside. They should go for a start,” I said.
He didn’t disagree.
Finally, as we went through a few questions, one I asked made Andrew pause: “Are you happy with what you are doing now?”
He thought about the question: “Yes, but I used to be happier,” he honestly admitted. “All the stress of building and owing bills for the last few years has taken a lot of the pleasure out of it.”
Hopefully by focusing on his real goals – the personal ones as well as the farm ones – he will soon be back enjoying both the farming and the reason he is doing it. CL
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