The domino effect of a forced farm sale

A forced sale is always difficult. A herd dispersal is often equally difficult. On Tuesday, we had the forced sale of a herd built up over two generations.

The back story is in many ways familiar – that of a small business with big dreams that ran into difficulty. Peter Kingston had a 100-cow pedigree Holstein Friesian herd, one of the best in the country, built up over two generations in Nohoval, near Kinsale.

In an interview back in 2003, he discussed his-state-of-the-art DeLaval 24-unit herringbone milking parlour. He could milk his 120 cows in little over an hour, Peter said. The cows were high-yielding, and of high genetic merit.

Fast forward to 2008, and he had installed a 64-unit rotary parlour, capable of milking 1,000 cows. He was building a two-acre shed to house his rapidly expanding herd, all on a home block of 170 acres. In total, €2.5m was borrowed, all for farm development.

The business model was based on high output and strong sales of breeding stock. Sales were halted when the herd was locked up with TB. From then to now, it must have been difficult for the Kingstons, constantly doing and redoing the sums to make them add up. They never did. The loans, taken with ACC/Rabobank, were interest-free for five years, but repayments would have been spiralling in 2013. Repayments were renegotiated, but payments were missed, and the receiver came in.

There is little sympathy among farmers for ACC Loan Management, the remnant of what was a farmer bank set up in Ireland for Irish farmers. It is now the debt collecting rump of a departed multinational bank. Massive costs have been incurred between legal proceedings, the receiver’s costs and the sheriff’s costs.

The sherriff, Sinead McNamara, has a team of Dutch workers running the farm. They have restored the functionality of the farm. The rotary parlour was in dire need of maintenance, and high SCC counts saw Clona dairies refuse the milk in the end. That at least was reversed. However, these workers, plus the stringent security on the farm, with up to 30 protecting the place from whatever perceived threat existed, all cost money. The bill is in excess of €1m at this point.

The real losers here are all the local small businesses who worked with and for the Kingston family farm – contractors, oil suppliers, vets, hauliers, feed merchants, machinery dealers and farmers selling feed or renting land. The Irish Farmers Journal met some of them on Sunday evening and their frustration was palpable.

When these businesses go to their banks, with a tale of woe, will they be helped trade through the financial hit they are taking? Or will one of them in turn be shut down, leaving another batch of creditors with a bad debt on their hands?

Cashflow has rarely been tighter on our farms, many of which are over-borrowed. Volatility means low prices and high tax bills. There is a crying need for a better form of debt resolution, and the lack of recognition of the claims of minor creditors leaves the distinct possibility of a chain effect, with defaulting businesses destabilising a raft of others.

There is a sense that banks are now about to move on those farms where agreement has not been reached. There are hundreds, possibly thousands. The Dutch workers have openly spoken of three more farms in Cork alone they may be next employed on. Tuesday’s proceedings may become an all too familiar sight over the coming months.

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