Own the farm plan, don’t just have an adviser develop a business plan for your farm and present it to your bank. You are the one that has to deliver it so if you don’t know what’s in it, then the chances of delivering it are much less.” These were the words of dairy farmer Pat O’Meara in his presentation to the Positive Farmers dairy conference last week.

A former bank agri adviser, Pat O’Meara presented his thoughts on banking and important aspects of cash flow budgeting with Paidi Kelly, and Pat Byrnes from Bank of Ireland at one of the Positive Farmer conference workshops.

Pat has first hand knowledge from both sides of the table, having worked as an adviser with AIB and he now owns and works his own dairy business in north Tipperary.

When first sitting down with a bank, Pat O’Meara was clear that you must build a positive relationship with your adviser.

Account dealings

“Remember your account dealings are visible to the bank so if you have betting shops hitting your account every day, sometimes multiple times a day, then that alone raises a certain level of risk and doubt in the mind of the bank about how this business or person operates,” he said.

“Some farmers have a business account and a ‘family living’ account and it makes it easier to see what the business is doing, but also what ‘personal drawings’ actually are which can vary a lot.”

A farmer from the audience asked if the ‘green’ lending bubble will burst, referring to the lower interest rate borrowing available depending on what investment is happening on the farm.

Both Pat Byrnes and Pat O’Meara said they believed it would continue.

O’Meara said: “Think of it like this. The bank leaders need to reflect government policy, they need to try and improve the bank share price, and they need to relate to what the market is asking for, so it will continue as long as policy remains on that track.”

The farmer asking the question said ultimately the farm business sustainability is important and the ‘green’ lending decision might or might not be the right one for the farm business. “I suspect if there is a difference in rate of 1% or 2% on secured or unsecured green loans, then other bank products have to probably make up the difference on this,” the questioner said.

Cash flow

The discussion moved on to cash flow.

“The key reasons for me to complete a cash flow budget are for one of three reasons; if you want to invest, knowledge is power or for peace of mind.

“Make sure you prepare the ground first by gathering all the relevant information (trading accounts, living expenses, stock details etc). Take time out to create the cash flow. This might be a simple Excel sheet or it can be a software package.”

Pat then went through a live example of how he uses Excel.

“You must write in the assumptions used in the calculation into the Excel document,” he said.

“It’s no use just putting in €330,000 for milk revenue. You need to detail out the cow numbers, assumed litres and price prediction so that in three months time when you are reviewing the budget, you can review the building blocks of the budget and adjust accordingly with real time data.”

The difference between cash and profit is it will vary if you are increasing or decreasing stock numbers or if you are changing your farm system.

The same way in terms of a cost like feed Pat said, put down the cow numbers, how many kilos you plan to feed, and the price per tonne etc. “If after three months where you didn’t get grazing for whatever reasons and you have blown the feed budget, then review your assumptions and update so you can react.”

Budgets

Another farmer in the audience asked how often should you review a budget and Pat said “that depends on what stage in business you are at. Some new entrants will review weekly while other more established and settled businesses will review it once in the year.”

Finally, Pat explained it is important to remember it is a cash flow projection – not a profit projection. The difference between cash and profit is it will vary if you are increasing or decreasing stock numbers or if you are changing your farm system.

It will change with tax payments, living expenses, and the cost of further capital expenditure that might need to be taken to make the farm compliant.

The key take-home messages

Clover

“Clover is delivering a ‘free’ 10kg to 15kg of milk solids per cow leaving aside the ‘artificial nitrogen reduction’ – we need to work hard to try and get that.

“We have struggled with oversowing to get clover established and have been working ‘a full reseed’ in order to increase the proportion of clover in swards but we probably need to work harder on it in 2025.” – Kevin Twomey, Cork dairy farmer.

Farm systems

“Paidi Kelly’s paper detailing the key numbers to optimise profit in spring calving grass-based farms was the key take home for me. We need to set the bar at 4,000 kg of ‘grazed’ grass per cow in order to optimise stocking rates.

“The system shouldn’t be bringing in over 30% of total feed from outfarms or it can become very expensive feed, and you need at least 70% of the total diet as grazed grass to keep the farm profit focussed.” – Denis Finnegan, Cork dairy farmer.

Using data

“I’m a relatively new entrant to milking so after this two-day conference, I now realise I don’t have the numbers to make informed decisions.

“So in 2025, I really need to build my data bank for our farm in order to benchmark what the farm can do (grow etc). It’s the same for the cows for me – again I need real figures on breeding parameters before I can make key decisions. That’s my aim for 2025 – get my farm numbers right.” – Rhidian Glyn, Welsh new entrant.

Budgeting

“The conference has brought clarity for 2025 for me in terms of what we need to do for our business.

“Next week. we need to finalise 2024 numbers and budget for 2025. We have more work to do on establishing clover. We need to consider the pure basics on calf health and build even more resilience into our business, given the importance of physical health and fitness in a demanding family farm situation.” – Gillian O’Sullivan, dairy farmer, Waterford.

Time management

“Self awareness is critical – know where your blockages are. Ask for external help if you have to.

“Farmers need to build in continuous review into just doing ‘tasks’ versus a review of ‘process’ that might make the job easier for everyone.

"You decide you are the farmer that finishes at 5.30pm every day and have a plan to do something in the evening so you just don’t slide into continuous work. Try to avoid multitasking as cognitively it is very demanding and stick to the plan.” – Nollaig Heffernan, independent management consultant.

Building resilience

Resilience of business, body and mind is as important if not more important for farmers. The Positive Farmers devoted a two-hour session to the topic last week.

Roger Adams, a certified strength and conditioning coach said, “everyone should have two short cardio training sessions at least twice per week for 30 minutes per session and one longer session at 60 minutes in duration. How hard you go is important and you need to be at least ‘out of breath’.” Roger also said strength and conditioning is important weekly and again, two 45-minute sessions is important especially as you get older, to maintain muscle mass.

Taking control

Dessie Fitzgerald a life, mind, health and performance coach lost two of his brothers and suffered a life changing injury himself.

His summary statement pushed the listening farmers to decide and control how they want to live their life.

This will need clear goal setting with timelines and a social network to deliver it.