Unlocking the potential within your farm
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Unlocking the potential within your farm
Maria Heneghan
Kevin Connolly
Sheep track walk
Maze in the Maize
Catering and meeting facilities on the farm
Your Equity!
What is it?
Why is it important?
Can it be better utilised?
Case Study
Westmeath Drystock FarmEstablished Self-Catering EnterpriseEstablished Bed & Breakfast
Family- Husband & Wife & 3 children
Farm Details
•110 acres (44.5 Ha)
•Running 45 suckler cows – selling weanlings•Good facilities & sufficient slurry storage
Self-catering enterprise
•Set-up in 1999 in vacant farm house
•Taking up to 6 people•20 week occupancy
The makeup of business profits (2005)€47,340
Total Profit
Profit from farming
SFP
Other Premia
Self-Catering
€0
€10,000
€20,000
€30,000
€40,000
€50,000
Net Cash Flow = €35,000
TotalNet Cash Income
Single Farm Payment
Net Cash Income from farming
Non-farm income State Transfers
Family Living Expenses
Tax Balance for Reinvestment
The Balance Sheet
Farm Business Debt Small O/D & stocking loans
Existing self-catering project Outstanding €15,000 loan
Assets valuation (2005) Land €17,000/ acre - €1.87 million Self-catering unit - €150,000
Total Owners Equity = €2 million
Business Goals
Cash flow
Better utilisation of available
assets
Planned retirement/ exit strategy
Options
Look at the farming system Push the self-catering harder Use the equity available for off-farm
investmentProperty at home or abroad ORLook at other tourism options
Making the decision! Potential identified to tap into the demand for
ancillary services Supplying food – evening meals/ suppersOpportunities to sell farm & local produceDevelop potential for walking trails on the farm
Decision made!expand in the tourism business using a
bed & breakfast to exploit the potential identified!
How this option was funded
Key costsConversion of existing farm houseTracking out the farm walks – minimum cost
Total cost of conversion - €150,000 To be borrowed over 15 years @ 6.5%
Annual repayment = €15,700
Borrowing for diversification
Issues Identified & DiscussedAffordability of repayments
Net Cash Flow from new business Stress test for rising rates
Using the farm as collateral Matching security to loan value Land as security –negotiate lower interest rates
Limitations on future borrowing?
The makeup of business profits (2007)
Profit from farming
SFP
Other Premia
Self-Catering
Bed & Breakfast
Ancillary Services
€0
€10,000
€20,000
€30,000
€40,000
€50,000
€60,000
€70,000
€80,000 €81,640 Total Profit
Net Cash Flow = €59,500
Unlocking the potential within your farm
Maria Heneghan
Kevin Connolly
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