Farmers who do not take financial planning seriously could lose their farms if they run into difficult times, the State agricultural agency Teagasc has warned.
Cathal O’Donoghue, head of Teagasc’s rural economy and development programme, said the vast majority of farmers were not carrying out financial planning, even though many were expanding because milk quotas are being abolished next week.
The education and advisory agency is beginning a countrywide series of financial-planning seminars today to encourage farmers to start planning and budgeting.
Prof O’Donoghue said farmers saw the need for improved genetics and grass growth but put little emphasis on financial planning.
“A weather shock in Australia or Ukraine or Argentina affects the prices farmers get, so it is a complicated business,” he said. “Think back to the 1970s, when there was a lot of expansion. Things were going very well until high interest rates with the oil crisis came at the end of the 1970s and put a lot of those expanding dairy farms into huge difficulty. Farmers went out of business. People lost farms.”
He said it was not enough to be a good farmer: “You need to have the business skills. The uptake of financial and business planning has been slow. Investing in a dairy expansion operation takes a lot of money; and if you don’t manage your budgets, when you have a fodder crisis you can’t feed your animals.”
Prof O’Donoghue estimated that only the top 15-20 per cent were using financial-management tools.
According to a Teagasc survey, 60 per cent of dairy farmers were planning to expand production in the two years following the abolition of quotas. The volume of milk produced is expected to have increased by 50 per cent by 2020.
Head of Teagasc Prof Gerry Boyle recently told the Oireachtas Committee for Agriculture there was "significant concern" that so few farms exercised even basic financial management.
The first Get Farm Financially Fit seminar will be held in Carlow today, followed by Cork, Offaly, Mayo and Tipperary in the coming days.