Challenging money matters for arable farmers
The current downward pressure on arable and commercial horticulture enterprise margins has re-emphasised the need for prudent business management practice, not least efficient financial planning for reduced cash flows in the forthcoming year.
Cash Flow budgeting now critical
The nature of farm and commercial horticulture production means that there are seasonal peaks and troughs in income. On arable farms most income comes in the last quarter of the year and this must be balanced to meet the expenditure and drawings required each month until the next harvest.
The seasonality of arable and commercial horticulture cropping means that growers, by necessity, must plan their cash flow carefully or else they would risk going out of business.
Most growers do this as a matter of course but rarely write it down. The benefit of writing down a basic financial plan will go a long way to helping to understand the individual farm and commercial horticulture business in terms of profitability and ability to generate cash. There is also a need to prioritise the needs of the grower’s family in line with the financial requirements of the farms/commercial horticulture business.
Projecting planned income, expenditure and drawings on a monthly basis is similar to projecting what your monthly bank statement will be. This is known as a cash flow budget and in times of low prices will take precedence over other parts of a business plan. Businesses fail more often from lack of cash than lack of profit.
Profit and Loss Budgeting (Management accounting) - the foundation for successful businesses
What some growers fail to realise is that their annual tax account is quite different from a business management account and that, together with a cash flow budget, the management account forms the bedrock of successful business management.
Benchmarking is a first step in producing a management account that will show a complete breakdown of the costs of production. It is not necessarily the daunting task that some farmers think. Analysis of the farm business VAT record book will provide almost all of the key data required. The next step is to produce a cash flow budget for the financial year.
Farmers in the north of Ireland can avail of a unique benchmarking service free of charge that is facilitated by The Countryside and Rural Partnership. The time invested (as little as 3 – 4 hours per year) to prepare a benchmark farm management report and interpret subsequent results will most definitely provide dividends.
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f interested in benchmarking your arable or commercial horticulture business, please contact your local CAFRE Crops or Horticulture Development Adviser.
CAFRE plan to facilitate a series of financial seminars for growers and farmers during the winter period of 2015/16. Details of dates and venues will appear in the agricultural press later this autumn.
Mourne Herring Fishery licences available from September
The Department of Agriculture and Rural Development (DARD) has announced that licences for the Mourne Herring Fishery will be available from 1 September 2015.
Fishing will be restricted to boats not exceeding 40ft (12.2 metres) in overall length using drift nets with a minimum mesh size of 54 mm in accordance with EC Regulation 850/98. Boats of over 40ft (12.2 metres) in overall length are not allowed to take part in this fishery.
The Mourne Herring quota for British registered fishing vessels in 2015 has been set at 30 tonnes. A further 81 tonnes is available for this season if required.
Weekend fishing for Mourne Herring will not be permitted in 2015.
Application forms are available from your local Fisheries Office. All licence applications must be accompanied by a copy of the current Certificate of Registry issued under The Merchant Shipping Act 1995.