financial planning for a farmer undergoing organic conversion dan clavin, teagasc, athenry pat...
TRANSCRIPT
Financial Planning for a Farmer Undergoing Organic Conversion
Dan Clavin, Teagasc, Athenry
Pat Barry, Teagasc, Moorepark
Teagasc National Organic Conference,
Athlone, 2nd April 2009
Profitable Organic Farming• Preparation
• Premium market price
• Productivity-keep high
• Payments - REPS 4 and Org. Farming Scheme
• InPuts and cost reduction
Preparation• Neighbouring organic producers
• Advisers/Planners/OCBs
• Demonstration Farm Open Days
• Educational Sources-– Teagasc/NOTS/Organic Colleges
• Conferences/Seminars
• Publications
Premium Organic Prices-Follow the Market
• What products are in demand?
• Organic premium prices vary
• Where can I sell my produce?
-processor, direct selling, marts,
or other farmers?
• Obtain premium for in-conversion produce
Maximise Productivity
• How do I grow enough grass?– Clover the driver of
organic production
• Cereals and Horticulture
– Rotations– Expertise - Fertility/Weed &
Disease (horticulture) management
Reduce Inputs and Costs
• Watch out for
– Info. and experience gathering costs
– Fixed costs - new investments, certification fees
– Variable costs–different to conventional
– Lack of access to premium prices during conv. period
Maximise Direct Payments
• REPS 4 and Organic Farming Scheme– Two separate schemes
• REPS 4 + Organic + one supplementary measure (Owned NATURA land, LINNET, Traditional Rare Breeds, Traditional Orchards, Riparian Zones)
• Organic Scheme – Extra top-up for hort. only farmers– Green manure payment for stockless
non-REPS farmers
REPS 4 and Organic Payments
Ha €/haREPS 4 first 20
20 - 4040- 55
55+
234 205 8210
Organic
- in conversion
first 5555+
212 30
- full organic first 5555 +
106 15
Green Manure up to 40 240
Farm Business Planning
Farm Planning ProcessGather and Analyse Information ↓ Setting Goals ↓ Draw up a Farm Plan ↓ Implement the Plan ↓ Control/Modify the Plan
6 year sample case study 2008-2014
Baseline plan – stay conventional• Part-time farmer, 44ha reasonable to good grassland
• S.R. 1.66 L.U./ha - 32 sucklers,40 0-1yr, 40 1-2 yr
• Finish approx. 36 cattle/year. Assumed €3.20/kg conventional beef price.
• Direct payments €35,186 (2008)-high
• Joining REPS 4, Feb. 2009
• Inflation 3%/annum on costs
Organic scenario assumptions• Commence organic conversion early 2009
• Reduce cow numbers, purchase extra org. weanlings (15/year). S.R. 1.48 L.U./ha
• Finish approx. 36 cattle/year. Assumed €4/kg organic beef price
• Cost assumptions- no fertilizer bill v’s straw bedding, organic feed concentrates, transport for weanlings, organic clover, certification and other minor fees
• Inflation on costs 3%/annum on costs
Gross Output-Conventional vs Organic
50000
55000
60000
65000
70000
75000
80000
2006 2008 2010 2012 2014 2016
Year
Gro
ss O
utp
ut
(€)
Conventional
Organic
Variable Costs-Conventional vs Organic
18000
20000
22000
24000
26000
28000
2006 2008 2010 2012 2014 2016
Year
Var
iab
le C
ost
s (€
)
Conventional
Organic
Direct Payments-Conventional vs Organic
25000
30000
35000
40000
45000
50000
2006 2008 2010 2012 2014 2016
Year
Dir
ect
Pay
men
ts (
€)
Conventional
Organic
Net Profit-Conventional vs Organic
10000
15000
20000
25000
30000
35000
40000
2006 2008 2010 2012 2014 2016
Year
Net
Pro
fit
(€)
Conventional
Organic
Take Home Messages
• Prepare before jumping!
• Making profit in organics depends on-choosing right market-maintaining productivity high-minimising inputs-maximising REPS, supp. measures and OFS
• Teagasc Farm Business Planner creates a clear financial roadmap for your farm
Best of luck in your decision making!
Thank You