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Unlocking the potential within your farm Maria Heneghan Kevin Connolly Slide 2 Slide 3 Slide 4 Slide 5 Slide 6 Slide 7 Slide 8 Slide 9 Slide 10 Sheep track walk Slide 11 Maze in the Maize Slide 12 Catering and meeting facilities on the farm Slide 13 Slide 14 Your Equity! What is it? Why is it important? Can it be better utilised? Slide 15 Case Study Westmeath Drystock Farm Established Self-Catering Enterprise Established Bed & Breakfast Family- Husband & Wife & 3 children Slide 16 Farm Details 110 acres (44.5 Ha) Running 45 suckler cows selling weanlings Good facilities & sufficient slurry storage Slide 17 Self-catering enterprise Set-up in 1999 in vacant farm house Taking up to 6 people 20 week occupancy Slide 18 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 Slide 19 Total Net Cash Income Single Farm Payment Net Cash Income from farming Non-farm income State Transfers Family Living Expenses Tax Balance for Reinvestment Slide 20 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 Slide 21 Business Goals Cash flow Better utilisation of available assets Planned retirement/ exit strategy Slide 22 Options Look at the farming system Push the self-catering harder Use the equity available for off-farm investment Property at home or abroad OR Look at other tourism options Slide 23 Making the decision! Potential identified to tap into the demand for ancillary services Supplying food evening meals/ suppers Opportunities to sell farm & local produce Develop potential for walking trails on the farm Decision made! expand in the tourism business using a bed & breakfast to exploit the potential identified! Slide 24 How this option was funded Key costs Conversion of existing farm house Tracking out the farm walks minimum cost Total cost of conversion - 150,000 To be borrowed over 15 years @ 6.5% Annual repayment = 15,700 Slide 25 Borrowing for diversification Issues Identified & Discussed Affordability 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? Slide 26 Slide 27 Slide 28 Slide 29 Slide 30 Slide 31 Slide 32 The makeup of business profits (2007) 81,640 Total Profit Net Cash Flow = 59,500 Slide 33 Slide 34 Slide 35 Unlocking the potential within your farm Maria Heneghan Kevin Connolly