CARA Wales

If your farming business has one or more partners under the age of 40, then you now qualify for 80% funding towards any consultancy receieved through the scheme. If all partners are over 40 then 50% funding is available towards the cost.

This consultancy can be used for whole farm planning, budgets & cashflows, technical advice, succession planning etc, and can be tailored to your indvidual needs.

If you are interested in recieving advice through Farming Connect, you will need to call 0845 6000 813 and ask for either John Crimes, Iwan Price or Wendy Jenkins under AgriPlan Cymru.

The Single Application Forms have now arrived. PLEASE, PLEASE phone for your appointment as soon as possible on 01570 471516. The last day of appointments in the office is the 8th of May 2009.

When you come into the office for you appointment please bring with you :-

SAF 2009 Form (Yellow Pack)

2009 Maps (Green Pack)

Exact Stock Numbers

Soil Assessment Booklet

Farm Assurance Number

Tir Gofal/Organic Scheme Maps & Agreements

List of any extra land - holding numbers etc

We look forward to seeing you!

You may have read the article in the Farmers Weekly recently about locking in your Single Farm Payment at the current Euro/Sterling conversion rate. This e-mail attempts to explain the issue and to make you aware of the options available.

Your Single Farm Payment is calculated in Euros by the Welsh Assembly Government. You can then choose on your Single Application Form whether to receive the payment in Euros or Sterling. The vast majority of farmers usually elect to receive their payments in Sterling. The payment is therefore converted to Sterling by the Assembly on the conversion rate on the 30^th of September in that calendar year. (0.79 conversion rate in 2008)

The farmers who elect to receive their payment in Euros are paid in Euros into a Euro bank account which they have set up with the bank. They can then convert these Euros back to Sterling at any time they wish, (most would do so when they received the payment – 1^st of Dec for majority). This effectively means that these farmers can choose to play with the exchange rate if they wish.

The article in the farmers weekly by World First, highlighted the option of forward booking a conversion of your euros into sterling at today’s conversion rate, which is 0.94. They required a deposit of 10% from farmers for this service, however the main banks are offering this service without a deposit.

SO WHAT WOULD YOU GAIN?

The conversion rate in 2007 was 0.69

The conversion rate in 2008 was 0.79

The conversion rate today is         0.94

On a payment of say €40,000 you would have received (before modulation) :-

2007  £27,600

2008 £31,600

2009 £37,600 (at today’s rate)

All you are doing is therefore eliminating the risk that the exchange rate falls back between today and the 30^th of September when the Assembly converts the money.

SO WHAT WOULD YOU LOSE?

The gamble you would take by forward booking a conversion rate is that the pound weakened further and that the conversion rate would improve by the 30^th of September.  (Barclays Chief Economist  is however indicating that the exchange rate will fall back towards 0.85 towards the end of the year. )

By pre-booking this conversion rate you are entering into a contract to convert your Euros in a certain payment window e.g. 1/1/10 to 31/03/10. If your payment was late for any reason, you would then be in breach of contract. However, the contracts can be extended for a fee.

Many businesses pay from £700 upwards for their annual accounts to be completed. How many actually use the accounts to assess their position and profitability?

Accounts show real costs, all be it sometimes not broken down into enough detail. But, they can provide a good starting point to see where things have gone wrong, or gone right. Questions that should be raised from annual accounts are as simple as:

Did I make a profit?

Did the profit cover my drawings?

Did my balance sheet improve?

Is my output, measured by sales, growing?

Are my costs increasing faster than my output?

These questions will provide a starting point for some decisions on best way forward.

In the current climate of falling milk prices it is easy to become despondent, but in most situations there are things that can be done. An important starting point is to benchmark your business and see where weaknesses lie. CARA as a company produce management accounts for many farms, which enable like to like comparisons. This process gives producers a real pence per litre cost of production, and shows where improvements can be made.

Contact us if you are interested in moving your business forward and seeing how you can reduce your production cost.

Many farmer’s have yet to order fertiliser, and this now seems like a good decision. The price is forecast to reduce, notably for nitrogen based products. There is currently, and locally some exceptionally good deals available on urea fertiliser, which should be considered.

When comparing fertiliser, it is best to use the price per unit or kilo of nutrient. For example 1 tonne of urea contains 460 kilos of nitrogen, at a cost of £275 per tonne this is 60 pence per kilo of nutrient. For ammonia nitrate to compete (345 kilos of nitrogen per tonne) it should be no more than £207 per tonne - certainly food for thought!

The best advice would be to order at least early spring requirements soon to guarantee product on farm for spreading in February / March.

Elin Jones has announced that there will be a further £6.8m of support given to the organic sector in Wales. The result of this is that all the applications made this year to enter the scheme will be accepted. It will also allow for more applications to be accepted to the 2009 scheme.

 There will be a total of £7.5m available in 2009-2010 and £5.5m in 2010-11. This means that payments have started with most farms receiving 70% of their total now.

If you are considering converting to organic farming then the advice would be to think about it as soon as possible to make sure you are in the first come first served bracket for the forthcoming year.

However in the same breath it’s advised that all farmers wishing to convert should apply for Assembly Government support before starting the conversion process.  This will enable farmers thinking about converting to be given a commitment of support or clear advice that they will not be supported and thus allow them to make informed business decisions. 

This good news won’t be such good news for others as the money has been taken away from other schemes to fund the organic applications. The result of this is that there will be a change in three other areas, these being

1)      All applications made for the Tir Cynnal Scheme on the SAF in 2008 will be put on hold for now until an Axis 2 review has been made.

2)      Tir Gofal applications that don’t reach the 100 points required for the scheme will be discarded without a visit and only those farms offering the best environmental result will be further pursued

3)      The Catchment Sensitive Farming Scheme will be delayed until April 2010 instead of late 2009. The number of catchment areas will however remain the same.

So often the case when cows are not milking well or milk butterfats and protein are poor the nutritionist gets the phone call to resolve the problem. The breeding advisor/technician is called when cows are not cycling, holding to services and the vet with issues such as ketosis, displaced abomasums, milk fevers’s, metritis etc etc.

Many of the issues raised can in fact be linked and one issue leads to another, yet on most dairy units the nutritionist, breeding advisor and vet never meet or know what issues they are having with mutual farms. Occasional but regular joint meetings can have significant impact on technical performance of a dairy unit.

An example might be significant incidence of displaced abomasums which is likely to be linked to dry cow management and nutrition. Low milk proteins, falling condition score and poor conception rates may be linked to energy levels of the milking cow diet. Working as a team on dairy units can result in problems being diagnosed quicker and therefore being resolved sooner. This has significant impact on dairy cow performance and therefore farm returns. Team approach avoids the SOS approach to managing a dairy unit and can lead to less vet visits to treat sick cows and by the breeding technician for repeat services.

The national minimum wage will increase from 1st October 2008. From this date, you will need to ensure that all staff are getting at least the new minimum wage per hour; appropriate to their age.  Below are last years rates and the new rates for this year:

National Minimum Wage rates from 1 October 2007

• Workers aged 22 and over - £5.52 per hour
• Workers aged 18-21 -         £4.60 per hour
• Workers aged 16-17 -         £3.40 per hour
• Accommodation offset -      £4.30 per day (£30.10 per week)

New National Minimum Wage rates from 1 October 2008

• Workers aged 22 and over - £5.73 per hour
• Workers aged 18-21 -         £4.77 per hour
• Workers aged 16-17 -         £3.53 per hour
• Accommodation offset -      £4.46 per day (£31.22 per week)

If you have any queries regarding payroll, please contact us and we will be happy to help.

The credit crunch seems to be the only news meriting any attention at present, but is this really having an impact on the agricultural sector? The major impact will be seen by new borrowers or those restructuring debt. In these circumstances, the cost of raising funds at bank level is increased, and therefore this will be passed onto the borrower.

In basic terms, although most owner occupier farmers have reasonable levels of security, new debt may not be at such good rates as previously seen. In order to prise as good a deal as possible out of the bank there are several things you can do to help:

1.       Ensure you ask for the correct amount of capital – asking for more at a later date is a sign of poor planning

2.       Structure the debt over the correct period – too quick a repayment period will see overdraft pressure

3.       Make sure you have an up to date balance sheet and farm valuation – security is still vital

4.       Always allow for some sensitivity and over spend in plans and budgets

5.       FINALLY … Show the bank a professionally produced business plan. (CARA does these regularly) 

Having all five factors above covered will gain respect and understanding from the bank manager and help in negotiating a competitive rate of borrowing.