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Thread: Sensible Financing For young person wishing to take over farming family farm

  1. #91
    Senior Member Phil's Avatar
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    Re: Sensible Financing For young person wishing to take over farming family farm

    Quote Originally Posted by Courier View Post
    That will be probably over the bank's own base rate which may or may not be the same as the BOE base rate.
    No it isn't !

    It is the actual interest rate I am paying on the overdraft !

    Our facility is set up on an interest rate of 3.25% over the Banks base rate of 0.5% !

  2. #92
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    Re: Sensible Financing For young person wishing to take over farming family farm

    Quote Originally Posted by Phil View Post
    Most manufactures now offer 0% interest schemes in a bid to keep their customers buying/investing. 2 + 22 months & 3 + 33 months interest free are widely available on a hell of a lot of stuff.
    100% of the payments you make in the year are fully Tax deductible expenses !

    Write out a cheque for one of these new bits of kit...and not only are you paying interest on your overdraught, The tax man then only allows you 40% against tax !

    Each to their own I guess.

    And when you start off your farming business in Debt, as I & a number of other farmers I know had to, you become use to running things with borrowings ! Mother sold the cows & quota etc to build herself a bungallow and then had everything else valued...so I started my farming business in debt to my mother to the turn of almost 50,000.00 ! O.K - so no one held a gun to my head & forced me to do it. But looking at the situation now with my wife & 4 young children growing up where I was born & having a pretty good environment to grow up in.....I certainly would not change a thing !!
    Some may accuse me of lacking business sense & not having any motivation, but I will always argue that there really is so much more to life than making huge profits !

    How many cows do you milk?

    50,000 seems a low enough amount to be borrowing if you have been given a decent dairy farm. You should be fit to pay that back no bother within a year/6 months at worst?????

    Or in a matter of days if you have a good single farm payment. You're a fortunate man to get (what should be) a profitable business like that. Many don't.

  3. #93
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    Re: Sensible Financing For young person wishing to take over farming family farm

    Quote Originally Posted by tex View Post
    How many cows do you milk?

    50,000 seems a low enough amount to be borrowing if you have been given a decent dairy farm. You should be fit to pay that back no bother within a year/6 months at worst?????

    Or in a matter of days if you have a good single farm payment. You're a fortunate man to get (what should be) a profitable business like that. Many don't.
    Not wanting to answer for Phil but I'm pretty sure Phil does not milk, you'll note he says his mother sold the cows and quota to pay herself out of the business. He's also a tenant farmer so he wasn't 'given a decent dairy farm', just the opportunity to run a farming business already burdened with considerable debt.

  4. #94
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    Re: Sensible Financing For young person wishing to take over farming family farm

    Quote Originally Posted by banjo View Post
    around half the size of the op's and it's mainly a sheep farm.
    the difference between me and you is, I recognise everyone does their financing differently and I'm sure it is done excellently and I respect them all for it.
    but I know there is another way to do it without risking everything and I would advise everyone contemplating big machinery borrowings on a mid range farm to think very hard indeed before they sign on the dotted line.
    you seem to think everyone who doesn't do it your way is a numpty and knows sod all about anything!
    some farms do things one way, others another, but there are a few ways to skin a cat, me thinks.
    Well exactly.

    I'd say the examples given by LALANS are quite true to life, farming is quite unique as an industry in that many people running reasonably large asset rich businesses are doing so not on merit, or because they build said business up from scratch, but because of who their dad was. Few industries work like that and as a result there are some people running farms who are not terribly good business men, who make decisions based on "what they've always done" or "look at the big shiny thing!".

    Just because some farmers make poor business decisions doesn't necessarily mean that buying a new machine isn't always the wrong thing to do though. After years of managing with inferior kit we bought a new loader tractor two years ago, and i feel it was the right decision to make, it's made the job a lot easier, cut down on my time needed to do the job and it was better value than a second hand one at the time.

    That said, the best business advice i've been given was "just because the bank will lend you the money to do something, doesn't mean it's a good idea."

    Really, you have to look at each situation individually, even then, there isn't always one right answer.

  5. #95
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    Re: Sensible Financing For young person wishing to take over farming family farm

    Most of my neighbours are,indeed,farming because their father farmed.But most of them,too,have taken several generations to get to this position.In my own case,my great grandfather went from being a ploughmen to being a tenant of 30 acres with no security.He moved to a bigger place and was able to help my grandfather into a tenancy.My father bought and I'm still paying.If any of my predecessors had been anything other than able industrious and courageous this would not have been possible.And that goes for me too.

  6. #96
    Senior Member Phil's Avatar
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    Re: Sensible Financing For young person wishing to take over farming family farm

    Quote Originally Posted by matbrojoe View Post
    Not wanting to answer for Phil but I'm pretty sure Phil does not milk, you'll note he says his mother sold the cows and quota to pay herself out of the business. He's also a tenant farmer so he wasn't 'given a decent dairy farm', just the opportunity to run a farming business already burdened with considerable debt.
    I'm glad you did...you were a lot more polite than I would have been !

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