Extras at the till

[Profpointy]

A farmers herd is'nt an asset to be scrapped on a whim. The herd is everything.

Yebbut it's then a hobby not a business. It's sad when a way of life or historic enterprise disapears, but if no one wants to buy your product for what you can produce it for you need to change tack.

 

[Profpointy]

Something tells me that you may not be a farmer.

I am not be a farmer, no. However you don't need to be a farmer to know you can't run any business on 7% loss. We've heard this point about losing money in dairying for decades, yet there are still dairy farmers. Have they all really been subsidising dairying out of their own pockets for all these years? It is hard to believe. I do accept there are good and bad times in any business and not to say it's easy money in the good times. Also it isn't that long ago when milk quotas were bought and sold ergo had value. A licence to lose money wouldn't have fetched much.

I worked in a business which lost money for a number of years and one by one the competitors folded and eventually, and quite sensibly, they closed down our division. We were all hanging on hoping for better times when everyone else packed in but ultimately there simply wasn't a living to be made supplying our particular sort of IT systems to the the railways, at least not whilst every station wanted a bespoke system completely different from every other.

 

[Profpointy]

The milk is often seen as a by-product(They require milking anyway), before the final product.

By product for what ?

Veal calves are, I understand a by product from dairying, but you wouldn't milk a beef herd as it be better for the calves to have it surely?

 

[Profpointy]

[QUOTE 4969441, member: 45"]They do. We know a farming family in Cornwall who stopped producing milk, turned to beef farming and built log cabins in a field for holiday homes. Because they couldn't live off dairy farming.[/QUOTE]

Sensible choice. That's kind of my point really

 

[slowmotion]

The few farmers that I know all have a variety of income sources that they switch between depending on the profitability of each. I imagine that it would be possible to take a 7% hit on dairy if the shortfall could be made up from elsewhere. The more hard nosed would probably send the cows down the lane.

 

[FishFright]

Yebbut it's then a hobby not a business. It's sad when a way of life or historic enterprise disapears, but if no one wants to buy your product for what you can produce it for you need to change tack.

How did you manage to turn the herd being a farms most important asset into it being a hobby ?

 

[screenman]

I am not be a farmer, no. However you don't need to be a farmer to know you can't run any business on 7% loss. We've heard this point about losing money in dairying for decades, yet there are still dairy farmers. Have they all really been subsidising dairying out of their own pockets for all these years? It is hard to believe. I do accept there are good and bad times in any business and not to say it's easy money in the good times. Also it isn't that long ago when milk quotas were bought and sold ergo had value. A licence to lose money wouldn't have fetched much.

I worked in a business which lost money for a number of years and one by one the competitors folded and eventually, and quite sensibly, they closed down our division. We were all hanging on hoping for better times when everyone else packed in but ultimately there simply wasn't a living to be made supplying our particular sort of IT systems to the the railways, at least not whilst every station wanted a bespoke system completely different from every other.

You worked in a business, different to owning a business by a huge margin. Others have told you what goes on so I will not repeat, also though many do not want to break with generations of family history.

 

[Profpointy]

How did you manage to turn the herd being a farms most important asset into it being a hobby ?

Well if you lose 7% a year from keeping cows it doesn't sound like good business to me; more like a liability than an asset

 

[classic33]

View attachment 375158

Where's the Strong Coffee, no milk/cream option?

 

[srw]

Have they all really been subsidising dairying out of their own pockets for all these years?

Off and on, yes.

It's called having a diversified business. In the case of farming, it'll be diversified dairy, arable, meat, possibly B&B and possibly BBQ provision. When one bit is going tits-up you hope that another bit is doing OK.

In the case of insurance, which is a business I know rather more about and you mentioned, it'll be diversified motor, household, commercial liability and other lines. As it happens various large firms have decided that they can't make money from bits of the motor market. To my certain knowledge Allianz, RSA and Zurich have dropped out of bits of personal motor recently - in each case incurring redundancies and writing off investment to do so. There do seem to be ways of making money out of motor insurance, usually apparently involving not settling claims and selling profitable add-ons - although there are firms that do it by being extremely technically capable, or by targetting extremely unpopular sectors.

 

[nickyboy]

Cobblers! That's roughly what they were paid for it. Often it's less, a lot less.

View attachment 374947

What is happening is that the discount retailers are driving the average price per litre downwards. Here is an article (from 2015) that details the price differentials that the supermarkets were paying (33p/litre for "traditional" supermarkets, 25p for discounters). Customers are voting with their feet

http://www.bbc.co.uk/news/blogs-magazine-monitor-31058356

The cost of production (on which, presumably this 7% loss is derived) is interesting. Here is a link to a breakdown

https://dairy.ahdb.org.uk/market-in...imated-gb-milk-production-costs/#.WcfSyYWcHIU

The farmer's Variable Cost (basically the cost of replacing the cows as they become too old and the foodstuffs) is in the 15-17p range. The other costs are fixed costs (I am not sure what they are in dairy farming). So a dairy farmer can make some margin on the sale of milk at current prices, and this margin goes towards paying his fixed costs, whatever they are. But he can't do that forever. He's not making enough margin.

Like a lot of businesses under price pressure, they hang in there as they are actually making some money on the sale of milk (it's about 10p/litre). But it isn't enough for long-term financial stability

 

[classic33]

These figures for dairy farming, are they inclusive of subsidy?

Farm gate price.

 

[snorri]

Not defending the supermarkets and their undoubted ruthlessness, but if I was making long-term 7% loss on milk I could simply get rid of all my cows and make more money. This doesn't ring true frankly.

That's what the vast majority of dairy farmers have done in my part of the country, although I wouldn't know if they are making more money.

 

[Profpointy]

I do accept there's an argument to be made for subsidising food over-production, for strategic national security type reasons. After all, if things go badly we'll not last long eating our ipads or financial derivatives. I also accept the supermarkets are basically gits in their dealings with suppliers.

 

[FishFright]

Well if you lose 7% a year from keeping cows it doesn't sound like good business to me; more like a liability than an asset

It's a well known truism that any response starting with 'Well' is a guarantee that what follows is not worth reading.