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  • Farm leader says proposed private pension levy "a direct and vindictive attack on the self-employed" by the "best paid and pensioned politicians and civil servants in the world" | I C M S A
    propose such a levy is astounding Furthermore it s worth remembering that it was the sheer incompetence of these same political and civil service elites in their management of the state s finances that has already led to the complete collapse in the value of private pension funds Having presided over that disaster these same elites now propose to simply help themselves to 500 per annum out of whatever pittance is left The proposal represents an attack on private property scarcely seem before in a democratic state and is absolutely unacceptable declared Mr Cahill Self employed people who have to make provision for their retirement and old age through their own pension funds are undoubtedly being singled out under this proposed measure The exclusion of the public sector pensions from this proposed levy gives the game away Taken together with the increase in the age at which the State Contributory Pension will be paid this measure is a direct and vindictive attack on self employed in their old age Nor am I convinced that the levy will only last for four years similar levies in the past were posited as temporary only to then become permanent features of the Government s budgetary process and to disappear completely into the black hole of public sector spending he continued The readiness of the Government to impose a levy on the funds of private pensions stands in sharp contrast to its unwillingness or inability to shut down the huge and ruinous raft of quangos or to reduce public sector pay down to levels that operate internationally This proposed levy should be opposed by all in the private sector and ICMSA will co operate with any other organisation to prevent this attack on privately funded pensions concluded the ICMSA President Ends 6 May 2011

    Original URL path: http://icmsa.ie/2011/05/farm-leader-says-proposed-private-pension-levy-a-direct-and-vindictive-attack-on-the-self-employed-by-the-best-paid-and-pensioned-politicians-and-civil-servants-in-the-world/ (2016-01-06)
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  • Westmeath ICMSA describe decision to close Mullingar DVO as 'bizarre and inexplicable' | I C M S A
    to do Mr Kenna said this was exactly the kind of decision that probably looked simple on paper but would cause enormous disruption on the ground I m sure that the Dublin civil servants thought that moving the operation to Tullamore from Mullingar was a minor administrative matter but as is the usual way in Ireland what they didn t seem to think about was the people whom that office is meant to be serving pointed out Mr Kenna who farms at Ballynacarrigy It probably looked like a little spin up the road from the Department s offices in Dublin but it s a very long haul when you re a busy one man operation as is the case for the vast majority of farmers in Ireland today continued Mr Kenna There s one other point that I d like to raise on behalf of Westmeath ICMSA stated the Secretary of the Westmeath Executive of the country s specialist dairy farmer association Farmers are well used to hearing lip service paid to their work and their sector But the time has now arrived for concrete action and a demonstration of real commitment That should mean that a concerted effort is made to take costs out of farming and this is a perfect example of the kind of area that is within the Government s control where they should be giving a signal to farmers that a real service is going to be offered and on a basis that suits the farmers not the bureaucrats concluded Mr Kenna Ends 3 May 2011 Aidan Kenna 086 3616508 Chairman Monaghan ICMSA Or Cathal MacCarthy 087 6168758 ICMSA Press Office ICMSA Taxation Committee simple guide to Budget 2011 for farming families Farm leader says proposed private pension levy a direct and vindictive attack on

    Original URL path: http://icmsa.ie/2011/05/westmeath-icmsa-describe-decision-to-close-mullingar-dvo-as-bizarre-and-inexplicable/ (2016-01-06)
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  • Capital and Credit Requirements for the Development of the Irish Dairy Sector | I C M S A
    Debt divided by annual Milk Sales This ratio indicates the number of years of Milk Sales that it would take to clear the debt if all Milk Sales income was used to pay down debt it is 1 2 years in 2010 and between 0 8 and 1 1 years by 2020 Asset Cover Ratios Liquid Assets divided by Farm Debt This ratio indicates the capacity for immediate repayment of the debt by sale of Liquid Assets it changes from 1 7 in 2010 to between 2 3 and 1 6 by 2020 Total Assets divided by Farm Debt This ratio indicates the capacity for immediate repayment of the debt by sale of all assets it changes from 9 5 in 2010 to between 12 2 and 8 9 by 2020 The Average Debt Ratios These average debt ratios describe an overall sectoral situation of relatively low indebtedness relative to income and cash flows and a high degree of asset cover In effect at a milk price of 29 c L the average Irish milk producer in 2010 Has Family Farm Income pre Interest of almost 11 for every 1 of interest due on farm debt Has over 15 in milk sales for every 1 of interest due on farm debt Could repay all Farm Debt in 1 7 years with Family Farm Income Could repay all Farm Debt in 1 2 years with Milk Sales income Has Liquid Assets that are worth 1 7 times all Farm Debt Has Total Assets that are worth 9 5 times all Farm Debt If milk price in 2020 is 30 c L all of the ratios would continue to be favourable under the expansion assumptions made above One key question for lenders is the relevance of these ratios in the case of individual farmers The Working Group is keen to work with lenders to establish standard metrics that can be applied in a transparent manner across the industry to indicate the repayment capacity of individual farmers Ideally such metrics should be straightforward and readily understood by farmers their advisors their Co ops and their lenders They could be available as an initial screen for credit applicants and as a guide to overall debt capacity for dairy farmers Standardised data on the performance of the sector in servicing current debt is not publically available However discussions with banking professionals suggest that the sector s performance is generally strong and that most instances of difficulty relate to very specific personal or operational circumstances such as off farm investment 6 Financial Effects of Lower Milk Prices due to Price Volatility Table 12 provides the same overview of the sector as in Section 5 above but with milk price of 25c L and 20 c L in 2020 across both expansion scenarios again it must be emphasised that that the future milk prices used in this document are not forecasts and are selected merely to illustrate the potential levels of income under different market conditions Year 2010 2020 30 expansion 2020 30 expansion 2020 50 expansion 2020 50 expansion Milk Sales millions of litres 5 000 6 500 6 500 7 500 7 500 Avg Milk Price cents litre 29 0 25 0 20 0 25 0 20 0 Milk Sales m 1 450 1 625 1 300 1 875 1500 Other Farm Sales m 250 288 288 310 310 Subsidies m 370 300 300 300 300 Gross Farm Output m 2 070 2 213 1 888 2 485 2 110 Total Costs excluding Interest m 1 050 1 365 1 365 1 575 1 575 Family Farm Income before Interest m 1 020 848 523 910 535 Annual Interest m 94 83 83 130 130 Family Farm Income m 927 765 440 780 405 Farm Debt m 1 700 1 500 1 500 2 360 2 360 Liquid Assets m 2 940 3 382 3 382 3 728 3 728 Owned Land Buildings 12 000 LU m 13 200 14 952 14 952 17 250 17 250 Total Owned Assets m 16 140 18 334 18 334 20 978 20 978 Table 12 Financial overview with lower milk price outlook This scenario shows Gross Farm Output ranging from 1 89 and 2 49 billion in 2020 and Family Farm Income moving from 927 million in 2010 to between 405 and 765 million in 2020 Key Debt Ratios 2010 2020 30 expansion 25c L 2020 30 expansion 20c L 2020 50 expansion 25c L 2020 50 expansion 20c L FFI before Interest Farm Interest 10 9 10 2 6 3 7 0 4 1 Milk Sales Farm Interest 15 5 19 6 15 7 14 4 11 5 Farm Debt FFI before Interest 1 7 1 8 2 9 2 6 4 4 Farm Debt Milk Sales 1 2 0 9 1 2 1 3 1 6 Liquid Assets Farm Debt 1 7 2 3 2 3 1 6 1 6 Total Assets Farm Debt 9 5 12 2 12 2 7 3 7 3 Table 13 Key debt ratios with lower milk price outlook Some of the key debt ratios would be less favourable as shown in Table 13 However the Interest Cover Ratios would still be strong with FFI pre Interest Interest in 2020 from 10 2 to 4 1 Milk Sales Interest in 2020 from 19 6 to 11 5 Debt Cash Flow multiples would also remain strong with Farm Debt FFI pre Interest in 2020 from 1 8 to 4 4 Farm Debt Milk Sales in 2020 from 0 9 to 1 6 The Asset Cover Ratios would remain largely unchanged For many Irish dairy farmers capital is a critically important farm input and its availability terms and price will influence the pace of change in the industry generally and particularly the expansion of production after 2015 This analysis deals with the Irish dairy production sector as a single entity and it calculates overall averages for the sector Even at this level the central conclusion is clear in this sustainable and resilient industry with a highly committed ownership and workforce the level of indebtedness is low Overall Sector Exposure In considering its exposure to the sector a lender may take the view that lending to dairy farmers dairy processing and dairy marketing all come within a specific category of lending All three areas require more capital as volumes increase and all three areas enjoy the same security that comes from an efficient resilient and sustainable industry producing a basic food product that faces increasing demand Therefore for information purposes the Irish Dairy Board s 2010 estimate of the financial implications for the supply chain beyond the farm gate of meeting the 50 expansion in milk output envisaged in Food Harvest 2020 is shown below Projected capital expenditure of 400 million for additional processing capacity Additional working capital requirement of 250 300 million for finance and storage Projected investment of 200 million in route to market infrastructure and marketing 7 Farm Level Averages Table 14 provides a financial overview of the average Irish dairy farmer under milk price scenarios of 20c L 25c L and 30 c L in 2020 and using the scenarios for milk output and farmer numbers outlined in the previous sections It shows average Milk Output per farmer rising from 278 000 litres in 2010 up to 555 556 litres in 2020 and average FFI per farmer changing from 51 000 in 2010 to a range between 30 000 and 86 000 in 2020 Average Farm Debt per farmer would rise from 94 000 in 2010 and to range between 115 000 and 175 000 in 2020 Average Liquid Assets per farmer would rise from 163 000 in 2010 to between 260 000 and 276 000 in 2020 FFI per litre of milk and per livestock unit are also calculated Average per Farmer 2010 29c L 2020 30 expansion 20c L 2020 50 expansion 20 c L 2020 30 expansion 25c L 2020 50 expansion 25c L 2020 30 expansion 30c L 2020 50 expansion 30c L Number of Dairy Farmers 18 000 13 000 13 500 13 000 13 500 13 000 13 500 Average Herd Size 61 96 107 96 107 96 107 Milk Output litres 277 778 500 000 555 556 500 000 555 556 500 000 555 556 Milk Sales 80 556 100 000 111 111 125 000 138 889 150 000 166 666 Gross Farm Output 115 000 145 231 156 296 170 231 184 296 195 231 211 852 Total Costs excluding Interest 58 333 105 000 116 667 105 000 116 667 105 000 116 667 Family Farm Income before Interest 56 667 40 231 39 629 65 231 67 629 90 231 95 185 Annual Interest 5 194 6 346 9 615 6 346 9 615 6 346 9 615 Family Farm Income 51 473 33 885 30 014 58 885 58 014 83 885 85 570 Farm Debt 94 444 115 385 174 815 115 385 174 815 115 385 174 815 Liquid Assets 163 333 260 154 276 148 260 154 276 148 260 154 276 148 Owned Land Buildings 12 000 LU 732 000 1 152 000 1 248 000 1 152 000 1 248 000 1 152 000 1 248 000 Total Owned Assets 895 333 1 412 154 1 524 148 1 412 154 1 524 148 1 412 154 1 524 148 Family Farm Income per Litre cents 18 5 6 8 5 4 11 8 10 4 16 8 15 4 per Livestock Unit 844 353 281 613 542 874 800 Table 14 Financial overview of the average farmer under different price scenarios It should be noted that the purpose of the scenarios in Table 14 is to demonstrate the potential impact of milk price volatility at a particular point in time and the scenarios are not projections of milk price averages over the coming decade Table 14 shows that the average dairy farmer has an improved repayment capacity in 2020 under the 25c L and 30c L milk price scenarios than in 2010 due to the benefits of increased scale It also shows that there is not a significant difference in farmers repayment capacity between the 30 and 50 expansion scenarios This is illustrated in the chart below 8 Role of Dairy Co ops in Credit Administration In credit as in other areas difficulties for dairy farmers are difficulties for dairy Co ops and it is generally agreed in the industry that Irish dairy Co ops will do whatever they can to facilitate arrangements between dairy farmers and lenders In particular Co ops could facilitate the following processes general communication from lenders to farmers in relation to credit credit applications by farmers credit assessment by lenders can be facilitated by Co ops on farmers expressed instruction collection from milk payments of loan repayments interest general administration of the relationship between lender and borrower based on written agreement and understanding by both In summary the dairy Co ops are willing to assist the lender in any manner possible subject to the critically important condition that the Co op will not incur any liability for any farmer debt The Co ops are willing to consider a role in assisting banks in credit assessment based on the farmer data available to the Co ops and on foot of a written agreement by the farmer to the Co op but the lending relationship will always be between lender and farmer In this context the term Co op is being used to include all parties that stand immediately downstream of producers and it includes Co ops that do not themselves physically process milk but stand between the producer and the actual Co op Table 14 Appendix A shows Irish Dairy Co ops in the context of this discussion 9 Exploring Options for Credit Security Recently there have been substantial changes in the law and procedure for providing security for loans and the registering of charges In essence the Land and Conveyancing Law Reform Act 2009 provides that effectively all security for farm loans is now based on a charge on the land All previous methods of providing security have been abolished Furthermore the law and procedures set out by the Irish Property Registration Authority provide that to be effective the charge must be registered in accordance with the prescribed form Virtually all agricultural land is registered land and therefore will have a folio number Probably all existing loans to farmers taken out prior to the new Act and subsequently are now secured by way of a registered charge on the land in question Two issues arise from the above First there is clear legal and formal security for the lender In effect lending to farmers has the same legal security now as a loan based on the traditional mortgage on a dwelling The other issue is the cost of registration of the charge There is evidence that the cost being charged by solicitors is excessively high at almost 1 000 per case This is excessive if the title of land to which the charge applies is up to date Indeed a significant number of lending institutions have agreed and lodged standard conditions with the Irish Property Registration Authority In conjunction with these standard conditions and a single page form entitled FORM 68 the charge can be registered against the folio of the land in question A copy of Form 68 is attached at Appendix B showing the simplicity of the procedure Where the land already has a charge on it with regard to existing borrowing a further charge can be registered Where there would be a package of funding involving a number of farmers the arrangements are now in place to streamline the security aspect and to significantly reduce the cost of providing security i e registration of charge There is however a fee of 125 payable to the Irish Property Registration Authority for every charge registered In summary the cost of providing security in the form of registration of a charge is not a major issue and in any event could be substantially reduced The key point however is that from a lender s point of view full legal and registered security can be readily obtained This combined with repayment capacity and the very strong record of dairy farmers generally in servicing debt clearly shows that dairy farming is a sector with particularly low credit risk which should be reflected in both the availability and cost of credit to dairy farmers Other Security Options The security options available to expanding dairy enterprises will vary Where a famer holds equity in land a term loan secured against the land will be the probable option However many dairy enterprises will use land lease arrangements including long term leases as a basis for their expansion In these circumstances alternative security options will be necessary such as chattel mortgages and stock mortgages These are already common in New Zealand and Australia 10 Conclusion The purpose of the document is twofold 1 To initiate constructive dialogue between the banks the sector both dairy farmers and Co ops 2 To inform banks of the lending opportunity The concepts and proposals put forward in this document have very broad support from the dairy sector including farmers Co ops and other stakeholders In this exercise the core objective of the industry is to ensure that Irish dairy farmers have access to credit on terms that are in line with those available by their counterparts in other Euro Zone countries There is sufficient credit available to finance profitable expansion of Irish dairy production Lending arrangements including repayment schedules take account of milk price volatility and the long term nature of farming investment The cost of providing security is minimised All suitable forms of security are considered and utilised 11 Appendices A Irish Dairy Co operatives Glanbia Kerry Dairygold Arrabawn Ballinfull Bandon Barryroe Boherbue Bunnoe Callan Carbery Centenary Connaught Gold Corcaghan Doapey Donegal Drinagh Drombane Fealesbridge Kill Lakelands Lee Strand Lisavaird Maudabawn Mullinahone Newtownsandes North Cork Creameries Oldcastle Poles Tipperary Town of Monaghan Wexford Table 14 Irish Dairy Co operativess B Form 68 FORM 68 Charge for future advances rules 52 113 LAND REGISTRY County Folio Charge dated the day of 20 A B the registered owner or the person entitled to be registered as owner hereby charges the property set out in the schedule hereto with payment to CD of all sums owing and due from time to time and covenanted to be paid in respect of future or present and future advances to the said AB and secured by this charge subject to such terms and conditions covenants and obligations as are set out in the General Terms and Conditions lodged in the Land Registry under reference The said A B hereby assents to the registration of this charge as a burden on the property The address in the state of the said C D for service of notices and his description are Schedule Description of property charged Signed or Signed sealed and delivered by A B in the presence of Signed or Signed sealed and delivered by C D in the presence of NOTE Where desired the covenants for title implied by the chargor charging as beneficial owner may be incorporated by inserting these words in the deed of charge after the name of the chargor See section 80 of the Land and Conveyancing Law Reform Act 2009 A Report by the Irish Dairy Sector Capital and Credit Requirements for the Development of the Irish Dairy Sector And Streamlining the Lending Process 7 April 2011 The drafting of this Report was coordinated by the Irish Creamery Milk Suppliers Association in conjunction with a Working Group whose membership is Jackie Cahill President ICMSA Pat McLoughlin President ICOS John O Brien Chairman Carbery Michael Harte CFO Dairygold Michael Dunlea CFO Tipperary Co op Dr Michael Keane Dairy Economist Representatives of Merrion Capital Group Willie Ryan Taxation Committee ICMSA Ciaran Dolan BL General Secretary ICMSA Geoff Dooley Policy Consultant ICMSA Executive Summary Background For many Irish dairy farmers capital is a critically important farm input and its availability terms and price will strongly influence the future development of the industry In order to facilitate a closer and more structured engagement between lending banks and the Irish dairy sector this report suggests metrics for assessing the borrowing capacity of individual dairy farmers and proposes an arrangement whereby dairy Co ops could act as a link between milk producers and lenders The report also proposes arrangements for the granting and taking of security in relation to loans This approach should offer significant benefits to milk producers seeking a reliable source of credit and to lenders seeking low risk lending opportunities with low administration costs The Irish Dairy Sector The milk production sector has undergone a long period of transformation and consolidation This process will accelerate with the phasing out of the milk quota regime by 2015 Estimates of the milk output increase between 2015 and 2020 vary between 20 and 50 With producer numbers continuing to fall the average volume per producer will rise to somewhere between 450 000 and 550 000 litres per year with an average herd size of somewhere between 85 and 110 cows Table 1 summarises the capital required excluding land to fund this structural change in the sector analysed across different scenarios and assumptions for milk output and average milk yield per cow It shows that in a baseline scenario of no expansion in milk output 585 million of capital will be required Expansion of 30 to 50 would require capital of between 1 1 billion and 2 8 billion Milk yield per cow increase to 2020 Milk Output Increase to 2020 Baseline zero expansion 30 50 10 585 million 1 9 billion 2 8 billion 20 1 1 billion 1 9 billion Table 1 Estimated Capital Investment Costs on Irish Dairy Farms While future milk prices are uncertain and milk price volatility is expected to continue the income analysis in this report finds that at current milk prices and farm costs the sector has significant debt repayment capacity This finding is tested by examining three milk price scenarios 20c L 25 c L and 30 c L for 2020 which show that the sector is resilient sustainable and well positioned to withstand future price volatility Table 2 shows 2020 farm incomes in a 30 expansion scenario Average Milk Price in 2020 cents L 20 0 25 0 30 0 Avg Family Farm Income per Producer 33 885 58 885 83 885 Avg Family Farm Income per Litre cents 6 8 11 8 16 8 Avg Family Farm Income per Livestock Unit 353 613 874 Table 2 2020 Family Farm Incomes after Interest in a 30 expansion scenario Table 3 shows the 2020 farm incomes in a 50 expansion scenario Average Milk Price in 2020 cents L 20 0 25 0 30 0 Avg Family Farm Income per Producer 30 014 58 014 85 570 Avg Family Farm Income per Litre cents 5 4 10 4 15 4 Avg Family Farm Income per Livestock Unit 281 542 800 Table 3 2020 Family Farm Incomes after interest in a 50 expansion scenario Proposals for Streamlining the Lending Process Recognising their shared interests with dairy producers dairy Co ops are prepared to facilitate structures and arrangements for credit application and debt repayment on behalf of farmers and lenders subject to the Co op not incurring any liability for farmer debt Transaction charges can be further reduced by streamlining the arrangements for credit security This can be done by lodging standard conditions with the Irish Property Registration Authority and the registration of a charge against the folio of land in question Given the changing structure of dairy farming where significant expansion will take place on leased land including long term leased land it is appropriate to consider alternative ways of providing security in these situations The arrangement of chattel and stock mortgages could very well form a useful and practical solution in these situations Conclusion The central conclusion of this report is that the level of indebtedness in the Irish milk production sector is low and that the sector has a strong repayment capacity The report seeks to inform banks of the attractive lending opportunity offered by the milk production sector and of the opportunity for lending banks to serve the sector on a low cost basis by working collaboratively with dairy Co ops It is important to note that the report does not attempt to project or forecast future milk price The analysis is based on a number of assumptions and scenarios which are clearly stated CONTENTS 1 Introduction 2 The Irish Dairy Production Industry Change Growth 3 Capital Investment Overall Requirements 4 Financial Overview Credit Requirements 5 Key Metrics for Dairy Farm Credit 6 Financial Effects of Lower Milk Prices 7 Farm Level Averages 8 Role of Dairy Co ops in Credit Administration 9 Exploring Options for Credit Security 10 Conclusion 11 Appendices 1 Introduction In January 2011 a meeting of representatives of dairy farmers and Co ops was convened by ICMSA to review the availability of credit to Irish dairy farmers A Work Group was formed at this meeting representing Irish dairy farmers and Co ops and it received administrative and other support from the ICMSA Specialist professional advice was provided to the Work Group by Merrion Capital Group and by Dr Michael Keane Dairy Economist The tasks undertaken by the Work Group included preparation of this document which sets out proposals for meeting the capital and credit requirements for the dairy farming sector The purpose of this document is To outline the financial characteristics and credit requirements of the Irish dairy farming sector as it is now and as it is likely to evolve over the next ten years To suggest metrics that may be used by lenders in considering the repayment capacity of individual dairy farmers To suggest arrangements whereby Irish dairy Co ops can intermediate between dairy farmers and lenders facilitating credit application lending and loan administration processes To suggest arrangements whereby the granting and taking of security in relation to loans can be streamlined reducing the cost to the farmer To generally inform lenders whether current market participants or potential new lenders in relation to the overall creditworthiness of the Irish dairy production industry and the scale and nature of the lending opportunity therein Membership of the Work Group Michael Dunlea CFO Tipperary Coop Michael Harte CFO Dairygold Michael Keane Dairy Economist John O Brien Chairman Carbery Pat McLoughlin President ICOS Representatives of Merrion Capital Group Jackie Cahill President ICMSA Willie Ryan Taxation Committee Chairman ICMSA Ciaran Dolan BL General Secretary ICMSA Geoff Dooley Policy Consultant ICMSA 2 The Irish Dairy Production Industry Change Growth In the 30 years from 1990 to 2020 Average dairy herd size in Ireland will have tripled The number of dairy farmers in Ireland will have fallen by two thirds Overall milk volume will have increased following the ending of the quota regime Average volume produced per farmer will have increased fourfold The Irish dairy farming sector is a highly efficient production system owned and run by technically skilled and commercially focused dairy farmers who will continue to optimise the scale of their businesses in order to suit Irish production conditions Much of this transformation has already occurred The charts in this section illustrate a range of quantitative impacts of different development scenarios for the sector As shown in the chart below it is likely that farmer numbers will level out between 12 500 and 15 000 at some time in the next 15 years After decades of overall milk volumes being restricted by the quota regime volumes will increase after 2015 The level of increase will be influenced by many factors dairy product prices input prices general economic circumstances etc but there is general agreement that there will be a very significant increase in overall volumes with current estimates of the increase between 2015 and 2020 varying from 20 to 50 With farmer numbers still falling over the next decade average milk volume per farmer will continue to rise eventually levelling out somewhere between 450 000 and 550 000 litres per farm This production growth will come partly from larger herd size and partly from increased yields Average herd size may level out somewhere between 85 and 110 cows but there will be a wide statistical spread around this average with the majority of farms having a herd size between 65 and 80 cows and a number of farms with up to 400 cows and higher 3 Capital Investment Overall Requirements Milk Output Scenarios to 2020 Two 2020 scenarios are considered a 30 and a 50 milk output increase Given the ongoing changes in numbers and sizes of milk suppliers it is suggested that by 2020 the number of dairy farmers will have fallen from about 18 000 to between 13 000 and 13 500 the average herd size will have risen from 61 to between 100 and 111 cows and yield per cow is assumed to increase by 10 Table 4 The yield increase is a critical assumption regarding future investment in facilities and livestock an assumed yield increase of 20 is considered later 2000 2010 2020 30 2020 50 Farm Milk Sales Millions of Litres 5 000 5 000 6 500 7 500 Number of Dairy Farms 32 000 18 000 13 000 13 500 Number of Dairy Cows 000 1 150 1 100 1 300 1 500 Average Dairy Herd Size Cows 36 61 100 111 Milk Output per Farm 000 litres 156 278 500 556 Table 4 Possible Changes in Milk Output and Herd Structure to 2020 Farm Level Estimate of Capital Investment Requirements This section is substantially based on M Sc 2009 J McCarthy UCC and L Shalloo Teagasc Moorepark Greenfield Dairy Farm The McCarthy study took as a benchmark an average farm based on detailed information from an active discussion group and the expansion costs were obtained from Teagasc The study found a net capital cost of 2 880 per cow excluding livestock Taking Department of Agriculture livestock compensation values the total capital investment required is found to be 4 680 for each additional cow An alternative estimate of dairy farm expansion costs derived from L Shalloo Dairy Levy Update no 12 2010 finds a total investment requirement per cow of 4 150 The analysis in this section will use the McCarthy estimate of 4 680 per additional cow While this may be regarded as being high in 2011 given likely cost inflation to 2020 it may be a reasonable estimate of the average cost over the decade ahead Additional Land Including land in this investment analysis would require a further set of assumptions involving the possibility of increasing stocking rate on continuing dairy farms to 2020 the possibility of replacing other enterprises such as beef cattle with dairying on continuing dairy farms and the likely cost on average to 2020 of the leasing or purchase of additional land for dairying It was considered that this further analysis could not be undertaken with sufficient reliability so as to be useful at this stage Aggregate Sectoral Level Estimates of Capital Requirements Initial Assumptions It is assumed initially that that there is no spare capacity with regard to facilities on the continuing farms and that milk yield increases by 10 by 2020 With regard to cow spaces facilities on the retiring farms it is assumed that the 4 500 to 5 000 retiring farms Table 4 had an average herd size of 40 cows and that most of these facilities will be lost to the sector The remaining 13 000 herds in 2010 are assumed to have an average herd size of 69 cows On this basis the continuing herds would need to increase on average by about 30 cows to achieve an overall increase in milk output of 30 by 2020 while herds would need to increase by about 45 cows on average for a 50 milk output increase While some surviving herds may remain largely static in size over the decade this would mean that others would need to achieve even larger expansion to meet the overall 2020 target The aggregate estimates below relate only to the capital investment required to facilitate the additional cow numbers in those herds that are assumed to expand There is no estimate of any capital investment that may be required to modernise facilities for the original cow numbers In aggregate terms this results in a total capital investment of 1 9 billion to 2020 for a 30 overall output increase and 2 8 billion for a 50 output increase Table 5 30 Expansion 50 Expansion Additional cows per herd approx 31 Cows 44 Cows Capital Investment per herd 145 000 206 000 Number of Herds 13 000 13 500 Aggregate Cost in billions 1 89 2 78 Table 5 Estimate of Aggregate Cost of Expansion to 2020 Alternative Assumptions The above estimates are based on the assumptions that there is no spare capacity on existing dairy farms that all cow spaces on retiring dairy farms are lost to the sector and that milk yields increase by just 10 by 2020 It is difficult to know the extent of dairy farm spare capacity the degree to which facilities on retiring dairy farms would be still available and used and how milk yields will develop when free from quota constraints Just one alternative set of assumptions is provided for at this point i e that milk yields would be a further 10 higher or 20 in total from 2010 and that there is 10 spare capacity in dairy farm facilities at present on continuing dairy farms Table 6 The assumption that the 4 500 to 5 000 retiring farms had an average herd size of 40 cows remains 2000 2010 2020 30 2020 50 Farm Milk Sales Millions of Litres 5 000 5 000 6 500 7 500 Number of Dairy Farms 32 000 18 000 13 000 13 500 Number of Dairy Cows 000 1 150 1 100 1 192 1 375 Average Dairy Herd Size Cows 36 61 92 102 Additional cow spaces required per farm 15 28 Table 6 Changes in Milk Output and Herd Structure to 2020 Alternative Assumptions On the basis of these revised assumptions total capital investment in dairy farming to 2020 would amount in aggregate to about 1 1 billion 30 output expansion or 1 9 billion 50 output expansion Additional cows are costed at 1 800 per head which is based on Department of Agriculture compensation values and the cost of providing additional cow spaces is estimated at 2 880 per head McCarthy 2009 30 Expansion 50 Expansion Additional cows per herd approx 22 35 New cow spaces etc per herd approx 15 28 Capital Investment per herd 83 000 144 000 Number of Herds 13 000 13 500 Aggregate Cost in billions 1 08 1 94 Table 7 Aggregate Cost of Expansion Alternative Assumptions Baseline Estimate No Output Expansion to 2020 While the above estimates relate to overall output expansion of 30 and 50 to 2020 considerable investment would also arise if no expansion whatsoever occurred due to herd restructuring or movement to fewer and larger herds It is useful to estimate this as a baseline against which the estimates above can be compared For the baseline it is assumed that milk yield will increase by 10 to 2020 and that there is no spare capacity on expanding farms The overall herd structure assumed for the baseline to 2020 is shown in Table 8 2010 2020 Baseline Scenario zero expansion Farm Milk Sales Millions of Litres 5 000 5 000 Number of Dairy Farms 18 000 12 500 Number of Dairy Cows 000 1 100 1 000 Average Dairy Herd Size Cows 61 80 Milk Output per Farm 000 litres 275 400 Table 8 Possible Changes in Milk Output and Herd Structure to 2020 Baseline Scenario Based on the same assumptions outlined above with regard to the size of retiring herds i e the average herd size of the 5 500 retiring herds is assumed to be 40 cows the estimated capital costs with zero expansion to 2020 are 585 million approximately Table 9 2020 zero expansion Additional cows per herd approx 10 New cow spaces etc per herd approx 10 Capital Investment per herd 46 800 Number of Herds 12 500 Aggregate Cost millions 585 Table 9 Aggregate Cost Baseline Zero Expansion Other Aspects for Consideration There are a range of other aspects that could be considered including the following The estimates above are based on various assumptions In particular the assumptions on yields are critically important In relation to the assumptions about cow spaces and farm facilities it is assumed that all facilities are lost to the dairy industry when dairy farmers retire while the estimates for remaining farms are only for the expansion component with no allowance for replacing older facilities on these farms The additional investment does not include any allowance for further spare capacity on continuing farms in 2020 There is no consideration of working capital All of the estimates above relate to additional capital investment without regard to how this might be financed e g own resources bank borrowing etc 4 Financial Overview Credit Requirements The financial characteristics of Irish dairy farming will continue to depend primarily on milk price and future milk prices will be determined by various market and policy factors which are uncertain There has been increased volatility in recent years in Irish and International milk prices which are linked directly to international dairy commodity prices and that volatility is expected to continue It is important to note that the future milk prices used in this

    Original URL path: http://icmsa.ie/2011/04/capital-and-credit-requirements-for-the-development-of-the-irish-dairy-sector/ (2016-01-06)
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  • ICMSA Welcomes Lakelands December Milk Price Increase | I C M S A
    Food Safety Authority of Ireland stated at the time that there were no concerns from a public or animal health viewpoint ICMSA believes that it would be appropriate at this stage to carry out a review to determine whether further products could be used for the treatment of fluke in dairy cows Herd health is a hugely important issue for dairy farm productivity and farmers spent 211m in 2009 on veterinary related expenses In the kind of wet weather conditions we ve experienced over the past number of years treatment for fluke is hugely important and there is concern that some products farmers have traditionally used and which they found were very effective for their requirements are no longer available to them said Mr McCormack In those circumstances and given the need to maintain healthy animals Mr McCormack said that ICMSA believes that the relevant authorities should carry out a science based assessment to determine whether a wider range of fluke products can be made available to dairy farmers We must endeavour to have the widest range of products available to dairy farmers while at all times fully protecting human and animal health concluded the Dairy Committee Chairman Ends 14 January 2011 Potential Investment Costs in Milk Processing and Transport to 2020 ICMSA say that IDB index is switching off the light on milk price data and facts Search the site ICMSA President John Comer Newsletter ICMSA Winter 2015 Newsletter ICMSA Autumn Newsletter 2015 ICMSA Newsletter Spring 2015 ICMSA Winter 2014 Newsletter ICMSA Autumn 2014 Newsletter ICMSA Spring 2014 Newsletter ICMSA Autumn 2013 Newsletter ICMSA Summer Newsletter 2013 ICMSA Newsletter Spring 2013 Presidents Speech AGM Read more Login Events Calendar January 2016 Mon Tue Wed Thu Fri Sat Sun 1 2 3 4 5 6 7 8 9 10 11

    Original URL path: http://icmsa.ie/2011/01/icmsa-welcomes-lakelands-december-milk-price-increase/ (2016-01-06)
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  • Copy of Letter sent by ICMSA President Jackie Cahill to TDs and Senators re Climate Change Response Bill | I C M S A
    of 17 600 will receive their payment in December rather than January The remainder of the farmers will receive their payment in January and in addition all farmers will receive the ex gratia interest payment in early 2011 agreed when the payment was staggered over three years 4 Suckler Cow Welfare Scheme In Budget 2009 the decision was taken not to pay the 2009 payment until 2010 and this continued for the 2010 payment The Minister has now decided to change the policy with the result that the farmer will now receive payment for both 2010 and 2011 in 2011 5 Additional Funding for On Farm Investment Schemes including Dairy Investment Scheme The Department has allocated 19 million for the Department s Targeted Agricultural Measures which includes a new scheme for dairy farmers to adjust to expanding dairy opportunities aid for sheep fencing and handling facilities and animal welfare grants for pig and poultry producers The decision on how much funds will be allocated to each scheme has yet to be taken but ICMSA will be lobbying for a substantial portion for the dairy scheme It is expected that a decision on how much funding will be allocated to each scheme will be taken in early 2011 Taxation Measures 1 Tax bands Tax bands will be decreased by 10 across the board The top rate of 41 will now apply on all income above 32 800 36 400 in 2010 in the case of a single person For married couples with one income the 41 rate will apply at 41 800 45 400 in 2010 2 Tax Credits Personal tax credits have also been reduced by 10 across the board The personal tax credit for a single person will be cut to 1 650 from 1 830 The tax credit for a married couple will be reduced to 3 300 from 3 660 3 Universal Social Charge USC The Health Levy and the Income levy will be abolished and replaced by a new USC at the rates and thresholds shown in the Table below USC payable on annual income Rate 4 004 0 0 10 036 2 10 037 16 016 4 16 016 7 The USC will apply on a similar basis to the Income levy with no special exemptions other than a lower rate being applied to income earners over 70 There will be an important exemption from the USC for genuine capital allowances used in business The ICMSA has received confirmation on this matter and all farm related capital allowances are deductible from this charge The impact of this change is illustrated below by the example of a farmer with an income of 50 000 who has 10 000 of normal capital allowances and 15 000 of accelerated capital allowances available for both 2010 and 2011 In this example the farmer is 631 better off as a result of the change 2010 2011 Income Levy 700 Health Levy 1 000 Universal Social Charge 1 069 TOTAL 1

    Original URL path: http://icmsa.ie/2011/01/copy-of-letter-sent-by-icmsa-president-jackie-cahill-to-tds-and-senators-re-climate-change-response-bill/ (2016-01-06)
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  • ICMSA Taxation Committee simple guide to Budget 2011 for farming families | I C M S A
    the Table below USC payable on annual income Rate 4 004 0 0 10 036 2 10 037 16 016 4 16 016 7 The USC will apply on a similar basis to the Income levy with no special exemptions other than a lower rate being applied to income earners over 70 There will be an important exemption from the USC for genuine capital allowances used in business The ICMSA has received confirmation on this matter and all farm related capital allowances are deductible from this charge The impact of this change is illustrated below by the example of a farmer with an income of 50 000 who has 10 000 of normal capital allowances and 15 000 of accelerated capital allowances available for both 2010 and 2011 In this example the farmer is 631 better off as a result of the change 2010 2011 Income Levy 700 Health Levy 1 000 Universal Social Charge 1 069 TOTAL 1 700 1 069 Please note that even where accelerated pollution related capital expenditure does not apply all normal capital allowances will apply to the new USC In contrast normal capital allowances do not apply to the income base used to calculate the Income Levy 4 PRSI The Self Employed rate of PRSI is increased from 3 to 4 As a result of this increase a farmer earning 40 000 will pay an additional 400 in PRSI per year 5 Stock Relief The existing 25 stock relief for farmers and the special incentive stock relief of 100 for certain young trained farmers are being extended from 1 January 2011 for a further two years 6 Stamp Duty The rates charged on the transfers of residential property have been reduced to 1 for properties valued at up to 1 million with 2 applying to residential properties valued in excess of this These rates will apply to residential property only and will not apply to agricultural land The existing rates of Stamp Duty apply to agricultural land However this has an adverse effect in relation to transfers of a site to a child which is currently exempt but will now incur the 1 rate There is no change applying to the rates applying to agricultural land where the top rate is 6 ICMSA has sought changes to Stamp Duty on agricultural land transfers particularly in relation to consolidation 7 Capital Acquisitions Tax The current tax free thresholds are being reduced by 20 percent This reduction applies in respect of gifts or inheritances taken from midnight on 7 December 2010 The changes in the tax free thresholds are as follows Category Current Rate Rate from 8 December 2010 Husband or Wife All tax free All tax free Child Favourite Niece Nephew 414 799 331 839 Brother Sister or child of brother sister 41 481 33 185 Any other person 20 740 16 592 The Minister proposed no other change either in the rate or the level of agricultural relief in the budget However it is

    Original URL path: http://icmsa.ie/2010/12/icmsa-taxation-committee-simple-guide-to-budget-2011-for-farming-families/ (2016-01-06)
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  • ICMSA welcome Agri-Environment Scheme but say Budget will significantly reduce income of farm families | I C M S A
    Cahill criticised the decision to abolish accelerated capital allowances for farm investment as he maintained that this will necessitate increased borrowings for investment He also criticised the lowering of thresholds for CAT Mr Cahill said that farmers will particularly welcome the safeguarding of the funding allocated to the various schemes but he warned that the details of the Universal Social Charge particularly the income base could prove very important for farmers ICMSA would be looking at the Finance Bill very closely and he said that the decision to increase excise duty on auto diesel was inexplicable in the context of a drive to an export led recovery Ends 7 December 2010 Queries to Ciaran Dolan 087 2322010 ICMSA Press office Or Cathal MacCarthy 087 6168758 or 061 314677 ICMSA Press Office Copy of Letter sent by ICMSA President Jackie Cahill to TDs and Senators re Climate Change Response Bill Search the site ICMSA President John Comer Newsletter ICMSA Winter 2015 Newsletter ICMSA Autumn Newsletter 2015 ICMSA Newsletter Spring 2015 ICMSA Winter 2014 Newsletter ICMSA Autumn 2014 Newsletter ICMSA Spring 2014 Newsletter ICMSA Autumn 2013 Newsletter ICMSA Summer Newsletter 2013 ICMSA Newsletter Spring 2013 Presidents Speech AGM Read more Login Events

    Original URL path: http://icmsa.ie/2010/12/icmsa-welcome-agri-environment-scheme-but-say-budget-will-significantly-reduce-income-of-farm-families/ (2016-01-06)
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  • ICMSA say dairy farmers need review of fluke products | I C M S A
    there were no concerns from a public or animal health viewpoint ICMSA believes that it would be appropriate at this stage to carry out a review to determine whether further products could be used for the treatment of fluke in dairy cows Herd health is a hugely important issue for dairy farm productivity and farmers spent 211m in 2009 on veterinary related expenses In the kind of wet weather conditions we ve experienced over the past number of years treatment for fluke is hugely important and there is concern that some products farmers have traditionally used and which they found were very effective for their requirements are no longer available to them said Mr McCormack In those circumstances and given the need to maintain healthy animals Mr McCormack said that ICMSA believes that the relevant authorities should carry out a science based assessment to determine whether a wider range of fluke products can be made available to dairy farmers We must endeavour to have the widest range of products available to dairy farmers while at all times fully protecting human and animal health concluded the Dairy Committee Chairman Ends 2 9 November 2010 Pat McCormack 087 7608958 Chairman ICMSA Dairy Committee Or Cathal MacCarthy 087 6168758 ICMSA Press Office ICMSA welcome Minister s statement on direct payments but say avoidable delays still causing worry and stress to farmers ICMSA Taxation Committee simple guide to Budget 2011 for farming families Search the site ICMSA President John Comer Newsletter ICMSA Winter 2015 Newsletter ICMSA Autumn Newsletter 2015 ICMSA Newsletter Spring 2015 ICMSA Winter 2014 Newsletter ICMSA Autumn 2014 Newsletter ICMSA Spring 2014 Newsletter ICMSA Autumn 2013 Newsletter ICMSA Summer Newsletter 2013 ICMSA Newsletter Spring 2013 Presidents Speech AGM Read more Login Events Calendar January 2016 Mon Tue Wed Thu Fri Sat Sun

    Original URL path: http://icmsa.ie/2010/11/icmsa-say-dairy-farmers-need-review-of-fluke-products/ (2016-01-06)
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