Kirwan Agriconsultants Ltd.
Article for June
I had an interesting conversation before the election with an old timer who was lamenting the passing of the old days of the 40’s and 50’s when election rally’s often ended in fisty cuffs between rival parties and there was he claimed a lot more passion in general election campaigning. He came to mind the other day when I read a letter in response to my last column from a Mr Doran in Marino, Dublin and I thought of the old days in the 1970’s and the urban rural divide that existed in those days, the dept of prejudice and level of misunderstanding which existed on both sides. In the appreciation of the fact that Mr Doran took time to put pen to paper I will attempt to answer his points without any hope of denting the deeply ingrained prejudice and antifarmer bias he displays.
First of all as a Consultant my relationship with my farmer clients is that of one business man providing advice and services to another. While I may be specifically hired to prepare for example a REPS plan, an Early Retirement application or a Single Payment application, my overall role as Consultant is to assist my clients in maximising the profitability of their farming enterprises. This is done by assisting them to increase their income, control costs and maximise their income from what ever schemes are available to them. This is the system we operate under and it is how we make our living. It is of no benefit to me if a client goes bust or finds themselves in such poor circumstances that they can not pay the bill. People are in business to make a profit and farming is no different to any other. Unfortunately the number of farmers has been in a steady of decline for a long number of years, due mainly to the decrease in the profitability of farming relative to off-farm opportunities. Mr Doran from his letter appears to be an employee in a business. He is therefore I presume taking home a regular wage packet. This is the essential difference between employees and business people. The employee gets paid a wage, a fixed income on a regular basis for as long as the company stays in business. The employer or business person on the other hand sells his goods or services for the optimum price with the aim of making a profit. If he doesn’t make a profit, he goes out of business. The more profit he can make, the more his business will prosper, the more employees he will have etc, etc. Mr Doran mentions in his letter talking to his boss about the possibility of getting paid for child minding etc, etc unfortunately this is unlikely to happen, the simple reason been, the difference between a business expense and personal expense. Travelling to work is a personal expense on the other hand travelling in the course of your work is a business expense. In the context of my previous article expenses occurred by farmers in preparing Single Payment applications etc, etc, providing information requested by the EU etc, etc are business expenses. I was making the case that perhaps farmers should be compensated by the relevant authorities as these expenses were not accounted for when the original schemes were set up. Expenses occurred in reaching your places of work on the other hand are personal expenses, totally up to the discretion of the person involved and are unrelated to the business and are not therefore likely to be reimbursed by your boss or anyone else.
The Revenues Commissioners have clear guidelines on this. Mr Doran driving to work is not entitled to compensation however if his employer asks him in the course of his employment to drive his car from A to B on business he is entitled to compensation at Revenue agreed rates (he may even qualify for a clothing allowance depending on the nature of the work!). This lack of understanding by employees of the difference between profits and wages and secondly the difference between business expenses and personal expenses is an age old problem and one would have thought that given the improved level of education in Irish society in general we would have moved beyond this stage by now but obviously not.
A large amount of money has been provided to improve the state funded advisory service. With almost 60% of REPS farmers been serviced by the private sector, we are probably in the best position to advise farmers on the pros and cons of organic farming and this I feel should be acknowledged by the Dept of Agriculture in their efforts to promote organic farming.. I should declare an interest here as we went organic on our own farm some years ago with a single suckling enterprise and have never looked back.
The two main speakers at the event were from Glenisk Dairies and Good Herdsman. Being Offaly based I will talk briefly about Glenisk Dairies first. At a time when our main dairies and Co –Ops seemed more interested in fighting each other to supply cut priced milk to Tesco and their likes, it is refreshing to see a company which spends a large amount of its budget on marketing and promoting its product as well as on market research to develope new products and is committed to paying a decent price to its suppliers and to expanding the business not just in Ireland but in Britain and Europe as well. Our dairy PLC’s and Co-Op’s I think should certainly take note. On the beef front Good Herdsman and others are now freely paying €4 kg for beef and are prepared to do this on forward contracts. This is in sharp contrast to the mainstream beef processors who like their dairy counterparts seem intent on beating their opposition down, not alone scraping the bottom of the barrel with price but putting their foot through it, with little or no regard for the financial well being of their suppliers. As I see it there is a future for Organic farming first of all because it offers a niche market at European level for Irish users and the opportunity to achieve a premium price for a premium product. I also think its very encouraging that companies like Good Herdsman are willing to put their money where their mouth is and to make the effort both in researching and developing new markets and new products and to pass some of the benefits back to their suppliers.
Profitability in farming depends not necessarily on high volume low price but an optimum price for the optimum output. I think as Europe becomes awash with cheap beef that rather than fighting against the tide.
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