Notes for farm Description
Inputs
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Farm size is 45 Ha
Cow numbers go from 70 to 130 cows
As expansion takes place contract rearing is used to rear the heifers
8 Ha are reseeded each year from years 3 to 5
Total expenditure on reseeding, grazing infrastructure, milking and housing
infrastructure is €140,000
Increased stock investment through increased animals reared €72,000
Total investment with expansion €212,000 circa €3,500/cow
There is €115,000 spent in year 3, €15,000 in year 4, €5,000 in year 5 and
€5,000 in year 6 on farm development with reseeding completed in years 3 to
6
Total equity €126,000 (farmers own money invested)
Total borrowed is €100,000 over 10 years @5.0%
Milk price received 33.8c/l increasing as milk solids increase to 34.0c/l in year
4, 34.2c/l in year 5 and 34.4c/l in year 6 based on increasing milk solids
concentrations
Milk yield per cow drops as cow numbers increase as there is a greater
proportion of heifers in the herd as it expands
Family drawings are €40,000 increasing with inflation by 2% per year
Additional labour is hired as expansion takes place only to a limited extent.
Tax is calculated including the Universal Social Charge with Capital
Allowances included in the analysis based on the 2013 tax rates
Exercise
 Populate the missing fields
 Calculate the cash flow and profitability for each year
 Complete sensitivity analysis by increasing or decreasing milk price by 4cpl
 Evaluate the budget
o Would you expand with this budget?
 Why?
o Is it bankable?
o Why are there deficits?
o What remedies could be suggested to reduce the deficits?