As a farmer it can be tempting to think the grass is greener on the other side of the fence. You see your peers doing things differently – different livestock, meat over dairy, or diversifying their income and mixing it up.
Although it may seem a desirable option for your business, there may be situational reasons why they operate the way they do, and those reasons may not suit you. So before going ahead and spending money, let’s look at the cost implications of switching farming types, and some of the questions you will want to ask yourself first.
Things to consider when you’re thinking about making a switch
1. Is the market known to you?
Switching from one style of farming to another means more than just different livestock – it’s a whole different market. The buyer is different, and it may require you to delve into unknown territory with contracts. Processors may not need more suppliers. You may struggle to get a milk contract if you’re just starting out.
- For Beef – there is a longer delay in terms of getting money in. The gestation period is 9 months and may be another 12 – 16 months before you can sell the calf. So you could be looking at 2 years before you see a return on your money. If you keep calves for 2 and half years, you are looking at over 3 years before a return. This could cause a major cash flow issue if not managed well.
- For Sheep – You’re looking at around 6 months – 1 year turnaround on your money, so it’s not as tricky. If you’re already farming beef, you’ve most likely already passed this tricky 2 year period, but if you are thinking of switching, be aware of this.
2. Is your land suitable?
Beef to dairy, sheep to cattle – whichever new venture you’re thinking of may require different infrastructure to make it work. Your land might not be suitable for dairy farming, or may not be the right environment for cattle, and you could end up spending a lot of money to get it right.
- Is your land a suitable size?
- Is it the right pasture for grazing?
- Do you have the means for housing?
- Is there a close water supply?
All of these questions are important to answer when you’re considering new livestock or a new process.
3. Do you have the equipment, people power, or even the livestock available?
Even if you had acres and acres of the right kind of land, there may still be big costs to your venture. Just taking dairy farming as an example, you’re going to need to invest in the facilities to house your dairy cows, feed them and milk them. This means a cowshed of some sort, comfortable cubicles, stalls, feeding equipment, milking equipment.
Of course, as a bare minimum, you’ll also need to see if the range of cattle or sheep you require is available for sale!
4. Will you need to employ a new skill set?
Your new venture may require a completely different set of skills to those you’re employing currently. Though some farming skills are transferable, investment in additional skills is something you’ll want to plan for in your budget.
It’s important to look at the big picture and consider management. If you want a manager to run the dairy farming side of your business, you’re looking at around £35,000 as a base salary, plus a house with utilities paid for, plus a vehicle with running costs paid for. You can do all of this yourself, but if you don’t want to (or can’t commit to the long weekly hours alongside other work) this is the cost of the bigger picture.
It may be a fantastic opportunity, but consider all the variables first
We don’t want to appear pessimistic if this venture is viable, and something you’re really excited about. There are pros and cons to the different types of farming, and some are more profitable than others.
You may find a switch to cattle from sheep makes you a more profitable business. However, getting to that place of profitability will mean big spending decisions and sacrifices. So we want to make sure you have a base of questions to ask yourself before you leap at the profit!
This is a big decision, with big financial implications – but the good news is you don’t have to make it alone! We have a team of farming specialists here at Saint. Our partners are local to the area, and many come from farming families and often run into each other at the auction every week! Ask for our advice if you’re seriously considering going ahead. We can help you plan it out properly so you don’t face any cash flow issues down the road.
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