Managing farm Cash Flow: AIB Agri Advisor Patrick O’Meara Talks Cash Flow
Getting to grips with cash flow management is integral to farming success. But with farmers facing a variety of challenging factors from the weather, to volatile output prices, to Brexit, it can often feel like navigating a minefield.
To get an overview of some of the options available to farmers, we spoke to AIB Agri Advisor Patrick O’Meara about the current landscape and its effects on cash flow. He also provided us with some useful methods for cash flow planning and dealing with common cash flow concerns. Read on to find out more.
The Current Landscape
For all farmers, the outlook for 2017 depends on the specific sector you are working in. “Pig and dairy sectors are going through a positive period at the moment in terms of increases in market prices,” Patrick notes. “Both those sectors have come through a difficult period so it’s encouraging to see. In the beef and tillage sectors, there’s some frustration at farmer-level with prices and also concern around Brexit.”
Brexit will continue to throw up challenges for farmers and add a level of uncertainty, but there are some aspects of the changing economic climate you can plan for. “It’s difficult to know exactly what the effects of Brexit might be,” Patrick explains. “But in the short-term, you’ll need to consider the impact of exchange rates on output prices when planning.” In the medium term, he says, legislative changes will come into play: “You’re looking at the potential impact of CAP reform and you’re also considering tariffs and trade agreements that may be developed between the UK and Europe.”
While there are many uncertainties that are outside of the control of farmers, it is important to control what is inside the farm gate. “Improving on-farm efficiency and competitiveness is essential to managing risk and sustaining your business through any future potential challenges” according to Patrick.
There are positives to consider also. An increase in global population and the expansion of new markets offer opportunities for the industry. “There’s growing demand for protein foods in terms of meat and dairy products” Patrick says. “Ireland is among the most efficient producers of dairy globally and up there in the top five in terms of beef when it comes to carbon footprint.”
Cash Flow Tips
When it comes to cash flow planning and concerns, Patrick’s biggest piece of advice is to address them sooner rather than later. “The earlier someone comes in, the more options that they have,” he explains. “Those options can include increases in working capital and overdraft facilities. Other options to address cash flow issues include short-term loans and extending the term of a loan*.”
Again, Patrick notes, time is of the essence: “If someone thinks that they have impending cash flow pressure coming up, look at it early. First, consider what the root cause of it is. Ask yourself how much cash flow pressure there will be or how much will be needed to get you over that pressure. Then put a cash flow plan in place. We can offer support and there are more options the earlier you look at addressing it.”
If you want help right now, our cash flow planning tool offers a simple way to forecast and manage your cash flow.
*Flexible repayment arrangements may impact on the repayment amount and/or term of the loan.
Need More Information on AIB Cash Flow Loans?
With a proven track record of supporting farmers through income cycles and cash flow pressures, you can find out more by taking a look at our support options or by contacting your local AIB Branch. You can request an appointment in your local branch at a time that suits you. Need more information? Take a look at this article to learn more about cash flow planning for your farm.
Please be aware that all of the views expressed in this Blog are purely the personal views of the authors and commentators (including those working for AIB as members of the AIB website team or in any other capacity) and are based on their personal experiences and knowledge at the time of writing.
Some of the links above bring you to external websites. Your use of an external website is subject to the terms of that site.
Allied Irish Banks, p.l.c. is regulated by the Central Bank of Ireland. Copyright Allied Irish Banks, p.l.c. 1995.