MAgrSc Innovation Support Programme 2016-2018 Study Title: Developing and testing proxy indicators of farm profitability and efficiency measurements for knowledge transfer use on Irish farms Student: Ciara O’Donovan Supervisors: Dr Kevin Heanue, Teagasc and Dr James Breen, UCD Location: Clonakilty Teagasc Advisory Office

Research Objectives To identify indicators of farm performance advisors and farmers use, what they indicate, how they are used and why they are used. To find out if the indicators need to be tailored by enterprise, scale, seasonality and individual capacity. To use a co-creation approach for choosing suitable indicators of farm performance and quality of life. To test the indicators and rules of thumb of farm profitability, efficiency and quality of life for KT use on farms.

Methodology Menu of indicators Pilot with discussion groups Literature review Semi-structured interviews Pilot with discussion groups Menu of indicators

Semi-structured Interviews 2 dry stock advisors 2 dairy advisors 1 agri-banking worker 9 dairy farmers 9-10 beef farmers Test/Pilot the proxy indicators with a farmer discussion group

Thesis Structure/Chapters Chapter 1 – Introduction Chapter 2 – Background Chapter 3 – Literature Review Chapter 4 – Data and Methods Chapter 5 – Results Chapter 6 – Conclusions

Profitability indicators Efficiency indicators Basic payment retained Profit & loss accounts Profit monitor Fixed costs Efficiency indicators ICBF breeding report ICBF co-op performance report Grass in front of stock Whole farm stocking rate Quality of life indicators Start time & finish time Hours worked per week Farm infrastructure Holidays Three broad themes of the project. The indicators don’t change too much but they should be tailored to suit each farm.

Key Findings – Efficiency & Profitability Advisor perspectives vs. Farmer perspectives

Indicators of Farm Efficiency & Profitability ‘…some guys haven’t got a clue what their profit is, haven’t a notion…a lot has to be done for tax purposes…’ – DA1 ‘...guys who technically mightn’t be the strongest fellas there actually don’t know how much money they’re making…’ – DA1 Tailoring the questions you ask a farmer based on their technical strength and motivations for farming. Advisor

Indicators of Farm Efficiency & Profitability ‘…a lot of fellas are just happy that…they cover all their costs and their single farm payment will be their profit.’ – BA1 ‘While [they] might get a very good price for the calf…what did it cost to produce that calf? They mightn’t be too aware of it like.’ – BA1 Very few farmers have detailed analysis done out on their farm business so it’s not appropriate in these cases to ask about net profit per cow or per hectare or cents per kilogram of milk solids or beef. Advisor

Indicators of Farm Efficiency & Profitability ‘…if it’s untidy around the yard, you can be damn full sure that the paperwork is going to be untidy and finances are going to be untidy as well…’ – BA1 ‘…we do profit monitors with them, but they know they’re in trouble before we ever do it.’ – BA2 ‘…some farmers won’t understand 1,500 kilos of dry matter inside in that field but they might understand the heights of grass…’ – BA2 Advisor

Indicators of Farm Efficiency & Profitability ‘…part-time farmers…tend to be better organised...to be able to do the jobs quick…they’re financially in a better position to [invest]…so they can be more efficient…’ – BA1 ‘…part-time farmers…age…disability…young family…’ – BA2 ‘A fella could be part-time but you can tailor it to suit him like…there’s no point pushing, so you have to look at the whole farm…or he won’t do it otherwise, yeah, it’s not a one size fit’s all like’ – BA2 Advisor

Indicators of Farm Efficiency & Profitability ‘What we’ve left at the end of the year in our bank whether we have cash left or not or paying tax…quality of life’ – DF1 ‘…the accountant told me that our profits were up. […] what’s my tax bill going to be like in 2017?’ – DF2 ‘…I’d be watching there to see if we can keep our figures above the general average slightly.’ – DF2 What was confirmed to me in the interviews carried out so far is the importance of the bank balance at year end as an indicator of farm performance. Crude measures like the average milk price allows farmers to benchmark themselves against their peers. Farmer

Indicators of Farm Efficiency & Profitability ‘…a couple of things that would jump out at you straight away…kilograms of milk solids produced per cow, tonnes of feed fed.’ – DF3 ‘The co-op performance report…is really good…because you can see year on year whether he’s static whether he’s moving forward…’ – DF3 ‘There are a lot of inefficiencies…farmers going out renting more land and they don’t actually need it…’ – DF4 Farmer

Key Findings – Quality of Life Advisor perspectives vs. Farmer perspectives

Perceived Quality of Life ‘…it’s a complete mind-set…they’re across all groups…I’m finishing [at] this time, I have family afterwards.’ – DA1 ‘…that lifestyle thing isn’t related to how good they are technically…’ – DA1 ‘…that would be the biggest influence on quality of life, the financial.’ – BA1 Having a simple system was echoed in both the advisor and farmer interviews as an important factor in improving quality of life. Advisor

Perceived Quality of Life ‘…if you’re happy enough in yourself that’s good enough, that’s an indicator…’ – DF2 ‘That’s a big thing if you can finish on time…’ – DF2 ‘…the only hobby I have really is ploughing matches in the springtime.’ – DF2 Farmer

Perceived Quality of Life On inspections, ‘You’d nearly lose a night’s sleep over it.’ – DF1 When asked about their work-life balance ‘No it’s shocking, it’s dreadful’ – DF3 ‘The pressure was on that year alright, we felt it because we had [one] in college […] the other three were in secondary school and there was fair expenses in them [and] there was nothing coming in.’ – DF2 Farmer

Perceived Quality of Life ‘…you do work 14, 16 hour days, you’re trying to get ahead…make money…[and] develop your business’ – DF3 ‘…if you mentioned work life balance you’d just get a blank expression, they wouldn’t have a clue what you’re talking about, sure farming that’s our life… [it] does not exist’ – DF3 Farmer

Conclusions to date Lots of indicators identified Questions should be tailored Utility of this study for knowledge transfer: The importance of knowing your audience Asking the right questions Active listening Being aware of the factors that affect decision making on the farm e.g. family, financial pressure, succession plan etc.

Steps to Completion Dec-Jan: Finish data collection and start analysis Feb-March: Finish analysis and write results chapter April-May: Write up thesis