1. Financial Planning for a Farmer Undergoing Organic Conversion Dan Clavin, Teagasc, Athenry Pat Barry, Teagasc, Moorepark Teagasc National Organic Conference, Athlone, 2 nd April 2009

2. Profitable Organic Farming P reparation P remium market price P roductivity-keep high P ayments - REPS 4 and Org. Farming Scheme In P uts and cost reduction

3. Preparation Neighbouring organic producers Advisers/Planners/OCBs Demonstration Farm Open Days Educational Sources- –Teagasc/NOTS/Organic Colleges Conferences/Seminars Publications

4. Premium Organic Prices-Follow the Market What products are in demand? Organic premium prices vary Where can I sell my produce? -processor, direct selling, marts, or other farmers? Obtain premium for in-conversion produce

5. Maximise Productivity How do I grow enough grass? –Clover the driver of organic production Cereals and Horticulture –Rotations –Expertise - Fertility/Weed & Disease (horticulture) management

6. Reduce Inputs and Costs Watch out for –Info. and experience gathering costs –Fixed costs - new investments, certification fees –Variable costs–different to conventional –Lack of access to premium prices during conv. period

7. Maximise Direct Payments REPS 4 and Organic Farming Scheme –Two separate schemes REPS 4 + Organic + one supplementary measure (Owned NATURA land, LINNET, Traditional Rare Breeds, Traditional Orchards, Riparian Zones) Organic Scheme –Extra top-up for hort. only farmers –Green manure payment for stockless non-REPS farmers

8. REPS 4 and Organic Payments Ha€/ha REPS 4 first 20 20 - 40 40- 55 55+ 234 205 82 10 Organic - in conversion first 55 55+ 212 30 - full organic first 55 55 + 106 15 Green Manureup to 40240

9. Farm Business Planning Farm Planning Process Gather and Analyse Information ↓ Setting Goals ↓ Draw up a Farm Plan ↓ Implement the Plan ↓ Control/Modify the Plan

11. 6 year sample case study 2008-2014 Baseline plan – stay conventional Part-time farmer, 44ha reasonable to good grassland S.R. 1.66 L.U./ha - 32 sucklers,40 0-1yr, 40 1-2 yr Finish approx. 36 cattle/year. Assumed €3.20/kg conventional beef price. Direct payments €35,186 (2008)-high Joining REPS 4, Feb. 2009 Inflation 3%/annum on costs

12. Organic scenario assumptions Commence organic conversion early 2009 Reduce cow numbers, purchase extra org. weanlings (15/year). S.R. 1.48 L.U./ha Finish approx. 36 cattle/year. Assumed €4/kg organic beef price Cost assumptions- no fertilizer bill v’s straw bedding, organic feed concentrates, transport for weanlings, organic clover, certification and other minor fees Inflation on costs 3%/annum on costs

13. Gross Output-Conventional vs Organic

14. Variable Costs-Conventional vs Organic

15. Direct Payments-Conventional vs Organic

16. Net Profit-Conventional vs Organic

17. Take Home Messages Prepare before jumping! Making profit in organics depends on -choosing right market -maintaining productivity high -minimising inputs -maximising REPS, supp. measures and OFS Teagasc Farm Business Planner creates a clear financial roadmap for your farm

18. Best of luck in your decision making! Thank You