business Flashcards
how many farms are in ireland as of the year 2020
135,037
which region had highest average agricultural area utilised (ha)
South East (44)
which region had the lowest average agricultural area utilised
West/ Border
what percentage of total farms in Ireland specialise in Beef production
54.9%
what percentage of total farms in Ireland specialise in dairy
11.3%
average farm size in Ireland in Ha
33.4 ha
total agricultural area in Ireland
4,509,256 ha
how many sheep are in Ireland
5.5 million
how many cattle are in Ireland
7.3 million
how many and at what percentage is there female farmers
18,101 or 13.4%
what percentage of farm owners are over the age of 65
32.7% or 44,135
what percentage of farmers are under the age of 35
6.9 % or 9,338
what percentage of farmers have off farm employment
40%
what % of farmer and spouse have off farm employment
60%
what is the median price of land sold nationally
€8,094
national median price of arable land in Ireland
€13,745
definition of average agricultural area utilised (AAU)
combined area under crops silage, hay, pature and rough grazing ground in use.
south east high
west/border low
definition of standard output (SO)
of an agricultural product is defined as average monetary value of agri output at farmgate prices.
not measure of farm income as doesn’t take into account costs, direct payments, Vat
NFS only takes into account farms with SO above what
€8,000/annum
how many farms were surveyed as part of NFS
793
define family farm income (FFI)
the return from farming for farm, family, labour, land and CAP.
what was the national FFI average for 2023
€19,925
what percentage of farms had FFI under €5,000
36%
define a farm business
economically viable if the FFI is sufficient to remunerate family labour at the minimum wage and provide a 5% return on the capital invested in non-land assets.
what % of dairy farms are viable
53%
define a sustainable farm
are viable but are at risk of being vulnerable if farm payments decrease. usually off farm income coming into household.
what does it mean if a farm is vulnerable
at risk of loss, off farm income needed to make viable.w
what are 4 risk factors to farm cashflow
- weather
- price volatility
- economy
- price - cost squeeze
3 factors to limited company
- 12.5% corporation tax
- liability to company rather than individual
- must follow company law and have registered financial account.
what is the law of diminishing returns
point where the level of benefits or profits gains is less the money/effort put into product.
what are the 2 types of decision making
- strategic
- tactical
what is strategic decision making
long term / enduring eg. purchasing land
what is tactical decision making
day-to-day decisions eg. concentrate feed fed to cows
what is a contra account
used where farmer may owe money to merchant or supplier who in turn owes money to farm for goods supplied.
what % of market value is used to get account value for cattle
60% of MV
what % of market value is used to get accounts value of sheep/pigs/harvested crops
75% of MV
what are bank reconciliations
used to compare what books say and the balance appearing on bank statement.
why are bank reconciliations accounts made
- check accuracy of bank account
- identify and banking errors
- identify any bank account omissions
- timing differences
what are accruals
revenue and expenses matched to period in which they are incurred regardless of when cash changes hands.
what is a sunk cost
cost committed to that will remain even if enterprise was ceased.
advantage of sole trader
flexible
have few legal formalities
what are the 2 major challenges facing farmers according to Makeham (1968)
- how to incorporate new technology profitably into business
- how to be sufficiently flexible, mentally and financially to adjust resource management.
define efficient farm management
organisation of the farm business to obtain maximum continuous profit from the resources available to farmer.
what is liquidity
ability of a business to pay off its debts as they fall due
why would gross margin accounts be used
for management purposes
define variable costs
vary in approximate direct proportion to changes in the size/output or activity of enterprise.
define fixed costs
not normal influenced by small changes in size/output or activity of enterprise, not easily allocated to specific enterprises.
how to increase TFGM
- enterprise substitution
- analyse efficiency of enterprise
advantages of gross margin accounts
- enables the performance of individual farm enterprises to be assessed
- comparison over number of years
- performance of enterprises on the farms can be determined.
limitations of gross margin analysis
- confined by its inclusion of variable costs only.
- confusion can arise unless full gross margin calculation can be examined
- outputs and costs alter with scale of enterprise
- makes no allowance for interrelationship between enterprises.
what is the main challenge that comes with net margins
the allocation of fixed costs
what must annual filing of returns show
total revenues earned and total expenses incurred
when must tax returns be filed by
31st of October but extension available until 14th November
what % of final tax in payable fir the current year
90%
what % of final tax is payable for previous year
100%
what is used in the tax calculation instead of depreciation
capital allowances
define production cost basis
direct and indirect costs of getting stock to its condition at statement of financial position date
what are the 2 additional charges to tax calculation
PRSI
USC
what is the current rate of PRSI
4.1% of all income
over how much self employed income must PRSI be paid
€5,000
over what annual income is USC payable
€13,000
what % of the stock increase will result in relief and a reduction in tax
25%
what % stock relief is available to farmers in registered partnerships
50%
what % stock relief is available to young trained farmers for increases in stock values
100%
for how many years must land be owned before farmer can apply for leased farm land exemption
7 years
how is relief determined for personal pension contributions
determined by age of person
does non trading income qualify for lower tax rate of 12.5%
no it does not eg, rental income
how long must you retain tax records for
minimum of 6 years
what happns if during revenue audit returns have been calculated as incorrect
the adjustment will be calculated and additional tax due will be paid along with interest and charges
penalties will apply depending on nature on non-compliance
define farm planning
a systematic and comprehensive framework for exploring ways of increasing farm efficiency and profitability
why do profits matter
- reward for investment
- funds for expansion
- survival
- morale
- measure of efficiency
examples of when major re-planning needs to be done
- buy more land
- give up job and return to full-time farming
- debt problem
what constraints limit possibilities
- physiological limits
- diminishing returns
- managerial ability
- resource levels
difference between planning and budgeting
planning is about identifying ideas for future farm development budgeting is evaluating these ideas.
define budgeting
calculated assessment of the impact of a plan on annual profit
why are budgets prepared
- viability
- feasibility
- worthwhileness
define strategy
plan of action designed to achieve a particular goal
why do farmers need a strategy
make reasoned, cohesive and consistent choices among alternative course of action in uncertain world
advantages of strategic planning
- focuses farmer
- filter distractions
- evaluate opportunities and threats
- guide day to day decision making
- gives business direction
what is a mission statement
defines a farms current business direction
what are the 2 components of internal analysis
strengths
weaknesses
what are the 2 components of external analysis
opportunities and threats
what are the 4 cost analysis
- comparative analysis
- horizontal analysis
- vertical analysis
- value chain analysis
what does KSF stand for
key success factors
4 common problems under strategic planning
- planning under uncertainty
- ivory tower planning
- planning for present
- errors caused by cognitive biases
list 4 tests used when choosing a strategy
- vision consistency test
- goodness of fit test
- building for the future test
- performance test
- importance test
why use cashflow budgets
the determine the feasibility of a plan
uses of cashflow
helps in planning
allows farmer to estimate overdraft
help prevent excessive borrowing
financial monitoring and control
when is whole farm planning used
when major re-planning of the farm business is required eg major expansion
define partial budget
examines the effect on annual profit of a relatively minor change
limitations to partial budgeting
doesnt focus on overall demand for resource
can encourage narrow thinking
danger of over looking certain costs
doesnt evaluate cash flow
