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Dairy farming isn't that bad is it?
I am a public accountant specialising in taxation and business advice to =
farmers.
I was bought up on a dairy farm at Leongatha and am a little =
disappointed my father always told me to not go dairying! I believe I =
could have a made a great go of it because dairy farms can be great =
businesses.
While some farmers' profits are lean, most are not. And all land owners, =
farmers being large land owners, have enjoyed significant increases in =
their wealth of recent times. Had they not been farming, this would not =
have been possible. It seems when things are not great, farming gets the =
blame. Things are not great in every industry all the time. People also =
have their ups and downs and no matter what job or business they are in =
those ups and downs will occur. Farming may not be the culprit.
The grass may not be greener on the other side of the fence! I love =
being in business and I think my clients are all great but not every day =
the roses are blooming.
Dairying enjoys, for example: No demands from customers; no waiting on =
payment from customers; no need to advertise; no need to think about =
marketing; no need to worry if customers will be back again; great tax =
advantages via "averaging", depreciation, capital gains tax concessions =
and splitting income; access to often significant government assistance; =
being outdoors and being involved in a very strong industry, are some. =
Yep, there are lots of disadvantage too.
The Australian population is getting older and all industries will =
comment how the owners and senior people in an industry are at =
retirement age and who will take over? The tax industry has been saying =
this for years. I am 34 and I will probably say the same when I'm 64.
I have averaged out the first 20 tax returns done this year of my dairy =
farming clients' and at taxable incomes of $60,000 after claiming =
depreciation of $26,000 I can tell you this is above the average =
earnings in Australia. Add to this capital gains and improvements to =
cattle values and it's miles ahead. Some years I know are bad, some are =
great. Return on investment and profits must include all this.
Who cares if you don't get big? (So long as the milk is picked up.) My =
opinion is don't worry about what the guy up the road is doing, just be =
good at what suits you. Tidy profits can be made by small, large and =
in-between operators and land will on average always increase in value. =
Some are suited to larger operations, in any business, while others are =
not. I can't find any law which says a farm has to be a particular size =
to make money.=20
I see the future of dairying, and for that matter, farming in general, =
not be so tightly connected to the ownership of land. Why? Buying land =
is more expensive than renting or leasing. A farm will have to be leased =
to build up the lessee's assets such as equipment, cattle and cash =
before buying land. When enough resources are available, then buy the =
land if it suits or make other investments.
All the best for 2006.
Matt Stewart
Principal, Victorian Farmers Accountants (Absolutely nothing to do with =
the VFF!)
03 59417514
--Boundary_(ID_sveEB396dtaBjeJ+6qla/g)
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<BODY bgColor=3D#ffffff>
<DIV><FONT face=3DArial size=3D2>Dairy farming isn't that bad is =
it?</FONT></DIV>
<DIV><FONT face=3DArial size=3D2>I am a public accountant specialising =
in taxation=20
and business advice to farmers.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2>I was bought up on a dairy farm at =
Leongatha and am=20
a little disappointed my father always told me to not go dairying! I=20
believe I could have a made a great go of it because dairy =
farms can=20
be great businesses.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>While some farmers' profits are lean, =
most are not.=20
And all land owners, farmers being large land owners, have enjoyed=20
significant increases in their wealth of recent times. Had they not been =
farming, this would not have been possible. It seems when things are not =
great,=20
farming gets the blame. Things are not great in every industry all the =
time.=20
People also have their ups and downs and no matter what job or business =
they are=20
in those ups and downs will occur. Farming may not be the =
culprit.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>The grass may not be greener on the =
other side of=20
the fence! I love being in business and I think my clients are all great =
but not=20
every day the roses are blooming.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Dairying enjoys, for example: No =
demands from=20
customers; no waiting on payment from customers; no need to =
advertise;=20
no need to think about marketing; no need to worry if customers =
will be=20
back again; great tax advantages via "averaging", depreciation, =
capital=20
gains tax concessions and splitting income; access to often significant=20
government assistance; being outdoors and being involved in a very =
strong=20
industry, are some. Yep, there are lots of disadvantage =
too.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>The Australian population is getting =
older and all=20
industries will comment how the owners and senior people in an industry =
are at=20
retirement age and who will take over? The tax industry has been saying =
this for=20
years. I am 34 and I will probably say the same when I'm =
64.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>I have averaged out the first 20 tax =
returns done=20
this year of my dairy farming clients' and at taxable incomes of =
$60,000=20
after claiming depreciation of $26,000 I can tell you this is above =
the=20
average earnings in Australia. Add to this capital gains and =
improvements to=20
cattle values and it's miles ahead. Some years I know are bad, some are =
great.=20
Return on investment and profits must include all this.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Who cares if you don't get big? (So =
long as the=20
milk is picked up.) My opinion is don't worry about what the guy up =
the=20
road is doing, just be good at what suits you. Tidy =
profits can=20
be made by small, large and in-between operators and land will on =
average=20
always increase in value. Some are suited to larger operations, in any =
business,=20
while others are not. I can't find any law which says a farm has to be a =
particular size to make money. </FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>I see the future of dairying, and for =
that matter,=20
farming in general, not be so tightly connected to the ownership of =
land. Why?=20
Buying land is more expensive than renting or leasing. A farm will have =
to be=20
leased to build up the lessee's assets such as equipment, cattle and =
cash before=20
buying land. When enough resources are available, then buy the land if =
it suits=20
or make other investments.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>All the best for 2006.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Matt Stewart</FONT></DIV>
<DIV><FONT face=3DArial size=3D2>Principal, Victorian Farmers =
Accountants=20
(Absolutely nothing to do with the VFF!)</FONT></DIV>
<DIV><FONT face=3DArial size=3D2>03 59417514</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV></BODY></HTML>
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