A very successful public farm walk was held on the farm of TJ and Christopher Tuffy in Doonally Co. Sligo. The Farming Through the Generations farm walk was aimed at exploring the options available to family farms around succession planning.
Farm background
The Tuffys originally milked a 60-cow herd in Enniscrone, Co Sligo. In 2008, TJ’s son, Christopher, decided he too would milk cows but there was very little opportunity for expansion. In 2011, they leased (15-year lease) the former AI station in Doonally, Co Sligo, a 150 acre block, 40 minutes from the home farm. A relatively new concept at the time, they installed farm roadways, paddock system and a milking parlour before milking began in spring 2012.
Risks:
- Large financial obligations
- Project management
- Different soil type
- New concept
Opportunities:
- Create a second income
- Increase net worth
- Stepping stone to next opportunity
Farm partnerships
Tom Curran (Teagasc) outlined the benefits of partnerships in bringing on board a successor for the farm. The succession farm partnership comes with a €5,000 tax credit per year to incentivise a transfer period between the farmer and a successor over a three to 10-year period. A key point noted by Tom was that it was vital the terms of the succession partnership mirror that of any will that is made involving the farm.
Company structure
Declan McEvoy (IFAC Head of Tax) then outlined why the Tuffys’ farm has evolved through the partnership stage and why they are now entering a company structure. When the leased farm was taken over, seven years ago, a large investment in infrastructure was made. As time has moved on, allowances on these investments are falling, and as these allowances fall, tax will be about to rise. The opportunity has arisen to get off income averaging without a tax hit. Plus, more importantly the drawings are currently very low on the farm. As the drawings are low, it is allowing for a large retained profit in the years ahead. A company structure has a low tax rate at 12.5%, therefore this will allow for an increase in spare cash and aid in the repayment of borrowings.
Farm performance
Finally, Cian Devaney (Teagasc) and Christopher Tuffy gave an overview of the potential of the leased farm. Starting off in 2012, the farm’s potential was overestimated. In 2017, the farm grew 12t of grass DM/Ha with the herd producing an average of 402kg MS/cow. Christopher noted that Doonally is known to be quite a wet farm and while it grew 12 tonne, it was very difficult to utilise this to its maximum potential on a very wet year. In contrast, 2018 has been an exceptional year for the farm – on target to grow above 13t DM/Ha and achieve 450kg MS/cow – a level of production required to achieve a productive level of cashflow.