For a while now we have been highlighting the importance of not only running your farm like a business but also the merits of utilising smart farm management techniques to enhance your profits and cut your day to day running costs. You could be a dairy farmer, crop farmer or meat farmer but it all comes down to money in and money out. So regardless of whether it is a grain of wheat or a bull that you’re selling at market it always ends up equating to money. Because everything you do on your farm has a monetary value or equivalent it means that it is measurable. Which makes for fantastic news for farmers everywhere because a national Canadian study by IPSOS has gathered together all of those numbers and the results are truly staggering.
Below we look at the findings and the 7 key things to implement on your farm to increase your profit each and every year.
The study found a clear correlation between farm management practices and profit margins. Those farms that turned the most profit not only employed smart farm management practices but they out-performed the farms that didn’t use smart farm management practices by over 500% on ROA (Return on assets) and over 100% on growth and profits. Simply at the very least a smart farm managed farm was making at the very least, twice as much profit as a farm not utilising smart farm management practices.
The 7 important things to do to ensure such substantial success are;
1) Learning. Farms and farmers that sought out new learning opportunities as well as shared in educational environments were 3 times more likely to be turning a profit than those that stuck to traditional farming methods or chose to not engage or learn from the wider farming community. The study showed that even farmers that took the time to educate themselves online by reading up on the latest technology and farming practices were benefiting from the learning they had sought out.
2) Record keeping. Farms that were on top of their spending and current financial situation were more likely to make better farm management decisions resulting in a stronger financial outcome. Those that used software to manage the farms finances found it easier to monitor and keep the financial farm data up to date. Farms that suffered financially had records as little as a month out of date showing that smart farm decisions need to be made and implemented on current day to day running data.
3) Using experts. Farmers that chose to make decisions based on someone else’s expertise made more profit than those who chose to go it alone. Despite often having to pay for that expert opinion the financial margin was substantial enough in the majority of cases to warrant farmers seeking expert opinions. Some farmers didn’t pay for the expertise however, choosing to learn from experts in local agricultural schools and universities and reading published data. Farmers that used apps to input data found it beneficial to get the expert information from the results provided by those apps.
4) Business strategy. Farms that had clear long-term goals as well as short term smaller goals and strategies to work towards the overall goal benefited greatly from this sense of direction. Having a clear perspective of what was achievable allowed resources to be allocated correctly and money not to be wasted on a whim.
5) Production costs. Monitoring the day to day costs of production allowed farmers to narrow down problem areas and remedy them quickly and effectively. Farmers that failed to address problem areas not only found that they were losing money but that the costs to remedy were considerably larger than had they taken pre-emptive action.
6) Risk assessment. Farmers in the higher profit margin area of the study were consistently conducting risk assessments and mitigating exposure to risk. This came in all shapes and sizes, from ensuring that storage facilities were optimised to looking at harvest/yield data and selecting crops that were most lucrative for planting.
7) Last but not least was budgeting. Farms that carefully budgeted were more likely to be successful than those that didn’t. This went further than the haves and have nots though and even came down to farmers sourcing better interest rates on borrowing and paying down debts faster whenever possible. Farmers that were money savvy made the most money.
While these practices are a lot to start using all at once it is well worth slowly implementing each one step by step into your smart farm management practices. The rewards and financial payoffs are significant and could be the very thing you have been looking for to turn your farm fortunes around. We hope you found these steps easy to follow and if you have any ideas or thoughts that we may have missed or overlooked feel free to comment below!