This article is not to promote the product discussed, I have no experience with it or those running it. But the philosophies they promote, should be an important topic of discussion.
Should farmers be focused on increasing production, or increasing profit? Over the past years NZ farmers have made giant strides on increasing production within their farm systems, and also for the industry they support.
The total meat produced by half the sheep numbers as carried 40 years ago, is an admirable example. But is the average sheep farmer better off profit wise, than he was years ago? Has the production come with greater costs, but at the expense of profit.
If capital growth in land is a thing of the past, to survive as a business, farming must improve it's profits.
The idea that if farmers produce more they will always be better off financially is wrong and farmers need to become more clearly focused on profit, according to farm business specialist Peter Floyd.“The ‘need’ to increase production that has been drummed into our industry for the past three decades is seductive because it sounds sensible, and all the technical and financial support services are geared to promoting more intensive production systems,” says Floyd.
Floyd believes that the way out is to change the mindset from production to profit although that is not as easy as it sounds. Farmers and their advisers will invariably say that they are focused on making a profit but he finds that they usually have no idea what the most profitable management strategies are.
Floyd, who is the managing director of the farm business system eCOGENT, has found that irrespective of the level of pasture production the profit per kilo of dry matter eaten by stock is around 3c for an average farmer and up to 8c for top farmers. However, within two years of changing the way they measure profitability these same farmers can be achieving 15c.
“Profitability is not necessarily about growing more grass or changing breeds or using more vaccines, drench, fertiliser, etc. – it’s about measuring daily profit and exploiting the opportunities that it reveals.”
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.