The Changing Measures Make The Difference
Around the country many farmers, some my clients included, are at various times short of feed and are facing some critical decisions. Should they buy more supplementary feed, quit some stock; tighten up on less vulnerable stock, lease some grazing, or what? There aren’t any obvious solutions.
Contrast their predicament with other farmers who are in a comfortable situation having read their markets, done the analyses and acted accordingly.
For example, one farmer in the Waikato intended to buy 500 cattle in autumn, but as his planned purchase date approached and he re-did his figures and decided instead to quit 300 head in May. It was a good decision, and he has had a very successful winter – meaning a profitable one.
Over my fifty years involvement with farming I have seen farmers use many different measures of success. In the 50s we just milked the cows and managed to pay for groceries most months. Every farm had pigs, cream, usually butter, and chooks running around outside the garden. Success meant that you had enough to eat, a tractor to break in the farm and the kids went right through secondary school.
The 60s saw some pressure to be better than the neighbour as measured by the arrival of your new car or building a herringbone cowshed. I remember that well!
The 70s saw the rise to prominence of discussion groups that gave the opportunity to skite about your EFS and how high your stocking rate was. In the 80s we measured success by how much NPK we applied, with the emphasis in the 90s on N, cash flows, and again on stocking rates.
And today it still goes on, with profit not figuring much at all as a measure. Bankers still control the purse strings with their balanced cash flows, gross margins and limited mindsets as to how to really grow a farm business.
The very best indicator is the robust business measure developed and used by eCOGENT farmers for over a decade – cents of PROFIT per kg DM consumed over a selected time period. Every week I am finding ever greater acceptance of this as the best available measure of success. As one new farmer member said to me recently, “Peter, it’s actually a no-brainer once you’ve given it a try.”
Basically it involves making a best estimate of future market prices and production patterns of your pastures and how it varies with rainfall, soil temperature and other variables, but the point is that with good records and the right analyses you can forecast the profitability of different stock at different times of the year and make decisions based on predicted feed availability and daily profit per kg DM consumed.
Note that profit per stock class will vary from farm to farm, even within the same district, so don’t think that just because your neighbour is making a lot of money from breeding deer then you will too. You have to factor in your own strengths and those of your property and business, as well as what you want out of life. Yours is a unique set of circumstances.
The key point is that daily profit per kg DM consumed gives you the financial insights you need to make more profitable decisions on when, how much and what type of stock to buy and sell, calve, lamb, wean, shear or dry off. It will also help you decide how much supplementary feed you need, how much and what type of fertiliser to put on, and how sustainable your policies are.
It works. Farmers are using it to remove much of the guesswork and risk from decision making, and I take real delight in seeing their confidence grow, their profits increase and the industry become more sustainable and secure. Find out more today by checking out our PROFITPOINT software package for farmers.