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PLANNING the FARM BUSINESS

We help clients to plan their farm business to be profitable, sustainable and aligned to their goals. Farm business management should involve more than just cash flow budgeting for the bank, or tax accounting. The primary aim should to measure and monitor farm financial performance. This analysis should answer questions like: 

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  • Is my farm business viable and if so will it still be viable in 5 years time?

  • How can I improve the profitability and efficiency of the business?

  • What are key risks facing the business? How can their impact be minimized?

  • What is the best way transfer the business to the next generation?

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Farmers work within an economic environment that is largely beyond their control. It is important however that key risks are identified and strategies put in place to minimize their impact. Drought, interest rates, markets and people related issues like staff, skills, health and safety, are a few of the major risks faced by farm businesses. Particularly for family farms, succession is a key risk that should be dealt with early, but many farmers start the process much too late and some even ignore it completely. 

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We assists clients with a whole range of farm business matters such as strategic and business plans, profitability analysis, lease agreements, budgeting, planning and evaluation of farm development projects. We would love to talk with you about your farm business planning needs. 

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Wet grass

INDEPENDENCE & INTEGRITY

Enterprise

Enterprise decisions:

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The enterprises are the engine rooms of the business and generate the farm income. It is uncommon that a single enterprise will remain profitable for the long term so having two or three enterprises spreads the risk of failure of a single enterprise. When considering a new enterprise, several matters should be considered:

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  • Availability of funds to establish the enterprise

  • Labor and skill requirements 

  • Synergies with other enterprises

  • Infrastructure and equipment required

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Enterprise selection decisions can be complex. We have the necessary skills and experience to help with a broad range of enterprise planning decisions.

Stocking Rates

Feed risk planning and satellite feed assessment:

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Most grazier's would say that most common risk on a livestock property is due to over-stocking and drought. Regular assessment of pasture dry matter is now possible through satellite pasture assessment and subsequent feed budgeting allowing feed on offer to be quantified and more accurate stocking decisions to be made. Considering this information along with changes in livestock condition, rainfall forecasts, and the status of drought feed reserves, feed risk management is now much easier. Timely adjustment of stock numbers based on such information is critical to successful feed risk management. Failure to undertake this task in your grazing business can be very costly when dry conditions eventuate.

 

Watch this space for more information on Satellite Feed Assessment as this service is now commercially available after recently overcoming key technical issues. 

Drought planning:

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The 2017 - 2019 drought was very difficult time in many localities.

After droughts some important questions need to be asked.
 

  • What was normal and what was different this time?

  • What happened to the farming business during this drought?

  • How prepared was the business?

  • What lessons have been learned?

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Droughts are an integral part of life on the land but the damage that a
drought can inflict on a business cannot be overstated. The financial
and personal impacts and the disruption to farm enterprises can take
years to recover from. What can farmers do to be better prepared?

Call us if you would like help with drought management planning.

 

Drought

Farm business software:

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Starting from scratch with your own budgets on spreadsheets is good to a point, but spreadsheets can quickly become cumbersome and unstable. Farmers looking for farm financial management software should consider 'P2PAgri' software. It is not designed for tax accounting but specifically for planning and monitoring the farm business. It focuses on the following areas: Liquidity (cash flow budget), business efficiency (profit & loss budget, enterprise gross margin budgets, return on capital), wealth (assets & liabilities budget), and key production and price drivers (key performance indicators - KPIs). It also tells the user if stocking rates are too high and calculates likely feed costs, including them as an expense in budgets when supplementary feeding is required. 

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Visit www.p2pagri.com.au for more information. 'P2P Agri'  models the farm business and allows budgets to be prepared intuitively. It also has an has an impressive scenario analysis capability for questions like:

 

  • What impact will higher interest rates have? 

  • Should we replace our shearing shed or delay it a few years and focus on reducing debt?

  • What will the bottom line look like if we change from sheep to cattle?

  • Can we afford to buy the farm next door? 

Analysis
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