Business and Farm Management

Business management : Farm management

Business Management

Make Decisions And Set Dates To Implement Decisions Early
The key factor which separates high income earners from the rest is the ability to make timely decisions. Every farmer should have at least an informal response plan in their head even if it is as simple as a series of planned steps. Some decisions may turn out to be wrong, but more will be right. On top of that, recognition of a wrong decision will often reveal an opportunity.

For example, quitting stock just before rain falls may be viewed as a wrong choice (although it was the right one to make at the time), but one which could open a raft of opportunities, such as buying in trading stock, taking on grazers, allowing pastures to recover, and improving the performance of the remaining stock. Studies show high income earners have fewer regrets about decisions made than average earners – this may be because they always make the right decisions, but more likely it’s because they don’t dwell on the wrong ones.

Plan The Whole Winter
It is a waste of money to feed too many stock for a period until money runs low, then decide that some stock have to go. Matching feed demand with cash and feed supply, while maintaining flexibility, is a characteristic planning exercise of strong businesses. Making early decisions is more likely to result in better ‘per-head’ performance and better profit than not making a decision until being forced to by circumstances, when no choices remain.

Update And Revise Plans Regularly
Circumstances will change and so must the plan. The important thing is there is a plan and decisions are made from the best assessment of events at the time. As conditions get tougher, reviews should be more frequent.

Plan The Recovery
Immediately rebuilding stock numbers when everyone else is doing the same will inevitably raise stock prices. Identify and explore other suitable options. For example, if stock prices are so high there is no profit for the coming year, an option may be to put the equivalent funds into a term investment and bring in grazers, make hay, grow crop or whatever. Perhaps there are some non-farming options for the short term which are more profitable than buying stock at temporarily inflated prices.

Focus On Profitability
Successful farmers, like other business operators, only have a few irons in the fire which are profitable and well-managed in their own right. The best option may be to exit any enterprises which are not. Concentrate on tax-paid cash, not on how much tax is paid.

Cut Losses Quickly
Strong businesses recognise a bird in the hand is worth four in the bush. This may particularly apply when buying feed. Businesses will individually have a point at which it is better to cut losses and sell stock rather than continue buying feed. It is likely that strong businesses determine this point during earliest stages of drought and before any feed is brought in.

Farm Management

Prioritise Stock Classes For Restocking Early
This is part of the plan, so farmers know in advance which stock will go when a trigger point is reached. For example, the order for many sheep farmers has been wether lambs, aged ewes, ewe lambs, ewe hoggets, mixed aged ewes, and finally two-tooths. The use of technology may help make this decision, for example, pregnancy scanning will allow removal of dry stock, and separation for reduced feeding of single-bearing sheep.

Sell Stock Early
In previous droughts high income earners have preferred to sell stock rather than buying in feed or grazing-off. A study showed 65% of above average farmers surveyed sold capital ewes which in normal circumstances would not be sold. They prioritise, plan sales and carry them out at predetermined dates, always matching feed demand to supply in order to maximise profit.

Buy The Best Stock Possible
High income earners recognise that quality breeds quality.

Focus On Maximising Income Rather Than Reducing Costs
The scope to improve profitability by reducing costs is limited as most farm costs are fixed. High earners know they have to spend money to make money. With good planning and management, the small amount of money available during difficult times can be targeted to achieve the best return on each dollar spent. The result is a series of small improvements at low risk which together, over time, add up to a significant improvement. Top farmers spend relatively more on productive inputs, such as fertilizer, animal health, and weed and pest control.

Feed Stock As Well As Possible
Concentrate on per-head performance to maximise profit in the medium term. The best stock, fed well, will produce better offspring, giving better growth rates of both trading and replacement stock, and therefore better future reproductive potential.

Animal Welfare
To prevent welfare issues arising (and the associated risk of adverse publicity) it is important that farmers are knowledgeable and know where to get help if necessary. Federated Farmers, veterinarians and MAF Biosecurity (0800 327 027) can provide help. In previous droughts, preventing animal health issues from escalating eliminated the possibility of an animal welfare issue arising.

Stock management in winter drought

Here are some tips to look after stock you still have on your property. The first is assessing worm burdens – check faecal egg counts at scanning and before set stocking for lambing. Choose a “best fit” drench, such as long-acting capsules in lighter twinners under 60kg and body condition score less than two: “There are plenty of these animals around now…..perhaps the majority of ewes,” says Richard Lee of Vet Services.

“Recheck that whatever you have done is working i.e. re FEC test 10 days post drench or at an appropriate interval. Also watch for ostertagia in R1 and R2 cattle and first-calving heifers.” With the recent rain, it’s easy to see dirty rub marks around lousey ewes’ necks. Delouse them now before they’re too heavy in lamb, especially if you’re not shearing.

Other advice is to test winter crops for nitrate levels before grazing (especially oats and annual ryegrass – take a supermarket bag sample to your local vet), school yourself to identify milk fever and sleepy sickness in pre-lamb ewes (and have a first aid kit on hand), be vigilant with ewes and cows/heifers over the lambing/calving period (watching for weak animals that need assistance) and be aware of disease risks and follow quarantine procedures for stock going out of the area to grazing and returning.

Finally, only transport stock that is fit for transport and slaughter. “If you would not kill it on farm to eat yourself or if it struggles to get onto truck, let alone make the trip, then DON’T SEND it.”