How to Boost the Profitability of Your Farm

In an industry with constant price changes and minimal ability to negotiate, it is important for farmers to be aware of costs they can control to ensure their farms are profitable.

Farmers need to be able to manage multiple problems, including scaling up production, improving cash flow, time management, weather patterns, and managing the need and prices of stock, seed, chemicals, and fertilisers.

The drive for sustainability is another matter they need to contend with as more people are demanding locally sourced, organic or chemical- and pesticide-free, sustainable crops.

To ensure your farming business remains profitable, here's a list of best practices to reduce costs and increase profits

1. Reduce the cost of supplies
Negotiate with your suppliers to improve contract prices and terms. Opportunities to negotiate discounts may arise if you prepay costs or buy in large quantities. Evaluate your suppliers, pick out the ones you absolutely need to deal with, and then work with them on reducing costs without sacrificing quality.

2. Improve efficiency
Work on tightening up efficiency in terms of management decision-making and operations. Group discussions usually take time, so review your decision-making matrix and make the necessary changes to facilitate efficient, rash and timely decisions. Have your annual plans in place, review them regularly and adjust accordingly. It is also important to review your cashflow to anticipate any upcoming costs versus expected timing of income. Due to the nature of seasonal income, timing of payments is crucial to your success.

4. Outsource professional services
As the owner of a farming business, you need to wear many hats. However, sometimes it makes sense to outsource specific services critical to your business. If you find yourself so time poor that it is impacting your business, it may be beneficial to look to outsource tasks such as bookkeeping, financial accounting and analysis, human resources, information technology and marketing to professionals.   Doing this will not only improve your business efficiency but also ensure you have the expertise your farm business needs without the need to hire full-time employees.

5. Partner with retiring operators
Retiring farm owners may still want to be involved in the industry, but without the additional responsibility and stress. These retirees can make great partners, with much insight to give.   If your prospective partner can still be involved in the business part time, you can benefit from their decades of experience, and gain access to additional farm equipment that would otherwise cost you a heft amount if you were to invest in its acquisition on your own!

6. Brand your farm
Your farm may have a name, but is it considered a full-fledged brand? Working with a marketing professional will help you to accurately voice your brand, values, purpose and story. This will not only help in building your presence in Australian rural communities and locally but also in the digital realm. The World Wide Web is a place you shouldn't ignore if you are to market your business to the younger generations.

To make the most of these six powerhouse tips, seeking help from accredited accountants and advisErs is a must to keep your profits at an all-time high

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