23 February 1996

WILL YOU MAKE RIGHT DECISIONS?

CONTENTS

Tackling environmental mastitis4

Foot blocks for lame cows6

Lowering the cell count8

Impeller-type spreaders12

Whole-crop forage milk boost16

How Scottish buyers line up18

Dont DIY-drill maize27

Maize heat units guide26

Shorthorns v Holsteins30

Lancs recipe for top yield34

Standby power36

Natural remedies pay dividends38

Family business at crossroads42

Edited by Sue Rider

Have you got the vision to manage change in your business? Giles Coley, Genus Management, reports

ALL too often farm profit is knocked because too little time is spent analysing and keeping up to date with industry information. Many producers would much prefer to operate under no political or market constraints – simply get on with producing what they know best. However, more and more decisions which impact on bottom line profit have to be made in the farm office.

With the pace of change in the farming industry increasing the responsibility to react is going to lie firmly with the individual. This demands a change in attitude of mind and acquired skill of improved planning.

All too often there is the temptation of diving into detail because of the perceived volumes of work, with all important planning left until the evenings or the odd spare moment.

At least once a year every producer should carry out a thorough review of his business and plan for the future.

In general aim to reduce your unit costs of production. This will allow you to compete more effectively in an increasingly competitive market place – a market place that it is all too easy to be isolated from. Anyone who ignores market demands does so at their peril. For example, milk with a cell count above 400,000/ml will be unsaleable by April 1997.

Before examining the detail of how to reduce production costs, first carry out your business review. Otherwise it will be difficult to assess the direction in which you are taking the business and so decide its future structure and the costs associated with it.

Assuming unit costs are to be critical in the future, then the first step has to be to know what yours are and how they compare to averages (see table).

There are then two distinct ways of reducing your unit costs of production. You increase turnover to spread costs more thinly that is, you invest to expand and grow the business. Or you cut costs while maintaining turnover, ie. you invest in efficiency of production.

It could pay to examine cost control (see box).

Most producers have the time and cash needed to reshape their business to ensure a prosperous future. The question is – have you the inclination and innovation to manage the change? &#42


COST CONTROL


&#8226 Cost effectiveness of buying or selling quota.

&#8226 Marginal return from the last 10% of production.

&#8226 Increasing turnover through better stock sales.

&#8226 What costs could you reduce or do without.

&#8226 How and where could the business grow.

&#8226 How could the farm operate more simply.

&#8226 What alternatives are there.


Unit costs of production for the year ending

March 1995 (p/litre)

Top 25%Average

Turnover28.4528.60

Variable costs11.2812.57

__________

Farm Margin17.1716.03

Overheads

Wages1.82.5

Power and

  machinery2.12.7

Sundries1.41.6

Property

  charges1.61.7

Total Interest0.81.7

Depreciation1.91.8

__________

TOTAL9.5412.04

__________

PROFIT7.633.99