Farm Business Efficiency: Investing Money To Save Money

Inflation is affecting the cost of almost everything and the current rate could end up being higher than anyone is quite ready to admit. No individual, organisation or business is immune to increasing costs. Yet for some farms, could the sudden and dramatic increase in costs, linked with a shortage of raw materials, be the catalyst to becoming a more efficient and profitable business?

Inflation is nothing new; some will recall higher rates of inflation and much, much higher interest rates. When inflation is exceptionally low it is easier to ignore and still possible to pass on smaller price rises to customers but in today’s environment, more strategic action is required.

The Golden Era of Data?

Increasingly farm businesses are besotted with collecting data, but do we use it to best advantage? Do we link data to production? At a basic farm level, monthly milk recording gives us data such as current and accumulative individual yields. Do we link this data to in-parlour feeders? When cow cake was £150 per tonne it was important, but at £400 per tonne it is vital. So it’s certainly worth considering further, how can this data be used for future planning or to negotiate costs of raw materials? Could the farm cope with less staff on certain days?

Investing Money to Save Money

Part of the equation is the lack of investment. In many cases, farm businesses have lacked the profitability to make improvements to enable them to embrace technology and data collection. In addition, the cost benefits of this type of investment in the past were fairly marginal but when input costs rise over 200% it is no longer a ‘marginal’ benefit.

Going back to the farm, 33% nitrogen fertilizer has increased more than three-fold to around £1,000 per tonne if you can find some to buy. A farmer, for years, has had access to yield maps from his combine harvester. His agronomist produces maps showing phosphate and potash indices, but there has been little incentive to invest in further technology.  Now, with the current cost of fertilizer the farm has invested in a new fertiliser spreader with in-cab technology embracing yield and soil maps. Apart from the cost saving of applying less fertilizer through more accurate placement, yields are not reduced and could increase and the environment gains as the risks of run-off are also reduced.  You can understand why he’d be wishing he’d invested in his farm business years ago!

FOLK2FOLK helps farmers access the finance they need to invest in their farm business. If you’d like to know more, contact our team for a chat.