No matter how much you enjoy working and living on the land, it can drag you down if the profits aren’t right. The financial side of managing an agriculture business isn’t everyone’s strength, but it’s essential to keep things afloat. Profits can quickly turn upwards with a bit of shared wisdom and some changes, reducing stress and improving the quality of your life and farm.
Trading profitably as an agricultural farm is becoming increasingly complex with external pressures. Good farm financial management starts with understanding the main drivers in your business. This will vary depending on your enterprise mix, location and individual goals. You then need to ensure good record keeping, an essential tool for analysing profitability in an agribusiness and ensuring you are on the right track.
Looking at the Three Secrets of profitability as identified by RCS and working out which of the three are working and which are not. Build on your strengths and cut out any dead wood weighing down the business. You can do this in our Business Fundamentals Workshop or Farming & GrazingforProfit program.
Profit drivers in a business are the factors that greatly influence profitability. Though every farm is different, some profit drivers are common to most agriculture businesses. Through analysing hundreds of businesses through our analysis and benchmarking tool, ProfitProbe®, RCS has identified the ‘Three Secrets of Profitability’. These are; reducing overheads, increasing gross margin and increasing turnover. To learn how you can affect these three profit drivers, we’d recommend attending a Business Fundamentals Workshop or Farming & GrazingforProfit.
Get clear on the vision and goals you have for your business. Once these are in place, develop the strategies and tactics to get there. To best achieve this, you’ll need to know how to calculate a gross margin and understand your own numbers.
Farm budgets and forecasting start with understanding the current situation and what you have right now. For a particular time frame, get clear on your expected purchases and sales, activities that need to be completed and approximate costs to complete all of those activities.
Management accounting is necessary to get the full economic picture of what is happening in your business. Keep good records that are easily retrievable and interpretable by anyone in the business and set up a chart of accounts so that costs can be allocated to divisions and enterprises. Lastly, do your own balance sheet using management figures.
It may all seem daunting to start with, but once you get the swing of things, it will pay off many times over.
Always start with your WHY. This is the basis of your goals and vision for the business. Goals need to be in harmony with the vision, and then you need to define actionable steps to achieve the vision. These actionable steps will form your strategy, tactics and operational details.
To make changes, seek out people who have already made the changes you want to make and clarify the principles they followed to get there so you can apply them to your own situation. Never underestimate the value of a mentor to bounce ideas off, no matter how skilled and experienced you are.
Do you need support with your business plan and strategic direction? Our Advisors are experts in creating business plans and strategies that work for you.
RCS’s benchmarking and business analysis tool, ProfitProbe® (part of the FarmEye suite of services), is the best way to benchmark your own agriculture business against others. The dataset in ProfitProbe® contains over 5,000 business years of data across various agricultural industries, including grazing, broadacre cropping, cotton and sugar.
The most important thing to do is to separate your office from the rest of the home. Many people set up their books on the dining room table, creating a blur between personal life and work—which means no time or space to disconnect. Once you’ve found your space, ensure it’s comfortable so you can work to your best. If you set up multiple screens it can make it easier to see everything at once. For more recommendations, come along to our Business Fundamentals Workshop.
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The season in SA and Tassie is particularly tight right now with little or no useful rain since early January and a generally failed 2023 spring prior to that. Right now, across southern Australia and much of the eastern NSW, you won’t need to drive far out into the countryside to see cattle and sheep grazing (and lying on) hay and silage trails lined across paddocks.
Martha Lindstad and partner Robert James are farm managers on ‘Karalee’, Enngonia NSW. Both have travelled different paths to being where they are. Martha is originally from Norway, growing up on a three hectare farm before travelling to New Zealand and eventually the Pilbara in Western Australia. It was here that she saw the benefits of sustainable farming for the country and livestock.
The Prince’s RCS mentor, Raymond Stacey, sees a strong future ahead for Simon and Laura. “The Drought Resilient Soils and Landscapes project is about supporting graziers to manage their country and businesses better,” Raymond said. “I see an operation here where they’re working hard on their planning and putting their plans into action to leave their country, business and people in better shape.”
John Kempf, a visionary in regenerative agriculture, founded Advancing Eco Agriculture (AEA) to revolutionise farming practices. A respected expert in biological and regenerative systems, John's mission is to empower farmers worldwide with the knowledge and tools for a healthier, more sustainable food system. AEA's impact extends from healthier soils to thriving communities. John hosts the acclaimed Regenerative Agriculture Podcast, sharing cutting-edge insights from scientists and leading growers on implementing these transformative practices. Prepare to be inspired as John delves into the profound connections between soil health, human health, energy, and economics.
Unlock the Secrets to a Thriving, Sustainable Grazing Operation! In this video and blog post, David McLean, RCS's Chief of Delivery, spills the tea on building a successful grazing business. It's not just about cows and grass (although those are important!). Discover how to find the perfect balance between practical skills, smart choices, and a long-term vision. We'll dive deep into the foundational principles and strategies that can make your grazing operation both profitable and environmentally responsible. Learn how to: Maximise your profits (without sacrificing your land!) Make sound decisions for a healthy herd and ecosystem. Plan for a thriving future in the grazing industry. Ready to take your grazing operation to the next level? Watch now!
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