Putting your profit plan into action

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Posted by Brendon Walsh on 17 April 2019

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In my last blog I discussed the importance of knowing the profit periods of animals that you can run in your sheep and beef farm business. Essentially, there are periods when they are gaining in value more than the cost of dry matter eaten (DMe), being profit periods, and periods when they are gaining in value less than the cost of DM, or are dropping in value, being non-profit periods.

It makes sense to put DM down profitable throats more often than not because DM is eaten only once. You can’t get it back (once eaten), to try and make a profit from it, if it was consumed for a loss.

So, what do you do with that knowledge to create profit in your farm business?

Well, presuming you have used a tool such as Growfarm’s ProfitLIVE to determine the true profit periods, you then put that information into the Growfarm Season Plan and complete the plan to capture the profit.

Firstly, you add the profit periods to the plan, and label the periods with the stock classes in question. Here is one example from one business - a predominantly breeding business. Any type of sheep, beef or deer farming business (breeding, trading, finishing or grazing) will have profit periods and they may vary from these particular ones, but the principles are the same.

Next, we determine when the main profit times of that year are likely to occur. In this example you would say Sep to late Dec, and late Feb to Late May/Early Jun.

These are the “bang for your buck” times, whereas these non-profit periods or low profit periods are the opposite - the “lack of bang for your buck” times.

To make the most of the main profit times, you need to be set up to implement Profit Principle #5 - Fully feed profitable animals during profit periods. To make this happen, you will determine the pasture cover needed to fully feed those animals at the start of the main profit times. These farmers know they need 2000 kg DM/ha PC in September and 2100 in Late February to fully feed their animals at those main profit times. To then achieve the Sep target PC they know they need a late May target PC of 2300, knowing what happens in their winters. They also know they need to achieve a target PC of 1800 in Early Jan to hit the Late Feb target PC of 2100.

So, this is their Growfarm Season Plan. From there, they adjust stocking rates through sales and purchasing decisions to allow full feeding, the achievement of each target PC AND the capturing of profit, as they make their way through each year. And that’s the simplicity of it.

Animals will receive optimum nutrition, will be very healthy AND will get the best value change for the cost of the DM eaten. There will then be enough PC to allow for a repeat of this during the next profit period.

Of course, they will also have other true profit scenarios run as backup plans in case of changes in forecasted climatic conditions, market values or some other variable. If need be, they can change the plan easily because the prep has already been done.

By being well prepared and set up like this, as well as being flexible, the chances of delivering profit every year are rather huge. It just works and many clients have shown the ability to double, sometimes triple their profit in 2-4 years. And that’s not by farming harder, it’s by farming smarter to a system that is logical, is sound and it delivers!

I’d love to know your thoughts, so please get in touch via email at this address brendon@growfarm.co.nz or through the Growfarm Facebook page.

I look forward to speaking with you again soon.

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