What is your system for generating reliable profit?

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Posted by Brendon Walsh on 21 May 2014

Sheep and beef farmers are enjoying some reasonable returns lately, and rightly so! They produce great products (mainly meat and wool) that consumers need to stay healthy and well clothed. It is in fact very challenging for the average consumer to find good healthy food (such as meat) produced by nature and without additives of some kind these days. Fibre from the sheep's back (natural) is also very hard to beat in terms of it's attributes for warmth, durability, good looks and fire retardant properties, among others.

Recent research has identified some factors that "top farmers" have in common and these are being put forward as the recipe for sheep and beef success. Factors such as more stock units per labour unit, higher stocking rates, more fodder crops, more fertiliser and nitrogen, paying more for genetics, hogget mating and more regrassing contribute to greater efficiencies. Great efficiency is important for any system to perform well - brilliant! However it was also revealed that farm size has increased, stock intensity has gone up and farming debt had lifted. Interest rates had declined recently and had masked increases in input costs, "making better returns vital to the industry's future." In other words, farmers are being told to lift their productivity just to stay afloat and they need higher prices for it all to work. With the bigger picture in mind, farmers are expected to produce more, to get more income, to stay ahead of costs. History has taught us that if this approach is accepted as the only answer then farmers will always be reacting after the event. They will be doing what has been recommended over the last 30 years (perhaps longer) and where has this got us as an industry? You only need to look at the much larger spread of profitability now compared to that of the 1980s and 1990s, not to mention fewer young people in farming, farmers getting older, higher stress levels and burnout.

Productivity has certainly increased (and well done farmers!) but farms are hardly more profitable now than they used to be. The long term average Return on Investment of sheep and beef farm businesses is around 2%. Yes some are greater than that but many are lower too. Focussing only on the productivity gains and not acknowledging static profitability would suggest that these strategies are at best preventing farm businesses from closing down and ceasing to exist (mind you there are a fair chunk of farms now not in existence). These strategies are not working (in general) to help farmers create better results, spare cash, discretionary time and great lives full of choice and opportunity.

These factors of "top farmers" tend to be outcome observations rather than definite drivers of better results. There seems to be little to no understanding of a system driving actual profit delivery, regardless of the prevailing conditions in the industry at the time. 

Farmers need a system where they can be proactive and make valuable business decisions with a lot more certainty than "work harder, produce more and assume/hope it works." They need to be able to understand exactly what will deliver the real profitability they want and then make it happen, on time, for their businesses. 

GrowFARM® clients learn this exact system of how to be more profitable, consistently.  They are then able to implement strategies depending on the climate, market trends and personal strengths and weaknesses, to deliver profit . Making these decisions because they have a proven system and set of principles underlying them brings a ton of confidence and ability to proactively respond to changes if need be. No longer are they at the full mercy of factors outside their control - they accept that things change and set their businesses up to still deliver profit anyway. Simplified decisions, proactivity, systems to deliver profit and a whole lot more certainty - farm business is so much more fun now. As one GrowFARM® client put it recently, "Farming is not boring any more, unlike in the past. It is far more interesting!"

To discover this proven system, download my ebook "7 Reasons Why Sheep and Beef Farmers Don't Make Profit - And A Step By Step Process For Turning Your Farm Into A Cash Generator." I look forward to your feedback!

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