Monitoring your profitability
GroundCover™ Issue: 22
A new business report which will help farmers check the profitability of their enterprises has been released to help boost profits on farms.
The report, by WA-based rural consultants Planfarm, was developed on actual business data from farmers and is based on the GRDC-supported FAST national program.
FAST (Farming and Sustainable Technology) aims to link the financial performance of farms with production aspects of the farming system.
The WA report is the sixth statewide FAST publication in a series called Families, Farming and the Future, and presents results from research with 80 farming families in the Great Southern and Central Wheatbelt of WA.
Planfarm consultant Andrew Rintoul said "farmers can use the information from this program to make informed decisions about their own farm enterprise".
FAST has developed a range of business indicators and benchmarks, linking them to the farming system. Disposable farm income is the main factor affecting business decision-making. This indicator measures the money remaining after operating costs have been met, machinery maintained and financial commitments met, leaving money for expenses, development and investment, capital repayments and taxation.
"The report allows a farmer to identify areas where he or she may be able to make improvements in business performance," said Mr Rintoul.
"For example, a farmer with a 70 per cent operating costs-to-income ratio can see that the business's operating costs structure is high and needs attention if profitability is to improve. They can then look at the main inputs and find where the anomaly is." Copies of the WA report are $15 and are available from Planfarm on 08 9322 7244.
Contact: M r Andrew Rintoul
08 9322 7244