Five reasons why tracking your costs this season is important

Five reasons why tracking your costs this season is important

The change in direct support after the EU exit, the economic ramifications of Covid, and the ongoing energy crisis, with its knock-on effects on input prices will put pressure on bottom lines this season and in the years ahead.

In 2022 Fertiliser prices have hit new highs as multiple problems affect global supplies. This includes reduced supplies from Russia and Belarus, disruptions to the supply chain, a China export ban, and a Canadian rail strike.

“It’s a series of events we’ve never seen before and it continues to look like it’s going to get worse than better,” said Josh Linville, the director of fertiliser at the US commodity trader StoneX. “People thought the Russia-Ukraine war would be quick and Russia would be back out in the market and that’s not been the case.” (Source)

Read below five ways recording your costs throughout the season can help your operation 👇

1. Get the most value from your input spend

Understanding how much it costs to produce something and how costs are split is the foundation of any business and farming is no exception.

Knowing your input costs and how they’re broken down (Seed, Spray, Fertilizers) will allow you to see where you are may be over and under spending across your crop types and fields.

The aim is not to cut costs to the bone. In some cases, it may be that you can afford to spend more on certain products. Are you spending a larger proportion than you would like on fertiliser? Can you reduce costs by changing suppliers or buying with a co-op group? Are your spray costs less for a particular seed variety?

View charts that show farm spend by field broken down by Seed, Spray and Fertilizer

2. Make better decisions when the market/weather changes

Selling anything for less than it costs to produce is a really tough pill to swallow. In an industry where decisions have to be made in a changing market knowing your cost of production per tonne can help inform decisions about what to sell, when, and how much.

Being able to view costs in the middle of the season rather than at the end will help you feel confident about making financial decisions under time pressure. 

With reporting on fieldmargin you can choose to view costs of complete and incomplete jobs for the current season. These can be easily shared with other team members or advisors on your farm. 

With fieldmargin reporting you can choose to view costs of incomplete jobs for the current farm year.

3. “Unless you measure it, you can’t change it”

A big benefit of detailed cost analysis is identifying problem areas within the farm business and trying something new. You can use reports to make better assessment of new methods and their effect on the farm bottom line. 

An example, is testing the cost effectiveness of foliar feeds for grasslands. Foliar feeds aim to supply small amounts of nutrients in a targeted manner to potentially increase fertiliser use efficiency and tailor crop nutrition to growth within a season. 

Trials have shown that his method can cut costs by £15/ha and double dry matter yields compared with conventional compound nitrogen (Source).

You can use fieldmarign reporting to track dates of applications and track the amount spent on each field. You can view the total applied and the total spent at each point through the season.

You can view a detailed breakdown of the quantity of the inputs used per field. 

4. Benchmarking and collaboration

Calculating your own costs as you go may be daunting at first, but as well as business gains there are personal rewards. The benefit of sharing, supporting, and learning from farmers in a similar situation as you should not be under-estimated. 

There are great opportunities to join local benchmarking discussion groups. In the UK we have some run by AHDB(Source). Results can be discussed with peers and ideas shared about what to do when problems arise. For example, in the UK AHDB’s Farmbench provides a platform for you to evaluate your fixed costs and, in turn, improve your understanding of the strengths of your business or areas where you may be overspending.

At the end of the season, you can view a table that shows your spending across your farm. You can also use this data to calculate gross margins. Read how here. 

5. Pass on a strong business to the next generation

Understanding your costs benefits you now and in future generations. Building a strong business, and being able to quickly share financial details is an important part of succession planning.

On fieldmargin you can separate costs by years so that going forward you can compare performance. 

With input cost breakdown reporting you can view input costs for your farm split by input type for each Farm Year.

Ready to try out costings on fieldmargin?  

Costings is a PLUS + PRO feature. You can upgrade here or start a 14-day free trial here. 

Click here to watch a 3-min introduction video for how to: 

  • Add a cost to an input
  • View tables and charts that show spend 
  • Breakdown spending by input 
  • Separate costs by years 

How to get started

Tap the reporting tab on the web platform side bar to access your reports.  You can change the currency in farm settings globe showing Asia-Australia Find our step-by step instructions here. 

As ever, we’d love to know what you think. Email support@fieldmargin.com or call +44 203 289 4200, our support is here to help. 

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