Technology is evolving at a rapid pace and farmers who can adapt and take advantage of new technology solutions to help drive decision making will likely gain a market advantage.
The Business of Farming event, organised and run by ANZ, recently highlighted the technology opportunity for red meat farming. The aim was to explore technology solutions that could help farmers build a more profitable and business.
Cashmanager RURAL Business Development Manager, Damian Buckley, and south Wairarapa sheep, beef and dairy farmer and Cashmanager RURAL user, Ed Handyside, presented to the audience.
Ed and his wife Mel have two enterprises (one sheep and beef, one dairy) but run both as one business, and their total farm area is 1200 hectares (1050 ha eff).
They milk 750 cows on the 275 ha eff dairy platform and finish lambs and bulls on the remainder.
Mel does the business admin side of things, inputting, coding and tax compliance, while Ed uses Cashmanager for budgeting and Farmax for feed budgeting.
Mel says the team at Cashmanager always helps her learn any new tips and tricks to make life easy, and they’re always at the end of the phone.
The couple formed an advisory board about six years ago, which has evolved and now has an independent chairman.
“We put it together to keep our rural professionals informed, so there were no surprises, and to get them to critique our business. We built from there, it’s largely independent of the business now and it’s about getting them to guide and critique us,” Ed says.
One of the suggestions from the board was to do a business plan, which is a 10-year financial plan “to make sure there’s some light at the end of the tunnel”. The plan includes goals set for each year, helping keep them focused.
Key messages about governance and advisory boards were the importance of including people who are independent of the business and a disciplined approach to setting aside time specifically to work on the strategic side of the business.
An independent chairperson can help level the playing field and enforce a disciplined approach, as well as neutralising emotion and dissipating friction.
Utilising the reports
Ed gave a run-down of how he utilises a number of Cashmanager reports:
Actuals versus budget – aims to revise monthly.
Performance Summary (EFS) report – “We pick out key data to see how we are tracking based on the original budget. We put in stock adjustments to give a true reflection of what the business will look like at the end of the year.” They keep track of any changes in expenditure – for sheep and beef they’re interested in production/ha and for dairy kg milk solids/ha.
Profit and Loss report – Ed describes this as a one-pager on the health of the business and cash position. “It’s quick and easy to see how we are tracking versus the previous month.”
Variance report – Shows the variance in the revised budget versus the original. “You soon pick up where you spent too much, it shows you how you’re tracking versus the original and what caused the variance. Then we can see where we have gone wrong, if we were too ambitious or not ambitious enough.”
They also use enterprising by coding D for dairy expenses and S for sheep and beef. They have one cashflow but can produce different reports for the two enterprises, instead of running two separate businesses.
Every month Ed produces a one page snapshot of key indices, using the information he pulls from Cashmanager, and puts into an Excel spreadsheet to share with his trusted team.
“I like to know where I’m at rather than get to the end of the financial year and realise how bad it is…The way I see it, you have all these tools and you pay the same amount each month, so I try to get the most value out of it.”
Cashmanager RURAL helps him make proactive decisions. In a season like this, with store prices inflated, the product helps him evaluate what way to turn in terms of stock purchases.
“We are able to come up with and test three or four different purchase price scenarios, to try to generate the best financial outcome. We can put all the variables in and quickly see what the best option is,” he says.
Using Cashmanager in conjunction with Farmax is where he can extract real value from the technology.
“We model on Farmax to see what’s physically possible (in terms of feed) and then run the figures through Cashmanager…the combination of the two programmes, one for information on physical potential with pasture covers, and the other for the financial information.”
While Ed says it is hard to quantify the value of the technology on his bottom line, it is significant.
“With finishing, often if you can buy when no one else is, that’s a huge advantage. That’s where the two products have been massive, having the confidence that we will have the covers going forward, that’s huge for our margins.”