“If you need high prices to stay in business, you will eventually go out of business.”
We live in an economy that is addicted to growth. Not growing is the deterioration of your business, was the mindset after World War 2. But times have changed, the demand from society is not what it used to be. In order to make your business survive and pass it on to the next generation, its important to adapt your businessmodel to it. But how?
It's possible to combine and incorperate these two factors in your businessmodel and make your company future-proof, by changing focus from milk per cow to costprice per kg of milk.
This is a fundamental change that will require preperation in order to incorporate successfully.
Dairy farmers are in the commodity business, they produce the resource milk. The prices for this resource is fairly good at the moment, but the costs for producing this resource are rising. The question here is if the margin is also increasing, that determines your income.
Often the "lawn mowing method" is used here. All costs will be examined critically and will be reduced to the minimum amount that is needed to keep the company going. However, when the price of a product of service increases, so will your expenses.
Hence why elimination of costs is way more effective than reduction of costs. Eilimination of costs leads to a businesmodel that is not reliant on that product. This will result in a permanent low expense. This gives peace and self confidence to the entrepreneur and their family.
In an earlier blog post we've showed a expenses and income overview from a dairy farm that focusses solely on converting green fodder to milk. https://puregraze.com/management/financieel-overzicht-pure-graze-melkveebedrijf/
The profit margin is 53% of the revenue.
By taking action, all dairy farmerswill be able to make their expenses and profit not reliant on the revenue and more on cost price. This way, they determine their profits. Focussing on costs gives you as an entrepreneur more control over your financial result. For the soil-bound livestock farm this will be the first step in order to lower costs by maximizing grazing .
Are you interested in taking succesful steps? Then register for the Pure Graze Grazing Course 2022. You will get access to a lot of practical knowledge, consultancy by Pure Graze Coaches in order to take steps in order to decrease costs and maximize profits.
Last year our participants had fertilizer savings up to 3-5kg per cow per day.
If you calculate that over a dairy farm with 100 cows:
3kg concentrates savings:
€0,25 x 100 x 3 = €75,00 p/day
€75,00 p/day x 365 days = €27.375,00 p/year avg.
5kg concentrates savings:
€0,25 x 100 x 5 = €125,00 p/day
€125,00 p/day x 365 days = €45.625,00 p/day avg.
In order to make use of the government subsidized program that covers up to 80% of the costs of this course, we're asking you to register before 5 december. You can register already via: https://puregraze.com/aanmelden-beweidingscursus-2022/
“Some people dream of success, while others get up every morning and make it happen.” – Wayne Huizenga