A while ago I was with Peter. Peter is a real fan of Pure Graze. On his farm he successfully applies various Pure Graze techniques to maximize grazing. Over a good cup of coffee we talked about cost price, costs and revenues and the production of dairy.
“Every time the milk check has taken place, we are assessed,” he says. We get a report grade, as it were. How well have you done.
Around that time, the concentrates representative will also come by again, to adjust the concentrates advice where necessary.
Relationship with family income:
Is milk production an indicator of the company's profitability?
It may be an indicator of cash flow, but the correlation between milk production per cow and family income has already been determined at 0.19, on a scale of 0 to 1 quite low….
Is there also a component with a high correlation with household income? Yes, the company's cost level has a correlation of 0.72 with household income.
In other words, effort at cost level has a major positive effect on family income!
Another thing that stands out regarding milk control and accounting is its availability. The milk check is quickly and easily available. Is shared with experts and can be adjusted quickly; a good tool! (for whom? For the cattleman or the fodder?)
Accounting, on the other hand, is difficult, difficult to complete. At best, it takes months, but often nearly a year, before the data is available. We look through the numbers and quickly throw it aside. (beautiful!? for whom? The cattleman or the ironmonger?)
The financial report:
But the accounting is the financial report. It gives us a figure on how well we have performed over the past period. However, we do very little with the numbers ourselves. It is the result of our efforts. But we don't judge it in light of the number of hours worked, for example.
We only look at the accounting in a limited way, in the light of savings or efficiency improvements. But with the businessmodel it is true that when something is adjusted here, changes also take place further on.
Take the milking robot, for example. This has short-term consequences for the milking process and the bondage of the livestock farmer. He is free during milking time.
What only a few farmers talk about is the greater amount of silage that is made, the difficulty with grazing, the attention lists, the labor and machine costs, and so on.
The long-term consequences are even greater; the company is not able to adjust the cost price to the milk price. The flexibility is gone.
Accounting should be the basis of decision-making.
Accounting is at the heart of many commercial non-agricultural businesses. The decisions are made on that basis. Many companies know their real-time figures! They can see the financial situation at any time of the day.
Financial management is essential for the proper management of any commercial company.
As the manager of a family business, it is my duty to make the company as strong as possible in order to pass it on to the next generation. It is also my duty to bring a good sandwich to the table. Make time for my family and spend free time with them, leaving room for things other than business.
That is why it is a good thing that the accounting processing can be done easily. Today there are various online programs that are very user-friendly and where you have all the crucial figures above water with the push of a button.
Only with the current financial figures can well-founded decisions be made to improve the financial performance of the company.
A good example is the New Zealand way of making forecasts for the coming year. In drawing up the cost side, household income in Europe is formed by the result of revenues minus costs.
If it is a bad milk year, the family suffers!
The New Zealand Dairy Exporter that I read a lot told how they deal with it. At the top of the cost side they first place the income they want, the rest must be produced for production.
If it is a bad milk price year, the suppliers suffer!
If you don't stand up for yourself, who will stand up for you?
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