6 Laws of Profit

6 Laws of profit

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With the benefit of the collective experience and wisdom of the eCOGENT.biz farming network, we’ve distilled out the proven ingredients for profitable pastoral farming.
These guidelines can be used to help identify some of the key areas that need attention as part of the ongoing business planning process.

1. Establish a vision and statrgic plan for your business

Make the big decisions in advance.

Turn your mind to where you want to be in the future, where you are today and decide what the most important issues are to address.

Put together a well thought out plan to make it happen and track your progress.

2. Indentify in advance the optimal daily profit windows for each class of livestock.

Forecast when and what stock is going to deliver you the most profit for every day of the year. 

Understand the natural cycles of your individual farm (soil temperature, rain, pasture growth and brix and stock performance) and maintain a high level of market awareness.
 
Use a range of research tools and sources to make informed decisions on future market prices.

3. Forecast cash flow and establish sources of finance to fund each profit window.

Make accurate cash flow projections to manage cash flow shortfalls ahead of time.

Negotiate better terms of trade with suppliers and lenders and review stock numbers to optimise the demand for working capital.
 
Have sufficient equity in the business to weather times of economic stress and take advantage of new opportunities.
 
Review the return on investment for capital expenditure items.

4. Maintain optimal pasture residuals to grow quality grass and healthy soils.

Promote a diversity of self-selecting grasses, legumes and herbs to improve the natural nutrient/mineral levels available to animals.

Grow more resilient pasture by leaving longer residuals to harvest more of the Sun’s energy and put down deeper, denser roots.
 
Build up the soil’s organic matter to enliven soil biology and improve drainage.  Avoid soil damage from pugging or ploughing.  If necessary, balance soils with biologically friendly soil enhancers.

5. Adjust stocking rates to ensure animals are fully feed during the profit windows.

Increase the performance of healthy animals by adjusting the stocking rate to ensure all animals remain fully fed. 

Focus on quality rather than quantity.

6. Establish healthy relationships with customers and suppliers.

Connect with customers and deliver to their needs.
 
Establish buy and sell agreements up front to reduce the risk of unfavorable market movements and add certainty to business planning.