The article I submitted last month discussed financial efficiency, which is defined as the ability of a farm business to use its resources (inputs) efficiently. There are three groupings of financial efficiency, in which expenses are categorized to yield margins and ratios: production expenses (fertilizer, chemical, seed, crop insurance, feed, veterinarian) operating expenses (fuel, repairs […] Read more

Analyzing and managing financial performance can be both simple and complex, depending on what you’re trying to understand about it. In it’s most simple terms, financial performance can be defined as sustained positive cash flow. Positive cash flow comes from the profit being generated by the farm business, and that’s where the complexity comes in. […] Read more

Financial ratios can be useful tools to analyze farm business performance. A great example of this is gross margin efficiency. Expressed as a ratio, gross margin efficiency measures how efficiently a farm uses specific, productive inputs. To demonstrate, the calculation looks like this: gross margin divided by gross revenue equals gross margin ratio. Gross margin […] Read more

Here’s somewhat of a rhetorical question: what are you doing right now? And then a follow-on question: what should you be doing right now? The second question warrants some discussion. A farm business requires a considerable investment in capital — assets such as land, buildings, equipment, livestock and quota. However, an investment is also required […] Read more

I recently made a presentation on financial benchmarking at Farm Management Canada’s Agricultural Excellence conference in Ottawa. I looked at data that we capture in our EAGLE farm business management software program. The program analyzes the financial performance of individual farms and aggregates the data from participating farms. Individual farms can compare their performance to […] Read more

Before getting too far into “next year” thinking, it’s important to look at how you did financially in 2017. There are many reason why people farm. One of them though, must be to earn profit. Four key questions should be addressed: What profit did the farm earn in 2017? Profit has must be calculated on […] Read more

I’m going to start by telling a story about my youngest son. I dropped by the place he’s renting a couple of weeks ago. When I got out of the vehicle, I noticed three dimes on the driveway. I picked them up, happy with my discovery. When I met him inside, I mentioned my find. […] Read more

Certain issues within the transition planning process might cause difficulties for some families. These challenges are often referred to as the ‘soft’ issues. They can be more difficult to deal with than the ‘hard’ or concrete issues such as taxation. I recently was in a farm family meeting about transitioning ownership and management when a […] Read more