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Evaluating Productivity on your Farm Operation

Dr. David Kohl
Educational Opportunities: 
Grain, Dairy, Swine, Beef, Young, Beginning Farmers
Home > Education & Events > August 2019 > Evaluating Productivity on your Farm Operation

I want to talk to you today about “Tim's triple play”. One of the benefits that I have from being on the speaking circuit is to work with agricultural lenders teaching lending and banking schools. One of the lenders, Tim, I asked him, "What are your customers doing to generate a profit, particularly in this down cycle?" While we came up with Tim's triple play, well, Tim's triple play first is to go through their expenses line by line item. This helps them discover which expenses they could cut, as long as they are the right expenses. For example, one of the producers cut vaccination costs only to have an outbreak in his herd. Another producer cut crop insurance only to have adverse weather which threw him into a loss situation.

The second element that's very critical is marketing and a risk management program. Now, some will use an advisory service. Some have gone to school and they're actually planning and executing a marketing and risk management program. And you know what it's all about? It's about a penny here, five cents there. Because in today's larger businesses, this can compound to larger profits over the long run. And the final aspect is they go through and do an inventory of assets, land, capital, machinery. And one of the things that they will do is they shed on productive assets. And sometimes there are human assets. Sometimes you have to go through and look at farm management. You have to look at employees, but also family members and determine whether they're productive. A few pennies here a cent here, add up. And one of the things is we can eke out a series of profits in this down cycle, but oftentimes it's not home runs. It's a series of base hits.

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