Achieving greater efficiency and profitability

  Utilize production records for management decisions including:  Problem shooting  Evaluating alternatives  Streamline current practices Objectives

  Production management is more than your daily activities on the farm.  It involves:  Cost analysis  cash flow planning, break-even price and yield, cost of production, risk management  Human resource management  job description/specification, communicating/motivating with employees  Budgeting  enterprise budgeting, partial budgeting  Strategic Management  SWOT analysis, goal setting Production Management

  Growth Strategy:  Expand – most common strategy, over-used  Diversify – addition of new enterprises, may spread management time and resources too thin  Replicate – copy existing operation in at a different site  Integrate – moving forward, backward, horizontal into production/processing Nine Strategic Alternatives “Positioning the Farm Business” by Miller, Boehlje, and Dobbins

  Rightsizing Strategy:  Focus/Specialize – committed to improving efficiency and reducing cost  Intensify/Modernize – increase production with same asset base  Network – creating economies of scale through alliances and partnerships  Delay/Wait and See – short-run inaction, but need to have a decision trigger  Downsize – reduce the size of the business to help improve focus or efficiency of the business (does not necessarily mean business exit) Nine Strategic Alternatives “Positioning the Farm Business” by Miller, Boehlje, and Dobbins

Strategic Options DecisionImproveFocusIntensifyExpandDiversifyReplicateIntegrateNetworkDownsizeExitDelay Decision Trigger “Positioning the Farm Business” by Miller, Boehlje, and Dobbins

  Financial records – needed to file taxes, apply for loans, and make strategic management decisions  Crop production records – chemical application, fertilizer, field records, and production yields  Livestock production records – breeding records, vaccination, feeding, identification  Human resource – I-9 Form, W-4 Form, job description, job specification  Miscellaneous – equipment repairs and inventory Record Keeping is Important

  Proper record keeping will:  Streamline your financial statement preparation  Streamline your strategic planning process  Help you identify strengths and weaknesses  Help you identify ways to cut costs or increase efficiency Record Keeping

 Cost Analysis

 Importance of Cost Analysis  Cost analysis is critical for farm management:  Manage margins  Production planning  Impact of changing costs/purchasing  Manage impact of sales growth  Evaluate expansion opportunities  Decision making tools

  Understand the impact of fixed vs. variable costs on flexibility  Cost composition influences breakeven and strategic planning  Cost Analysis Tools:  Break-even Price  Break-even Cost  Contribution Margin  Break-even Throughput  Cash Flow Break-even Cost Analysis

 Break-even Price Break-even Price (Budget)Break-even Price (Income Statement)

 Break-even Cost

 Contribution Margin

 Break-even Throughput

 Cash Flow Break-even

 Homework  Discuss what record keeping systems you need in your business to make production management easier.  Do a cost analysis for your farm. Discuss how this will impact your production decisions for the year.

  Take a minute to write down one or two ideas or takeaways from this lesson. One Minute Takeaway

 Sieverkropp Consulting LLC. Contact: Elizabeth Sieverkropp (509) Website: Training Program Homepage: program-homepage