An analysis of updated production records will enable producers to determine if production and profitability goals (milk sold per cow, daily rate of gains, culling rates and grain yields) that were set at the beginning of the year have been met.

What is the net profit per unit of product sold, e.g. pound of milk, bushel, and beef calf? 

If production and profit goals are not being met are there factors within the control of the manager (e.g. change timing of harvesting of forages, increase utilization of grass as feed source in rations etc.)? 

By answering these questions, the manager can implement changes that will help the farm maximize profits. High production yields do not always equate to maximizing profits. Remember, maximizing net profit pays the bills.

Many times the owner’s labor management skills are ignored in the analysis of farm profitability.

Are the employees viewed as individuals who have “strong backs and weak minds” needed to complete tasks or are employees viewed as an integral part of the financial success of the farm? 

What is the employee turnover rate? If employees have left the business in the past six months, what were the reasons? The owner’s attitude toward hired labor can have a major impact on farm productivity and profitability. 

As the former owner-operator of a dairy farm, I believe a farm’s employees are the business’s most important asset. Staff meetings provide a forum where the owner and employees can air concerns about management of the farm.

Employees can be recognized for making decisions that contributed to the success of the farm (e.g. quickly repairing broken equipment, taking care of the herd with a limited amount of help, etc.). 

Discussion may be focused around the following questions:  

What has worked well? What changes should be made? Prioritize the changes. The owner and employees need to reach a consensus when the changes should be implemented. Then the owner makes the changes. 

Employees relish the opportunity to work for a business where the owner acknowledges and implements employees’ suggestions that will improve productivity and profitability. 

Finally, an area that can have a significant impact on farm productivity and profitability is the farm’s policy towards vacations for the owners and employees. 

Employees and owners should be encouraged to schedule vacation time during slower times between planting and harvesting seasons. Vacations allow people to get rested and recharged. 

Taking time off will help owners and employees gain a new perspective. Owners and employees who are well rested will be able to address the production and financial challenges with a clear mind in a year that has had numerous weather and financial challenges.

A mid-year review can help producers understand current financial status of their businesses. Then producers can make changes which can help maximize farm profitability during the last half of the year.

Best wishes for a safe and profitable 2011.