Why data-driven decisions can optimize your farm’s profitability and reduce risks to your business

Synopsis

Data can help you make proactive and informed decisions to benefit your farming operation and overcome the current challenges facing your industry — including rising interest rates, uncertain cost of production, and limited perspectives.

Benchmarking can help you understand where your farm stands in the current marketplace and help you to identify areas for improvement. Tools such as Farm Builder can provide you with real-time data to track your cost of production and predict revenue.

It is essential to embrace new technology to succeed in any industry — and farming is no exception. Data tools can provide you with the insights you need to become more efficient and improve profitability.

From fluctuating prices to high interest rates, unanticipated costs, and unpredictable weather, your farm is inundated by risk factors that impact your success. While you can’t predict the future, you can leverage your farm data to make informed decisions that will help optimize profitability and reduce financial risks to your farm.

Let’s discuss some of the current challenges you may be facing and tools you can use to make informed decisions to support the success of your farming business.

What challenges are farmers facing?

Farmers operate on low margins, so any unanticipated changes in costs or pricing can impact the profitability of your farm. Some recent challenges facing the industry include:

Rising interest rates

Interest rates have skyrocketed, and the price of fertilizer, feed, operational debt, and equipment repair has increased accordingly.

Farmers who invest in financial forecasting tools or benchmarking to predict and plan for price changes are best equipped to weather this period of high interest rates.

Changing costs of production

Constantly changing prices and unexpected expenses can make it difficult to track your true cost of production.

Tools that use real-time data to track expenses, adapt for price inflation, and forecast your farm’s profits ensure you don’t have to wait until the end of the year to discover how much you’ll earn.

Limited perspective

It’s easy to compare yourself to others — especially when there is a large farming operation down the road with all the newest equipment. However, the size of your farm has little relevance to your overall profitability. Instead, how well you manage the resources of your farming operation determines its success.

Benchmarking gives you the information you need to determine where you fit between your neighbours. It also provides you with the perspective you need to discover the areas where your farm is financially healthy as well as the areas where you can make changes to increase your profitability.