Financial analysis important for continuous business improvement
Tim and Grit Cashin’s focus on continual improvement of their Gippsland dairy operation means not just a focus on cows and pasture but farm business management as well.
The couple started farming in Leongatha South in 2006 and are a part of the Dairy Farm Monitor project (DFMP) which offers dairy farmers the opportunity to compare their performance against themselves, other farms and identify areas for improvement.
They milk 280 cows from an effective milking area of 115 hectares as well as an 80 hectare runoff, both leased properties, and are focused on equity growth with the aim of buying their own farm.
The business has been in the top 25% of DFMP farms during the five years they have been involved.
Mr Cashin said the DFMP and another annual financial review process with his consultant John Mulvaney was a key to tracking their progress over time providing invaluable information for business planning.
"What is really beneficial for us is having that financial data over the years so that we can look back and compare seasons. We can come back to the figures and for example find out how much grain we used in a certain season to compare with the current.”
“At the moment the figures show that we have grown quite a bit. Crucially the numbers are important when it comes to our business planning because we know we are not guessing.”
Mr Cashin said the result he was most interested in from the DFMP data was pasture consumption as it was the key driver of profit.
“We do look at the results very carefully when we compare ourselves to others. What we really look at is the pasture side of things to know that we are doing a good job there.”
Being on top of management decisions is a focus of the operation. Learning from other farmers and being open to new technologies and ideas is a part of the Cashins’ mindset.
“You are never going to get all of your decisions perfect but if you can get it near enough to perfect then you have made the right decision.
“Being more profitable comes down to getting the timing right. For example, planting your pasture. You could plant on March 15 or you could leave it until April 15 but if you do that you could miss out on a tonne a half of dry matter. These decisions affect the bottom line.”
Sharing information in discussion groups and taking note of the more successful farmers was another way to improve he said.
‘We are always looking at ways to become better and different ideas that might help us. Even in tight years there are things you can do. For example we have a very wet farm here and some humping and hollowing work over 40 hectares has made that land at least twice as productive.”
Mr Cashin said using an annual financial review like the new farm business management tool DairyBase was part of good farming practice and should be a part of an effort by farmers to become better at business.
“Being better business people and knowing where your business stands financially is key. We know where our cashflow is at if not weekly then bi-weekly and we know that having a handle on this is just as important in the good years as the tight years. You need to know where you stand.”
DairyBase will offer dairy farmers a free web-based system to enable them to measure their business performance and compare their business anonymously like the DFMP.