What are the best practices for managing farm costs and revenues?

3 Control your variable costs

The third step to managing your farm costs and revenues is to control your variable costs. These are the costs that change depending on your production level, such as seeds, fertilizers, feed, or veterinary services. You can control your variable costs by implementing best management practices, such as soil testing, crop rotation, pest management, or animal nutrition. Controlling your variable costs helps you reduce your risk, improve your quality, and increase your margins.

4 Manage your fixed costs

The fourth step to managing your farm costs and revenues is to manage your fixed costs. These are the costs that remain constant regardless of your production level, such as rent, depreciation, insurance, or salaries. You can manage your fixed costs by optimizing your asset utilization, such as leasing, sharing, or upgrading your equipment, land, or buildings. Managing your fixed costs helps you increase your capacity, lower your overhead, and enhance your competitiveness.

6 Review and adjust your plan

The sixth and final step to managing your farm costs and revenues is to review and adjust your plan. This means monitoring and evaluating your farm performance, comparing your actual results with your expected outcomes, and identifying any gaps or deviations. You can review and adjust your plan by using financial statements, ratios, indicators, or benchmarks. Reviewing and adjusting your plan helps you learn from your experience, correct any mistakes, and improve your future decisions.