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Go beyond just bushels – how can your farm achieve best profitability per unit?

Darren Frye, CEO

May 3, 2021

3 Min Read
cornfields on the rolling farmland north of Schuyler, Nebraska.
Weldon Schloneger/Getty Images/iStock

One of the easiest things to look at when you want to answer the question, “How is my farm doing?” is to look at the farm’s financials, especially the bottom line. While it is a good idea to follow and keep track of the farm’s financial numbers, there’s usually more to the story in terms of how the farm is really doing.

The danger in only focusing on the farm’s financials when thinking about accomplishment is that the farm’s leadership could miss some key things that greatly impact the level of success the farm is able to achieve.

What brings success

It can be helpful to consider the top five or so things that will most greatly impact the farm’s success. In other words, if these few critical things are done really well, the operation will more likely to achieve the financial goals that have been set.

This doesn’t mean that metrics aren’t important. In fact, it’s helpful to have relevant metrics in place to measure progress toward goals so leaders can make any necessary adjustments. However, not all of the metrics will necessarily be financial in nature, but might measure something else: efficiency, for example.

Steps to take

First, consider the top things that will help your farm reach the goals and success you envision. Try to move beyond thinking about how to grow more bushels toward a mindset of how your farm can achieve the best profitability per unit instead. This can get your mind in a different zone, thinking about goals that are oriented toward increasing efficiency or improving processes. Then, you can begin thinking about what you can do to improve your farm’s performance in those key areas or aspects.

Once you have set goals for each area, then create metrics that will measure how your farm is doing in each one.

Some aspects might be more difficult to create metrics for – such as a goal of improving relationships with landlords. For these goals, you can get creative on how to best measure progress and improvements, according to the needs of your unique operation. Maybe you measure it through some combination of how many times you communicate with each landlord per year and how many landlord relationships are improved in some way (that needs to be defined individually by your operation).

Bigger picture

Focusing on these key aspects of your operation can give you a more complete picture of how your farm is doing, especially throughout the crop year when the financial outcome of the year is still unknown. Measuring these other areas can help bring real improvements in parts of the operation that will ultimately bring about the financial numbers and success you’re working toward.

One of the critical areas in every operation is how the farm is going to successfully bring in revenue through marketing the crop – but this can be a challenging aspect for many farm leaders. To get a market advisor to walk alongside you through your marketing decisions or to get a free trial of our market information service, visit www.waterstreetconsulting.com.

The opinions of the author are not necessarily those of Farm Futures or Farm Progress. 

About the Author(s)

Darren Frye

CEO, Water Street Solutions

Darren Frye grew up on an innovative, integrated Illinois farm. He began trading commodities in 1982 and started his first business in 1987, specializing in fertilizer distribution and crop consulting. In 1994 he started a consulting business, Water Street Solutions to help Midwest farmers become more successful through financial analysis, crop insurance, marketing consulting and legacy planning. The mission of Finance First is to get you to look at spreadsheets and see opportunity, to see your business for what it can be, and to help you build your agricultural legacy.

Visit Water Street Solutions

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