The Dairy Cost Study offers business analysis for participating Alberta dairy farmers. Pauline Van Biert, research analyst with Alberta Agriculture and Forestry, looks at the benefits that producers receive when they sign up for this free program.
“A prime objective of any business is to have a good understanding of how well it is performing,” explains Van Biert. “Important parts of measuring that performance include tracking revenues, expenses, and profit margins. The Dairy Cost Study is a program where dairy farmers provide farm information over the course of a year. This information is then compiled, creating a business analysis on the cost and returns of producing milk at their farm.”
The data of all the participating farms is then combined and averaged to produce a document called the Economics of Milk Production. Each individual’s information is kept confidential.
Van Biert says that this analysis of their farm is a tool to help identify and manage costs. “Farming is becoming more complex, and there is a need to go back to the basics to really know how your business is performing. It is important to know the details. Only once you have a complete picture of your business can you better manage its opportunities.”
“Annual budgeting and planning are better when you use your own numbers,” she adds. “Having your own numbers in front of you helps assess farm management options.
Van Biert uses these questions as some examples that the Dairy Cost Study final farm analysis will help answer:
- I am surprised my total vet costs are so high. Why and what can I do about it?
- How much are my cows producing? Is this satisfactory? Should I try to up my production to fill my quota or buy some more cows?
- What extra income would I have if I sold the milk I now feed to my calves? How would this compare to buying milk replacer?
- Can I invest in some upgrades?
- How does it compare if I buy my feed vs home grown?
“Being in the program and receiving your detailed farm analysis is free,” says Van Biert. “The cost is the investment of time, and the payback can be huge. We will help those dairy farmers who have signed up with the increased paperwork, and I will come out to the farm and explain the details. After a few months, it becomes routine. As well, I could also work with the farm’s accountants or feed providers to fill in some of the blanks.”
Van Biert mentions that a current participant found that the time invested in the program is well spent and the results are useful in decision making. “He has been in the program every year for over 10 years and continues to get value from the analysis. Whether you join for one year or stay for many, you will get that value too.”
Source : Alberta agriculture and forestry