It’s murphies law isn’t it; grain growers are coming off one of the best seasons in terms of yield, but are struggling to comprehend the low prices being offered for their commodities.
At Mulcahy and Co, farm accountants for Ballarat and district, we can help you to understand what to do this year.
The 2016/17 harvest highlighted the importance of two variables for grain producers these being, price and yield which make up your gross return. In order to see higher returns the two components in this equation need to work together to achieve the best results possible.
Ballarat Farm Accountants help you understand
Have you already started planting or are you still designing your crop plan for the 2018 harvest? Are you changing from what would be your “norm” to something that is going to provide you with likely higher returns and take the risk?
Like all markets there are bears and bulls. The bears are currently talking about the glut of global grain stocks and the fact there have been no production scares around the world. The bulls will tell you that on the balance of probabilities we are due for a production scare somewhere in the world, the US have reported lowest planting for 30 years and China have a stockpile of grain that has been spoiled.
In reality, you cannot control a lot of the above; it is out of your hands. Mulcahy and co are experienced farm accountants for Ballarat and district and can show you that what you can control, is having a thorough understanding of your business and knowledge of what return you need. It is human nature to want to sell at the highest price. But, don’t worry there is always someone that got a better price and yield!
But to minimise risk what yield and price do you need in your farm business?
The harvest just gone was an interesting one with many clients very disappointed with the price offered for grain but once the yield was factored in and looked at on a per hectare return the answer of what to do was pretty straight forward.
Sure, if you have the financial capacity and infrastructure to store grain and want to take the punt that it can work in your favour – take the chance. At Mulcahy and co we have the expertise to analyse a specific farm businesses financial requirements and make a decision based on those requirements, is what farm farm business management is all about.
Getting back to your current scenario. You are about to spend a lot of money but don’t really know what the outcome will be. Yield was the saviour last year but will it step up this year? The bears and bulls will continue to put their views forward and as time goes on one of them will be right. Sow… are you prepared for it fall either way?
Mulcahy and Co are experienced farm accountants for Ballarat and district. Wee can help you to understand what you need in your business. What are your costs of production per hectare or tonne are so you know what price you need to be targeting.
Partnering with Xero and Figured, Mulcahy and Co farm accountants can easily source information on a timely basis. Using budgets and reforecasting as circumstances change is essential to understand how you should be marketing your grain and to help you make well-informed decisions for your business.
Want to know more contact us! And keep an eye out for next week’s blog “What’s the difference between a grain marketer and seller”.