Initial findings of a study in New Zealand by DairyNZ using the top quartile of dairy farmers ranked on operating profit per hectare found that seven characteristics were commonly associated with these top performing farms.
1.That top farmers benchmark against other farm businesses;
2.Eighty-five per cent of farm managers would have a financial budget, and were more likely to check their actual expenditure against the budget expenditure, while only buying supplies as required;
3.Top quartile farmers are more likely to network with other farmers, which would facilitate the swapping of ideas, improve their practices and be a source of advice to others. Some 59pc would participate in discussion groups;
4.Top farmers exhibited confidence in decision making, finding planning easier and were more likely to run their farm the way they wanted to regardless of what others said. These farmers had systems in place to assess opportunities and risk;
5.Top farmers generally had more than five years experience in farm management, with a high proportion having over 15 years experience;
6.Some 55pc of top farmers would describe their milking parlour as up to date and reliable;
7.A greater proportion of the top farms were managed by couples.
Having repeatedly analysed financials with my own discussion groups on an annual basis and having picked out the top 5pc, I would also concur with these findings.
No one county, soil type, stocking rate, breed of cow, kgMS/cow or kg of meal fed determined whether a farm was top class or not. What does determine a top performing farm is the person in charge of the business, and as many Irish farms are one-man units it came down to the "operator".
As farming is a biological system subject to numerous changing variables, top operators take the time and have analyst systems in place, which provide them with the conviction to make a good set of decisions.
They tend to do things to a high standard and in a timely fashion.
So as we face the start of 2013 it is important to have a financial budget in place for the year ahead. Many dairy farmers hate looking and working on financial budgets.
The common quote is that "there's no point budgeting when the weather determines what you spend".
While 2012 defined the control that weather had on a financial performance, a budget will help you plan, prepare and minimise the financial hangover that such a year creates.
Financial budgets help you control cash flow, and identify areas of spending that can be increased or decreased depending on the year.
For example, repairs and maintenance on a farm can often be deferred from one year to another which may facilitate extra spending on concentrates and fertiliser depending on the season.
However, without reviewing your financial position, additional spending without planning is more likely to result in a cash deficit.
Reviewing your budget and updating the figures throughout the year is an essential part of having a financial budget.
There is no point doing one at the beginning of the year and leaving it in the drawer.
There are numerous cash flow budgets around and even a simple spread sheet will work, so have a go and take control of your farming year.
Dr Mary Kinston is a Kerry-based dairy consultant. Email: email@example.com