Farm Ireland

Friday 15 December 2017

Do an eProfit analysis to boost farm returns

Michael Gottstein

Hopefully, as you sit down and read this you will have enjoyed the Christmas festivities and are refreshed facing into the next 12 months. Nobody can answer what this year holds in store for sheep farmers at this stage.

In my final article of last year I wrote about some of the challenges that I see sheep farmers facing in the future. Challenges will vary hugely from farm to farm and from person to person. So now, as the New Year has arrived, what kind of resolutions will be made by the sheep farmers of Ireland?

If your New Year's resolution has anything to do with improving your lot from sheep farming then the first step is to find out where your enterprise currently stands. The finding out that I'm talking about cannot be done in a tractor, handling unit, sheep shed or fields. I am talking about taking an in-depth look at the paperwork associated with your enterprise and working out exactly how your flock is performing. What I am suggesting is that everybody carries out an e-Profit Monitor analysis of their farming enterprise.


I know that for most sheep farmers this type of 'paperwork' is about as appealing as going for a swim in the Atlantic during January. But if you don't know where you stand, how can you take any steps to improve? And what's more, most people who have carried out an e-Profit Monitor analysis have found it a useful tool in guiding the direction of their business.

Completing an eProfit Monitor analysis is not a very onerous task, but it does take a bit of time if you want to get it accurate. Completing the analysis with incomplete or incorrect information is a waste of your time. I always recommend that any 'paperwork' jobs should be done during the day when you are fresh rather than in the evening when have spent the day working. What is required is that you assemble your chequebook stubs, lodgement books, factory and mart dockets, flock register and a profit monitor input sheet, which is available on the Teagasc client site or from your local Teagasc office.

Having assembled the above information, you are ready to start completing the input sheet. The first part of the profit monitor deals with physical data, such as weaning rate, stocking rate, lamb output (kg) etc. Some of this data will be generated by the programme as you input the data and some (eg area farmed, number of ewes to the ram etc) will have to be inputted by you.

I can't stress the importance of getting these figures right as opposed to guessing. Results obtained where some of the information has been guessed will, at best, make the result meaningless and, even worse, provide you with misleading information.

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Having completed the physical data, the next step is to enter the financial data. This is where your chequebooks and lodgement books come in. Divide the costs into either variable or fixed costs.

Again, it is important to allocate the various costs into the appropriate categories. Variable costs include items such as bought feed, fertiliser, veterinary, contractor, levies and transport, straw etc. In general, these will be any costs that are directly associated with the animals and will rise or drop as stock numbers increase or decrease.

Fixed costs are those associated with running the business, such as labour, machinery, interest, depreciation, insurance, professional fees etc. In general, these are the type of costs that are not that easily altered, even where stocking rates change -- hence why they are called fixed costs.

Remember that if you run into problems or want help in completing the input sheet, you can contact your local adviser. There is no charge for this service for existing Teagasc clients.

Once the input sheet has been filled in, give it to your adviser and he/she will enter the data for you. You can also choose to input the data yourself if you are registered on the Teagasc client website. Once the data has been entered, your adviser will be able to run off various reports and go through these with you. This will help to highlight areas of the business that should be targeted for improvement.

Every Teagasc client is only a few hours away from having this analysis done for their farm business. All you need to do is get an input sheet online or at your local Teagasc office and start filling in the boxes. The advantage of having this task completed by this month is that you will be in a position to use the information from last year to help you make better decisions for the coming year.

Irish Independent