Farming used to be one of those careers that would always reward you if you worked hard. These days, however, things are a little different. It’s a tough landscape for agricultural businesses at the moment – the supermarkets have many farmers over a barrel, and many farms are only a mediocre season away from losing an awful lot of money. Plus, of course, who knows where the agricultural industry will be post-Brexit?
So, while farming is a great opportunity for newcomers, it’s also important to keep on top of the costs of running the business. Doing so will help improve your bottom line and make you more robust against sudden prices changes and worrying developments. Here are some ideas on cutting the costs of an agricultural business and giving yourself a chance of making a profit rather than a loss.
The energy you use to run a farm can be incredibly expensive. But is there a need to be spending all this money? The truth is, maybe not. While farming is one of the most energy-intensive industries out there, it’s also incredibly innovative – and there are plenty of opportunities to explore if you want to save costs. Installing wind turbines is proving to be a valuable for many farmers at the moment, as is using solar arrays. Biofuels are another sector worth looking at and can help you stabilise – and reduce – your energy bills.
Maintenance and repair work
The cost of replacing farming equipment can hit you hard in the pocket. So, it makes sense to ensure that you invest a little in regular maintenance to ensure your repair costs don’t get out of control. For example, you might need to replace hydraulic fittings, or change a simple lug not – not major repairs by any means, and pretty cheap in comparison with buying a new tractor. Regular maintenance will also ensure your equipment is working as efficiently as possible. For instance, if you have animals in milking parlours or piggeries, clean and well-maintained ventilation systems will give you significant savings over dirty, clogged, and inefficient systems.
Find new suppliers
There is always a cheaper supplier out there for farmers; it’s just a question of where to look. And given the large volume farmers tend to buy in, it’s clear that even a few pennies off every unit can make a huge difference over a year. You’ll have to weigh up whether a low price results in lower quality, of course, but don’t be afraid of negotiating or haggling for a discount. Most suppliers will have some wiggle room for their most loyal customers.
Be wary of fast growth
Finally, don’t assume that increasing the size of your operation will cure all your problems. Focus on cost-cutting first, and it will stand you in good stead. There are many cases of farms embracing growth a little too quickly, but because they haven’t sorted out their bottom line first, they can end up in serious trouble. Get a tighter grip on your margins, and then look to grow – it reduces your risk by a significant amount.