While farm management has seen many adaptations throughout the years, I don’t think anyone could argue that the biggest game-changer of the 21st Century stems from farmers’ and ranchers’ increasing power yielded from today’s capability to collect big data.
It has provided unprecedented decision-making capabilities and seamlessly connects people and systems you rely on.
How? Let’s say you farm 4,000 acres of corn, soybeans and wheat. You also have a livestock operation that’s fed largely by the silage you produce.
You may be pretty clear about the numbers on the cattle side of your operation. But the pain point comes with tracking costs on your crop side. Maybe you’re using Excel and other software programs to track your crop rotation or inputs. But you can’t seem to pull together all the data to fully tally the costs involved in all the crops you grow. Pieces are missing from the total profitability picture. Something isn’t working.
It’s a common problem and a major need in United States agriculture today.
Collecting complete, accurate data—and managing it properly—is just as important as any other aspect of your farming operation. If you’re not employing sophisticated financial technology to pull it all together, you’re not seeing the entire picture. You’re making operational decisions, risk management choices and projections partly in the dark. This is not a great way to gain a competitive edge.
Like farm equipment, processing machinery and smartphones, financial technology has advanced in astounding ways. And like those advancements, a sophisticated data collection program can do amazing things. It can gather information from every part of your operation and then transfer it in real time to a central platform. It stores all that data there so you can access it quickly and easily.
The impact of financial-gathering tools
Today’s comprehensive financial-gathering tools can offer incredible technology to farmers and ranchers and positively impact your decisions and outcomes.
Connects key people for your business. As an example, K∙Coe Isom works with a worldwide farm-management technology provider called Agworld to connect its clients with the people and systems that can link your farm or ranch with your agronomist, financial adviser, ag retailer, lender, custom applicator and other key partners and stakeholders.
Identifies costs. Farm management technology collects data from equipment sensors, field and satellite imagery and other emerging data gatherers. With a robust technology platform, you can identify costs in every facet of your operation, including seed, chemicals, fertilizers, rent and equipment. For example, your chemicals can be tracked by field and by mix.
Manages complex information. This technology’s ability to fully capture and manage complex information is compelling. When integrated with the business and financial expertise of your advisors, you can see what your cost of production is for your fields and make informed decisions on whether to keep farming them or not.
Advantages of high-tech data collection
The advantages of employing a premier data-collection platform with knowledgeable advisors are pretty straight-forward. This is technology that can help you succeed in ways you didn’t see before.
Effortless seasonal preparations. Using today’s robust farm management technology, farmers are able to plan for the upcoming season based on what they did last year, both from a cashflow and input perspective.
Accurate reporting for good decisions. The planning reports are useful in calculating product requirements and getting quotes from suppliers. The more accurate the planning reports are, the better your buying power; and by using last year’s actuals and farm performance report, you can really be incredibly accurate. When your accounting department needs to know what labor and therefore cash flow requirements are, you can provide them with a detailed overview of what you are planning to do.
Valuable year-to-year comparisons. With the data collected, you can make year-to-year comparisons and see where every aspect of your operations stands. Today. In real time. You can track the cost of fuel and labor. You can run “what if” scenarios to determine whether planting beans makes more sense than corn. Major decisions, whether about planting, marketing or a conservation practice, will be clearer. If there’s a slow leak somewhere in your operation, this platform will help you find it.
Of course, keeping accurate, organized financial records will be more important than ever. You’ll need to categorize your expenses consistently and accurately. You’ll have to ensure your capital expenditures or personal expenses don’t comingle with operating costs. You—or someone in your operation—will need to document your loan principle, interest and payment terms. This is basic bookkeeping. Precise numbers allow accurate measurement. If you have garbage going into the program, you’ll have garbage going out.
Tracking and analyzing comprehensive data is time-consuming. But the benefits are tremendous: greater profitability, better information to provide to your banker and a more sustainable farm for future generations. Invest some time into investigating it.
Editor’s note: Maxson Irsik, a certified public accountant, advises owners of professionally-managed agribusinesses and family-owned ranches on ways to achieve their goals. Whether an owner’s goal is to expand and grow the business, discover and leverage core competencies, or protect the current owners’ legacy through careful structuring and estate planning, Maxson applies his experience working on and running his own family’s farm to find innovative ways to make it a reality. Contact him at email@example.com.