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Crop Information Tracking for Farms - It's All About Profits
The plain and simple truth is that
if you don’t track financial information by crop, farm, field, and land owner,
you are just guessing whether you are making the right decisions regarding your
farm. On the flip side, when you are tracking it, you can also do “what if” scenarios
that open the pathways to making better business decisions. “What if” scenarios
can help you:
Compare the profitability of individual production
years regardless of crop/livestock.
Determine which products to continue producing by
comparing the profit per acre/head of each crop/livestock.
Determine if fields/livestock are not producing to
View the break even cost/bushel for each field in a
View the profitability of a field regardless of which
crop it raised over a period of time or determine if it is more profitable
to raise feeder hogs or farrow to finish.
Analyze and compare profitability between profit
centers, farms, and production years or any other combination of business
If you track inventory, it will
provide you with more accurate profitability analysis. If you aren’t tracking
inventory, then you can’t really do accrual accounting, so you just expense
your supplies (seed, fertilizer, etc.) in the year you purchase it. But that
might not be the same year that you use it, AND it may not be the same year you
sell the crop. So you could have the expense in one year and the revenue in
another year… thus throwing off profitability for each year.
You can decide how detailed you want
to be with tracking crop production…
Start really basic – just do production tracking by
crop, farm or field, or a combination of crops & farms or by land
Once you are comfortable with that, you could expand
the next year (or whenever you feel comfortable doing so) and start
Then once you are comfortable with that – you can start
using WIP (Work In Process) accounts and doing accrual accounting (and
getting more informative and meaningful financial reports).