Records are crucial for success of any niche pork producer. How can one evaluate their purchases of assets or find optimal levels of labor, scale and efficiency without good records? Records are necessary to help you make informed decisions that will directly impact your competitive position and overall profitability.
Not only will even basic records help you make informed decisions, it will help confirm what things are important to the bottom line of your farm. People will not enter into the market unless they know that they are making as much fair profit as possible. Also, a list of critical management areas to master is needed in order to be successful. You can only be effective at managing what you can measure.
Important questions that quality records can help you analyze
- Which tools are valuable?
- Will additional inputs increase profit? and which ones?
- What is your optima herd size?
- Is the way you raise pigs the most cost effective?
- Are there changes that you can make to improve your return?
- Are you spending too much time on things that do not change your financial position and too little time on the things that will?
- Is your farm financially stable?
Keeping records just for the sake of keeping them is only useful for taxes, but taking those same records and relating them back to your performance is very useful in making informed decisions.
In a small lower overhead farm, whole herd cost records related to gain are needed for benchmarking certain areas critical to financial sustainability. This type of record keeping links cost to performance and requires only minimum amount of data that is easily obtained.
The number of pounds pork produced by the farm is essential. Pounds produced can be calculated by the following formula;
Pounds Produced= (Ending Inventory Wt + sale Wt) – (Opening Inventory Wt + Purchase Wt)
Once the number of pounds produced is calculated, cost then can be related to performance (pounds produced)
For example, If you had the same opening and closing weight, did not purchase any animals, and sold 10,000 pounds of market hogs (40 head at 250lbs). If you spent $7500 on feed, the feed cost of grain would be $0.75/pound or $75/cwt.
Now an important discussion begins when you find out that another farm spent only $5000 on feed to produce the same amount of pounds, you will have to decide if the $2500 spent on additives or specialty feeds to possibly enhance your growth rate had a good payback or not. This is why records are important on making informed decisions.
The same formula can be used to benchmark all your costs on the farm. You need to track costs of things like utilities, fuel, repairs, supplies, bedding, meat processing, etc. After you have these costs recorded plug them into the formula to find out cost per pound.
You must charge enough to cover the costs per pound to make break even then add in enough profit for your own income.