Turnover vanity profit sanity….what a load of tosh

[B R C]

Heard this said plenty of times, but really if you have a small farm turning over a relatively small amount say £1-200k you are only ever going to be able to make so much money no matter how efficient you are or how well you sell your produce. The only way to increase profits is to increase revenue and that means turnover. Lots of moaning on here about cost of red tape and lack of government support and the expectation that we should be supported, I agree we should be recompensed for any environmental obligations. We have to accept that cheap food relative to the cost of everything else is important for the world’s people and governments. In order to survive, we need to increase revenue and profit. So what’s your plan?

 

[Wigeon]

Agreed.

The future belongs to the revenue growers, not the cost cutters.

Twas ever thus, but feels especially so at the moment.

 

[teslacoils]

Im going to accept that, a small, non-specialist farm can only really provide a) a nice view and b) a small bit of extra pocketmoney for me and future generations. I am retraining and going to work off-farm, and will crop opportunistically, or wang it all in whatever scheme is most reliably able to pay the mortgage.

I have a potential solar scheme, and a nice yard to develop which is the next project.

 

[Bobby Spray]

As a new entrant to farming I am planning to keep my full time job and offset any farm losses against my PAYE. I can't see any other way of making money easily.

 

[Briar]

To improve “profit” from what you produce you must either cut costs or sell at a premium over the norm.

Don’t follow what everyone else is doing.

So I converted to organic. Malting barley this year enjoys a healthy premium over conventional with no synthetic fert nor sprays hence my costs are reduced and soil health is improving. Am sure it may bite me in the arse at some point but will take the rough with the smooth.
Some long time ago we were told at college that for a family farm to survive it must diversify. In addition to organic we have invested in renewables both turbine and biomass and diversified into equestrian.
But some these ships may have sailed several years ago or are unattractive propositions.

We also rely on neighbouring farmers for our field operations as we cannot justify the machinery expenditure.

 

[PSQ]

Turnover vanity profit sanity….what a load of tosh​

To maintain a decent working profit it used to help buying used machinery at displenishing sales.
And it used to be that to buy decent sized kit it was usually a sale from a farm where they went balls out on 'turnover' and daydreaming, until reality came calling and the money ran out.
Sadly theres more than 2 daydreamers for every lot at a sale theses days, but watching the next generation of kids trying to justify big kit with 'turnover' and paying new money for old rope makes for an interesting days sport, and it only costs the price of a coffee and a bacon roll.

[The real answer is to invest the farming profit 'off farm', as when it rains on the big boys (literally, like this year, or metaphorically) you've got a 2nd income stream that follows a different 'non ag' path, instead of just playing the same hand with a bigger stake, and doubling down on the losses].

 

[topground]

I won’t be running faster just to stand still which is what the supermarket cartel would like me to do. Likely to be producing less at less cost. Making a profit while not killing myself in the process is the plan.

 

[britt]

It's easy to be a busy fool.
If you have to pay high rents to get the extra land the margin gets ever thinner and the risk greater. It's often better to find another income stream with a better margin to spend your time on. Especially if it complements or piggybacks on what you are already doing like chickens to give cheap N for your existing arable ground.
But I agree that profit is limited by total income.
Smaller numbers at a higher margin needs less investment and therefore less risk, and can give a higher overall profit if you get closer to the end market.

 

[Derrick Hughes]

The point being , buying cheap and selling cheap is far better than buying dear and selling dear , asking any straw merchant atm which he prefers, Turnover means F all
My plan , spend less and keep more

 

[Steevo]

No point having a £1million turnover if you are making a £300k loss.

Better to have a £100k turnover that makes a £1 profit.

You can easily buy work and therefore turnover….if you aren’t bothered about making a profit.

Either way, you’ll never be able to compete with the celebrity landowners who want to buy a 1000ac farm like Clarkson or Guy Ritiche to have their own playground.

They don’t care about turnover or profit! They make their money elsewhere and are just investing it from the taxman in something they can show off and have fun with big boys toys.

 

[JockCroft]

Heard this said plenty of times, but really if you have a small farm turning over a relatively small amount say £1-200k you are only ever going to be able to make so much money no matter how efficient you are or how well you sell your produce. The only way to increase profits is to increase revenue and that means turnover. Lots of moaning on here about cost of red tape and lack of government support and the expectation that we should be supported, I agree we should be recompensed for any environmental obligations. We have to accept that cheap food relative to the cost of everything else is important for the world’s people and governments. In order to survive, we need to increase revenue and profit. So what’s your plan?

Sounds great.
But have you heard of "The Law of Diminishing Return".
Grow larger, buy larger machines. Make a greater profit, but who takes that profit? The Bankers and Machinery men?
Be very careful that you are not working harder, running yourself into the ground and the benefit is taken by others.

 

[Steevo]

To improve “profit” from what you produce you must either cut costs or sell at a premium over the norm.

Don’t follow what everyone else is doing.

So I converted to organic. Malting barley this year enjoys a healthy premium over conventional with no synthetic fert nor sprays hence my costs are reduced and soil health is improving. Am sure it may bite me in the arse at some point but will take the rough with the smooth.
Some long time ago we were told at college that for a family farm to survive it must diversify. In addition to organic we have invested in renewables both turbine and biomass and diversified into equestrian.
But some these ships may have sailed several years ago or are unattractive propositions.

We also rely on neighbouring farmers for our field operations as we cannot justify the machinery expenditure.

Precisely that. It’s all about added value.

Adding that value without just adding cost is where the skill lies.

People will pay £5 for a cup of coffee that they could make at home themselves for 5p.

 

[puppet]

Depends how much profit you should make. If you want to make £60k you can make 30% on £200k or 10% on £600k turnover.
I know which one I would rather be doing.
The margin can certainly be increased as there is far too much metal on farms. Probably driven by historical subsidy payments and farmers not wanting to make much profit and pay tax.
It is very hard and unpredictable to increase income on a unit of produce so you need more produce. This takes borrowing, labour and land further away which all eats into the margin making your last litre of milk or ton of wheat the most expensive.

 

[Boomerang]

Precisely that. It’s all about added value.

Adding that value without just adding cost is where the skill lies.

People will pay £5 for a cup of coffee that they could make at home themselves for 5p.

I don't get that at all , but starbucks ,costas Et Al are making a living , a friend I don't see very often arranged to meet for coffee at starbucks never Been to one before couldn't believe a coffee and hot chocolate was nearly £8.
As above its pence at home.

 

[Bald Rick]

Annual Income twenty pounds, annual expenditure nineteen, nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery

C. Dickens

 

[SilliamWhale]

I don't get that at all , but starbucks ,costas Et Al are making a living , a friend I don't see very often arranged to meet for coffee at starbucks never Been to one before couldn't believe a coffee and hot chocolate was nearly £8.
As above its pence at home.

It's not the coffee, it's the experience. Ie it's something to do, somewhere to go, sugar rush etc.

 

[Bossfarmer]

The point being , buying cheap and selling cheap is far better than buying dear and selling dear , asking any straw merchant atm which he prefers, Turnover means F all
My plan , spend less and keep more

strangely enough buying my inputs at record levels and selling the grain at record levels the last 2 years has resulted in my 2 largest ever profits for cereals

so with that being said your statement isnt factually correct

 

[Bossfarmer]

No point having a £1million turnover if you are making a £300k loss.

Better to have a £100k turnover that makes a £1 profit.

You can easily buy work and therefore turnover….if you aren’t bothered about making a profit.

Either way, you’ll never be able to compete with the celebrity landowners who want to buy a 1000ac farm like Clarkson or Guy Ritiche to have their own playground.

They don’t care about turnover or profit! They make their money elsewhere and are just investing it from the taxman in something they can show off and have fun with big boys toys.

id rather have 1m turnover and 300k profit

 

[milkloss]

No point having a £1million turnover if you are making a £300k loss.

Better to have a £100k turnover that makes a £1 profit.

The first one the bank might be in trouble, the second one you're in trouble yourself.

 

[crashbox]

Heard this said plenty of times, but really if you have a small farm turning over a relatively small amount say £1-200k you are only ever going to be able to make so much money no matter how efficient you are or how well you sell your produce. The only way to increase profits is to increase revenue and that means turnover. Lots of moaning on here about cost of red tape and lack of government support and the expectation that we should be supported, I agree we should be recompensed for any environmental obligations. We have to accept that cheap food relative to the cost of everything else is important for the world’s people and governments. In order to survive, we need to increase revenue and profit. So what’s your plan?

Cut cost and turnover but increase margin.

So much research in dairy that the sweet spot is optimised output, usually lower turnover.

That's why NZ, Ireland and Australia dairy are all built on low cost systems.

Maximum is rarely optimum.