As summer in the Midwest dwindles and fall approaches, producers are reviewing their mid-year financials. They are focusing on where they stand in their budget-to-actual projection and starting to think about their 2023 financial forecast. During this time, one could be wondering, how can I manage costs in the future? How can I be a more efficient producer? Or how can I have more economies of scale?
We all can appreciate the revenue opportunities the market has put in front of us in recent history. However, it is difficult to get excited about where expenses and input costs have and continue to trend.
The factors impacting today’s farm economy have led me to believe that we can accomplish more together than we can alone. With inflated input costs, high building expenses, outrageous equipment price tags and the ongoing challenge of labor, it can be difficult to know what is a sound investment and where it may make sense to cut costs. Aligning with other producers and industry partners is a beneficial way to help navigate these opportunities and challenges. Below are few things worth considering:
- Build a trusted circle. People in our industry are extremely knowledgeable and have a significant amount of experience. Leverage it. For you, it may be a veterinarian, nutrition specialist, risk management advisor, lender or all of the above. Regardless, if you see them as an asset to your business, use their expertise. They can help focus on areas of improvement, see potential risks or capture future opportunities.
- Interact with peers and colleagues. The swine industry offers several networking opportunities throughout the year, such as conferences, committee meetings and producer peer groups. Get involved, be engaged. Conversations with other producers and industry professionals can be impactful in many ways.
- Align your business. As you manage overall costs, consider new growth or additional investment, it might also be a good time to consider strategic alignment. Shareholder groups have shown to be advantageous in gaining economies of scale, managing risk and gaining more perspective.
Aligning with others can be mutually beneficial for your operation and others, however, it is important to note that any engagements with other partners or producers should meet all anti-trust laws.
We live in a very volatile world. As a producer or ag industry professional, you understand this all too well. Commodity prices and expense variables change daily, and sometimes even hourly. Being proactive in managing your business will help a producer be more successful today and in the future.