This is the right time of the year to review how your business performed for the last 12 months. Field work is finished, the days are short, and a new year is just around the corner. Sit down and start to get a picture of what money came in from milk and stock sales and where you spent that money.

Many dairy farmers will complete a dairy profit monitor input sheet, which lists all your costs for each category, such as feed, fertilizer, etc, and how much you spent on each item. Once your adviser gets this, many different reports can be generated either per cow, per hectare, c/litre or per farm. Benchmark your performance against discussion group members, co-op monitor farmers or the top 50% of national average figures. Comparing your business to poorly performing operations that are going out of business is not much good. There will be a big difference in costs between established farms that have been developed over the last 40 years and those just starting off now that have completed large capital expenditure. Much comparison will depend on key physical variables such as stocking rate, herd maturity, herd size, etc.

Get someone to mark where you can improve individual costs and performance. Total up what changing two or three variables would be worth to the business. Look at your bank statements and ask were there times when the business was tight for cashflow.

1 It is time to assess financial performance for the year. The objective is to look back to allow a measured look forward into 2015.

2 Benchmark your key variable costs against good performers and check what they are doing differently.

3 Identify three variable costs that need to be improved and develop an action plan on how you can change them.

4 What can you do to change pattern of spending to reduce overdraft costs? Will the pattern of inflow and outflow of cash be very different next year? For many, 2015 will bring smaller milk cheques, superlevy charges, etc – it is time to plan for that.