Question: I’m a dairy farmer and, to be honest, I feel like I’m working harder every year, but not getting ahead. Output is good, cows are performing, and we’ve invested over the last few years, but
financially it feels like I’m standing still. Costs keep rising and the milk price is hard to predict. I don’t really sit down with the numbers apart from tax time, so I don’t have a clear picture of how it is doing. How can I measure performance properly to know if the business is actually working?
Answer: This is something many farmers are feeling at the moment. You can be busy all year, doing everything right on the ground, and still feel like there is nothing left at the end of it.
The problem is that hard work and good performance are not the same thing. A farm can look strong from the outside, but still be under pressure financially.
The first step is to move away from gut feeling and look at the numbers in a simple way. You don’t need complicated reports. You need a clear starting point.
Begin with three basic figures
• Total income for the year.
• Total costs.
• What is left over before drawings and tax.
This gives you a clear picture of where the farm stands. Many farmers are surprised when they see this written down properly.
Once you have that, the next step is to break things down a bit further. For a dairy farm, it helps to look at performance per litre, per cow or per hectare. This shows how efficient the farm really is.
For example, you might be producing more milk than ever, but if your costs are rising faster, your margin could actually be worse. Without breaking it down, that can be hard to see.
Costs are usually where problems build. They don’t jump all at once. Instead, they creep up over time. Feed, fertiliser, contractors, repairs, and electricity can all increase bit by bit.
On their own, each cost might seem small. But together, they can take a big chunk out of your income.
That is why it is important to look at costs in categories and compare them year to year. If a cost keeps rising, it is worth asking why. Sometimes it is justified. Other times, it may need to be reviewed.
Split costs into two types
Fixed costs include loans, machinery, and insurance while variable costs are feed, fertiliser, and vet bills.
Fixed costs are harder to change in the short-term. Variable costs are where you have more control. In tighter years, focusing on these can make a real difference.
Another area to think about is your time. If you are working more hours each year, it is worth asking what you are getting back for that effort? Sometimes, small changes in how work is organised can improve efficiency and quality of life.
Talking to other farmers or joining a discussion group can also help. Seeing how your numbers compare gives useful context. You are not trying to copy anyone, but it can highlight where your strengths and weaknesses are.
One of the biggest benefits of understanding your numbers is better decision-making. When you know where you stand, it becomes easier to decide:
• Can I afford to invest?
• Should I hold off on spending?
• Where can I improve?
Without that clarity, decisions are often made under pressure.
It is also important to check performance more than once a year. Even a simple mid-year review can highlight issues early. That gives you time to adjust before problems grow.
The goal here is not perfection. It is understanding. Once you know what is happening in your business, you are in a much stronger position to manage it.
Farming will always have ups and downs, especially with milk prices. But knowing your numbers puts you back in control of the things you can influence.
Andrew Brolly is fractional cfo with ifac, which is the professional services firm for farming, food and agribusiness.
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