Financial analysis key to profits

How is your farm doing financially?
Comparing your farm’s current performance against your past performance, and that of other similar operations, is an important step in increasing profits.
Another way to describe this is internal and external benchmarking.
Identifying your areas of strength, and areas that require further investigation, can help you focus your management time where it will have the greatest benefit.
The following is Part 1 of an article adapted from John Molenhuis, Business Analysis and Cost of Production Program Lead, OMAFRA:
For the fourth year, the Towards Increased Profits (TIP) report has been sent to more than 11,000 Canadian Agriculture Income Stabilization (CAIS) participants.
Using the CAIS information, the report presents a financial analysis that compares your farm’s performance to its previous five-year average and to other similar farms in your sector.
If your farm is significantly different than the sector average in any one expense, TIP flags it and this may be something you want to investigate further.
TIP recipients are strongly encouraged to take advantage of the Canadian Farm Business Advisory Service (CFBAS) for a more complete, accrual based farm financial analysis.
A qualified private-sector farm business advisor will review your farm records and work with you to develop a financial plan to meet your business goals.
Reach them toll-free at 1-866-452-5558 or visit for more information.
If you were in CAIS for the 2006 program year and did not receive a TIP report, you can request yours by calling the Agricultural Information Contact Centre at 1-877-424-1300.
The sector average is comprised of farms with a similar mix of commodity sales and similar sales levels. Farms are classified by farm type when more than half of total farm sales come from sales of a specific commodity or group of commodities.
For example, a farm with more than half of its $250,000 total sales in field crops is compared to other field crop farms with sales ranging from $100,000-$500,000.
There were 105 different farm type/income range combinations.
Part 2 next week, with some explanations of the TIP report.
(Note: I would like to start a “Hay for Sale” listing. If you have hay for sale, call me at 482-1921).
< *c>Dates to remember
•March 31—Agri-Corp Info Night, Morley municipal office, 7 p.m., with Reg Kaus and Barry Roberts. Update on crop insurance and risk management Programs.
Call Reg at 852-3967 for more info.

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