How to Get Control of Rising Operating Costs on Your Farm

Posted on July 21, 2022

Producers across Canada are feeling the financial strain caused by record-high inflation and input costs. According to CBC, Canada’s inflation rate is at 7.7%, the highest it’s been since 1983.

The U.N. Food and Agriculture Organization’s Global Input Price Index (which covers energy, feed, fertilizer, seed, and pesticides) has also reached a record high in 2022, causing concern for producers everywhere. The conflict in Ukraine has further exacerbated rising costs, as sanctions on Russian imports are preventing Canada from importing its yearly 660,000 to 680,000 tonnes of nitrogen fertilizer.

Despite food prices being at an all-time high, potential profits for producers are being slashed by significant inflation on diesel, fertilizer, and other resources necessary for successful operation. Fertilizer prices have increased by 200% in some cases.

In addition to financial challenges, factors such as the weather and supply chain disruptions create additional stress for producers as they decide how much risk to take on. If 2022 is any indication of where 2023 might be headed, it’s more important than ever for producers to understand their breakeven point and the risk of taking on increased operating costs.

Here’s what you can do.

Compare your operation against provincial benchmarks

Provincial benchmarks are a key tool in helping producers mitigate risk and ensure financial efficiency on their farms. By measuring the financial health and performance of your farming business against farms throughout your province, you can determine how well your business is performing.

Although it’s important to see how you stack up against provincial benchmarks, your own fixed and variable expenses are essential for planning for financial success. This is where GrainFox comes into play.

What is the GrainFox ROI Calculator?

The Return on Investment (ROI) Calculator is a powerful tool designed to help you quickly tabulate your fixed and variable expenses and calculate potential returns. You can input expenses for a multitude of existing categories, including fertilizer, inputs, machinery, labour, and many more.

Using either provincial benchmarks or your own farm expenses, you can calculate potential ROI, providing necessary information to help you make the best decisions for your farm business. Comparing your operation against others in your province will give you a good idea of where your business stands in the grand scheme of things, but using your own business’ expenses will provide personalized results, allowing you to make solid, informed plans.

Why it matters to you

Agricultural operating costs are rising rapidly, making planning and strategizing all the more important for producers all over the world. Having the right tools and the right time to provide you with essential information can make it easier and can even help bolster your long-term success.

Taking as many factors into consideration as possible when making financial decisions on your farm can help mitigate the risks experienced by producers in 2022 and beyond. There is no better time to take control of your farm wealth strategy than right now.

How ROI Calculator fits into your strategy

Understanding your potential profitability can help you mitigate shortfalls and plan accordingly. ROI Calculator cleanly lays out your expenses for you so that you can easily identify areas for improvement across your operation.

It also helps you plan for more than just profit. Thinking about buying a new combine or tractor this year? ROI Calculator can help you determine where you might be able to cut back on expenses so that you can allocate more money to new machinery.

Combined with all the other tools and features available in the GrainFox Smart Plan, ROI Calculator can help streamline your farm wealth strategy so that you can get the information you need, make decisions, and get back to your already busy day.

The best part is that you can access ROI Calculator anywhere and any time, right in the GrainFox app on your smartphone or tablet or even on desktop if you have a few minutes to sit down at a computer.

Get started with GrainFox today

With a whole suite of useful tools and features and even more on the way, there’s never been a better time to get started with GrainFox. Try it FREE today or book a live demonstration with one of our dedicated Customer Success Specialists.

Start your three-month free trial today.

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