Kieran Coughlan: Cost-cutting: look after the pennies and the pounds will look after themselves

In each parish, there are outstanding farmers, and it’s interesting to observe that these farmers pay attention to almost every detail.

Unlike many businesses which operate behind closed doors, the efforts of these successful farmers are in the most literal sense visible for all to see, with resplendent crops, stock, farmyards, and machinery.

For competitive neighbours, it can be a case of imitation being the sincerest form of flattery.

When the top farmer in their locality is undertaking whatever task is at hand, it can act as a clarion call for a host of wannabes to follow suit.

For the most cost-efficient farmers, a similar focus on attention to detail is applied, in respect to costs.

All costs must be tackled and all expenses should be justified.

Remember the fundamental rule that being cost efficient doesn’t mean simply cutting spending.

An old adage comes to mind, which says ”you have to spend money to make money”.

So being cost efficient means knowing what to spend your money on, what will make you money, avoiding foolishly wasting money, and getting the most bang for your buck.

With that in mind, here are some more tips which may be helpful when tackling your costs.

Buy what you need (not what you want): it sounds obvious, but it’s amazing how many things we can accumulate which we don’t actually need.

Take a look in your garage or attic if you don’t believe me!

Understanding the difference between “want” and “need” is the key starting point here.

For example, I want a new tractor (any free offers in this regard are most welcome!), however I realise I don’t need a new tractor, as the one I have will do.

Many farmers have “if only” syndrome.

This manifests in the farmer convincing his family and more acutely himself that “if only” he had such and such a machine/shed/animal/field (delete as appropriate), then the benefits to his life would be more profit/time/  enjoyment (delete as appropriate).

The reality is that for most of us, farm spending is never finished, nor will ever finish.

Putting yourself under financial pressure to satisfy your “wants” as opposed to your “needs” can have the opposite effect, by creating new unnecessary stress, in trying to make financial ends meet, replacing the earlier pressure of lack of time/money or enjoyment.

Remember too, that many on-farm investments won’t actually make you any extra money.

You can’t take concrete to the mart!

Nor will your cows give any extra milk because you’ve upgraded your tractor.

When thinking about spending, take a large dose of reality, and ask yourself will this spending actually generate a return, and how long will it be before you make your money back (if ever)?

Of course, if money is plentiful, then loosen the reins, and feel free to splurge on all your desires, if you so wish.

Share: for farmers, the amount of duplication across the country is phenomenal.

Many farmers have two or three tractors and a variety of machinery, all of which the next door neighbour also has.

The reality is that machinery represents a huge cost, depreciates to nothing in most cases over time, and in my experience, each of us can only drive one tractor at a time.

Neighbours should consider swapping/sharing/pooling or providing cross-services to each other, especially in the case of machinery that is used only a handful of times per year, and that isn’t particularly weather dependent.

For example, one farmer I know spreads slurry for his neighbour, who in turn provides hedge-cutting services to him.

In this way, both farmers benefit from reduced machinery ownership costs.

Owning machinery jointly with a neighbour is also possible, but can lead to arguments if servicing and usage terms are not properly planned out.

Make use of freebies: cast your mind back to days at the National Ploughing Championships, where hordes of youngsters rifle the stalls and stands in the hunt for a bag full of pens, hats and other accessories.

In the overall scale of things, a few free pens aren’t going to make or break you, but the concept was and remains valid.

Youngsters strapped for cash saw the value in obtaining something for nothing.

For farmers too, there can sometimes be something for nothing. It could be getting nutrient-rich sludge for free, or free pig slurry, or waste by-products of the food and beverage industries.

Sometimes you have to go forage for these freebies, but it might be worth your while.

I leave you for this week with another apt adage “One man’s trash is another man’s treasure”.

  • Check back here next week for my final instalment of cost saving tips.

     


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