| | Alberta Agriculture and Food (AF) regularly publishes a variety of benchmark and applied research materials for use by agriculture industry clients. These materials are generated directly and indirectly through the AgriProfit$ Business Analysis & Research Program.
What is AgriProfit$?
AgriProfit$ is a business analysis and research program operated by AF's Economics Unit. The primary roles of the program are to (1) deliver sound business management benchmarks and information, and (2) create applied research information, assisting producers in:
- evaluating their own business' performance
- assessing production, management and technology options, and
- charting their business' course, in an economically sustainable fashion.
Ultimately, the goal is to provide better business management information to knowledgeable business managers
.
Where does this information come from?
Each year the AgriProfit$ service is offered to Alberta crop and forage producers. Participating producers receive a business analysis documenting the production, economic and financial performance of their operation for that business year. The strength of the program is two-fold:
- AgriProfit$ employs accepted, consistent analysis standards. Individual and "group" results are reliable and broadly comparable, and
- AgriProfit$ covers a breadth of operations, regionally and by business type. The results (benchmarks and research information) address many information and management needs.
The strength of AgriProfit$ is in its base of producer participants. Using information that comes from crop and forage producers throughout the province adds a degree of realism and practicality to the economic and financial analysis materials published.
What's in it for producers?
Participation in the AgriProfit$ program requires an investment in time from producers. It is essential that participating producers see some direct value in return for their time. AgriProfit$ participants receive:
- an economic analysis of their farm enterprises, driving at unit production costs and returns for the specified commodities,
- a financial analysis of their "whole farm" business, revealing financial performance, strengths and weaknesses,
- benchmark comparables to assess the productive and economic performance of each of their enterprises, and the financial performance of their farms as compared to their "peers" (by region, size of operation, type of operation, management practices, etc.), and
- newsletters, bulletins and analysis tools containing AgriProfit$ methods, information and data.
Participants are in the position to measure performance and take active management control of their business. AgriProfit$ provides better information and tools to make better business management decisions.
How can AgriProfit$ help producers?
The link between AgriProfit$ and farm business success can be summed up by two phrases:
1. "You Can't Manage What You Don't Measure!"
To reduce unit costs and improve profitability, the first logical step is to measure the "current position". A basic business analysis, including key enterprises and a roll-up to the farm financial position, is a starting point. Each added year of analysis adds another dimension in measurement that shows progress, opportunities for change and/or potential areas of weakness.
These same unit cost profiles and farm financial analyses form the basis of financial projections and operational or investment-based budgets. An individual's business analysis becomes useful in identifying and managing profit centres within the farm and farm capital investment activities.
2. "Who's in Control of this Business, Anyhow?"
Without a business analysis, for all intents-and-purposes, a farm directs itself. Knowledge of unit production costs and financial performance helps producers focus strategically on necessary short and long term changes. It provides a basis to measure success of each change and how each of these improves farm profits, with acceptable risks. The manager is now in control.
AgriProfit$ benchmarks
A number of AgriProfit$ crop and forage enterprise benchmark reports are available through the AF "Ropin' the Web" site . These reports present unit cost and return profiles along with productive and financial performance of "average" and top management groups for the province and by geographic region.
It is important to note that these reports do not suggest that all producers in a region have the same "average costs of production". In fact, a significant amount of variation from one farm to the next is normally observed, so application of averages to an individual situation requires caution. However, these benchmarks can be very valuable in assessing the competitiveness of a farm and in identifying a farm's operational strengths and weaknesses.
Other AgriProfit$ information & tools
The AgriProfit$ database is used to create "knowledge nuggets" for producers. It supports applied research and analysis into topical production economics and finance issues, ranging from assessments of specific production practices (eg. conventional seeding, crop rotations, crop inputs) to business structure issues (eg. land rent agreements).
CropChoice$ is a budgeter created to key in on risk management strategies using unit costs and farm financial information derived from the AgriProfit$ analysis.
The AgriProfit$ business analysis service is also available in conjunction with the Canadian Farm Business Advisory Service (CFBAS) process. CFBAS consultants work one-on-one with producers. They build the strengths of enterprise costing into the farm's operational and strategic (long term) levels, which are invaluable to many farm managers.
Closing notes
Confidentiality of each participant's information is a critical element of the AgriProfit$ program. Every precaution is taken to maintain the privacy and confidentiality of each individual's information. While individuals receive their own business analysis, benchmarking will only be undertaken when the "individualism" of each group can be masked.
Should you have any questions or comments about the AgriProfit$ Business Analysis Research Program, please contact us toll free by dialing 310-0000 followed by 780-422-3122 (Karla Bergstrom), 780-427-5390 (Dale Kaliel) or 780-422-4054 (Nabi Chaudhary). For immediate assistance you can also call the Alberta Ag-Info Centre at 1-866-882-7677 to speak with a Business Mangement Specialist. |
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