Wednesday, October 28, 2015

Making the Margin

Knowing where you are at will help you know where you are going....
 Many folks question me regarding commercial poultry production and its true sustainability.  Many of the farms I work with are family owned yet have grown over the course of 60-100 years of operation.  At the same time I work with folks with smaller flocks, who sell directly to their customers.  In each case for me to be economically sustainable is where a farm pushes past break-even for a sustained period of time.  Enough so to reach the goals of the farm.  So, each farm can make it if they: 1) understand their cost structures 2) prices their products properly for the market they are trying for, and 3) never invests more than what they are getting out of the system unless they wish to.  This point of diminishing return (MR=MC) at times hurts many farms regardless of size.  So, by buying inputs in bulk, trucking only with full loads, and moving high volumes of product works for some.  Keeping costs to a minimum, producing a product that will sell in certain markets works with others.  Each system fulfills the needs of the market, and brings a return to the farm.  Whichever system employed, it takes keeping great production & financial records to know where you are at all times.  And in a highly diversified market each system is needed to fulfill the demand of their customers.