Over the last few months, the industry talk has been about the price being offered to producers. I've been paying a lot of attention to these discussions, particularly as I am passionate about helping producers become more profitable.
So it was timely today to come across a press release from MLA, http://www.mla.com.au/News-and-resources/Industry-news/Kilos-and-costs#hp=highlight2&article=Cost%20of%20production
Knowing your Cost of Production is the first step for any producer focussed on improving their profitability. I was interested to note a big variation in the Cost of Production among the producers identified in the MLA article, ranging from $0.79 to $3.92. The average across the group of 72 producers was $1.22
So what does this mean. I reckon Cost of Production is the first step. The second step is to work out your average price per kilogram of beef sold. The difference between your Cost of Production and your average price per kilogram is your profit margin.
When you know what your profit margin is, then you can start to focus on those enterprise activities which will lead to an improvement on your margin.
As the Principal of RaynerAg, I've been working with several producers on a few exciting ways to improve their profit margin. I reckon we will make some big differences in the next year, and I'm excited about the opportunities we have come up with.