Many mixed farmers produce crops not only for sale, but also for internal use as feed for livestock, or seed for future seasons.
With a variety of usages comes choices about where best to allocate crop production, and even what is the best use of available land to maximise farm profitability.
The opportunity cost of using production for one usage over another needs to be constantly assessed, and planned usage may need to change over the course of a season.
A poignant example of this was the 2019 droughts that affected eastern Australia. As pasture dried up across New South Wales and southern Queensland, livestock producers had to turn to purchased feed. The ensuing increase in demand sent hay prices skyrocketing, and astute farmers in South or West Australia redirected hay production away from producing fodder for their own livestock, and instead trucked it hundreds or even thousands of kilometres to fuel the demand. In global markets, the opportunity for profit must be constantly reassessed as factors change.
Typically, cash focused systems have accounted for the quantity of crops used for feed or seed, but rarely consider the cost/income contribution between livestock and cropping. Even Figured’s previous iterations of crop tracking functionality have missed this vital component.
Figured’s solution, inbuilt into our refreshed cropping experience, allows for not only the intent of the usage to be recorded, but also creates a system of Figured-only transactions, to ensure costs and income are appropriately placed as well.
For example, at the start of the season a farmer may decide they need to set aside 100 tonnes of hay, to feed their cattle. This intended usage can be recorded on the harvest, so others with access to the farm can see it too. An amount per unit can be set on the intended usage, and it can be differentiated by usage too, so external sales can be at a different price than internal use. This allows the average price per unit produced to be weighted, producing accurate profit forecasts.
The intended usage can then be entered as forecast ‘Used for Feed’ transactions, to allocate the income to the appropriate crop season, and livestock tracker. This produces accurate gross margin calculations across all enterprises on the farm.
Used for feed and seed transactions are available on both actual and forecast basis, and generate transactions in Figured only, keeping Xero tidy of internal entries. Those farmers or advisers seeking to have Xero reflect those entries still have the option of recording journals in Xero and adding quantities of crop production to them via the Allocator.
Who is it for?
For Farmers - Farmers now have the ability to not only record the intended usage of their crop production, but also appropriately record how much goes where, and attribute a cost to it.
For Advisers and Bankers - Advisers have additional insight into the interaction and opportunity cost between trackers. Quantities and value on hand also feed into the Financial Position, allowing asset position to be accurate for end of year reporting.