It’s no longer news that businesses and organisations across Northern Ireland are experiencing rising costs. However, it’s important we remember that not all sectors have been affected equally. The rising costs of running a farming business, or agflation as we like to refer to it, is having a dramatic impact on farmers’ ability to turn a good profit for their produce, writes Jane Gill, Director, RBCA.
Taking dairy for instance; two litres of milk in 2003 was 99p, which two years ago rose to £1.25, and now sits at an average of £1.75 per two litre containers. However, large supermarket chains need to address the impact the cost-of-living crisis is having on the consumer and so they are choosing to decrease prices contributing to a greater cost of farming squeeze. There has been outcry from shoppers as food shortages continue but they’re likely to continue until fair negotiations are had at the farm gate. Reduced food production isn’t helping anyone.
But what can farmers do to ease the burden?
In our experience, farmers are astute and adaptable individuals who have long been early adopters of innovation, subsequently securing jobs for almost 3 per cent of Northern Ireland’s workforce. But some farmers remain at risk of being left behind, especially in this jeopardous climate.
For starters they should consider the benefits of seeking expert financial advice. Advice that will not only deliver gains, but also ease the negative impact current business limitations are likely having on their mental health. Many of our agri customers are reporting that even nominal investments in technology, such as automating operations, can generate quality paybacks in a relatively short period of time. Similarly, being vigilant with soil testing and milk recording can improve performance of your crop or cows respectively.
During these trying times shopping around for supplies can lead to significantly reduced costs. Now isn’t the time to be brand loyal, it’s the time to deliver the best deal for the business. Moving away from your traditional budget is a smart move, and we urge farmers to lean into lean. When dealing with suppliers, it’s also highly important to address your bills in a timely manner.
Tracking your inputs closely is equally important and adopting a cloud-based accounting software is crucial. It not only reduces the time spent tracking financial performance, it also provides financial forecasts and credit advice with suppliers to aid the cash flow of the business. This level of assessment is a non-negotiable when profitability is threatened. In many cases, a farming business will include a variety of livestock or a multitude of crops and in these instances financial recordings should be sufficiently detailed to unlock business performance trends empowering farmers to wind or invest accordingly.
Our hope is that we start to see agflation ease in the next six months but in the meantime, farmers should consider addressing their financial health, and remove business risks and weaknesses therein, to better their position as they endure the uncertain road ahead.
Jane Gill is a business advisor and fellow of Chartered Accountants Ireland. She has recently joined the board at RBCA as director offering a new and positive range of accountancy, audit and advice services to businesses across Northern Ireland, with a clear vision on how to grow owner-managed businesses and provide strategic advice. For more information visit rossboyd.co.uk
