Good farming is about doing everything right, day in and day out. Otherwise all those “one percenters”, or small variances in kpi’s, can conspire to hit the bottom line in a big way. Using a simple fish farm model and some common assumptions for every 1000mt produced, being off your survival target by one percent can impact margin by Aus$59,000 (€45,937.83) (less biomass to spread costs over, less biomass to sell). Harvest weight is down by 50g on a 4,000g target reduces margin by Aus$66,000 (€51,388.081). FCR increases from 1.3 to 1.35 costs $76,000 (€59,174.154). So on just three parameters we have reduced our margin by Aus$201,000 (€156,500.066) or $0.20/kg. On a 10,000mt farm it would be a Aus$2m (€1.557 million) hit!
We have not touched other variables such as feed price, labor and overhead cost, yield, selling price, etc. Hopefully all the parameters do not conspire in the same direction; hopefully some are positive variances and balance out the negative. But this is a common problem, “the overly optimistic budget”. For some reason we often put in “best case scenario” assumptions in our budgets across a wide range of variables and then spend the rest of the year explaining why they were not achieved. While it is important to strive for best performance, being too optimistic can be misleading and take the focus away from the real issues. More on this later.
Back to the opening sentence. For some reason we are more relaxed about issues on the farm than, say, the issues in the processing plant. The feeding equipment breaks down on the farm and we lose a few days feeding. The results of this breakdown may not be apparent for several months when the fish are harvested, so we are not in a panic. Compare this to your filleting machine breaking down in the processing plant, you are not able to supply your customers, and everyone will be jumping around to solve the problem right now. Then reflecting on how it happened, what is wrong with the maintenance program, etc. Both scenarios affect your bottom line in a significant way, but one is screaming at you and the other is not.
We have “big dollars” in our business and small variances can have a large impact. Knowing what to do and having a culture of doing everything right day in and day out can be the difference between profit and loss.
Article from Smartaqua
This blog is written by Martin Little, The Aquaculturists, published and supported by the International Aquafeed Magazine from Perendale Publishers. To get your copy of 'PPLAPP' click here.
We have not touched other variables such as feed price, labor and overhead cost, yield, selling price, etc. Hopefully all the parameters do not conspire in the same direction; hopefully some are positive variances and balance out the negative. But this is a common problem, “the overly optimistic budget”. For some reason we often put in “best case scenario” assumptions in our budgets across a wide range of variables and then spend the rest of the year explaining why they were not achieved. While it is important to strive for best performance, being too optimistic can be misleading and take the focus away from the real issues. More on this later.
Back to the opening sentence. For some reason we are more relaxed about issues on the farm than, say, the issues in the processing plant. The feeding equipment breaks down on the farm and we lose a few days feeding. The results of this breakdown may not be apparent for several months when the fish are harvested, so we are not in a panic. Compare this to your filleting machine breaking down in the processing plant, you are not able to supply your customers, and everyone will be jumping around to solve the problem right now. Then reflecting on how it happened, what is wrong with the maintenance program, etc. Both scenarios affect your bottom line in a significant way, but one is screaming at you and the other is not.
We have “big dollars” in our business and small variances can have a large impact. Knowing what to do and having a culture of doing everything right day in and day out can be the difference between profit and loss.
Article from Smartaqua
This blog is written by Martin Little, The Aquaculturists, published and supported by the International Aquafeed Magazine from Perendale Publishers. To get your copy of 'PPLAPP' click here.
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