When it comes to farm oversight, understanding where you are, in terms of financial information and accounting is vital. Growth Path Accounting starts with asking where you are now and what your information goals are. Growth Path Accounting can be narrowed down to three objectives:

• Leveraging the technology available to you through software and applications
• Learning advanced accounting skills at your own pace  
• Preparing you and your operation for future expansion to integrated farm records
  
  

To get there, you first need to understand Growth Path accounting and all of its separate parts. That informs not just your understanding of where you are and which accounting method you’re currently using, but also where you’d like to be and the advantages of the other accounting methods available to you.

Farming is about growth. It’s the primary focus from crop and livestock to the back office. Crops don’t grow from seed without external factors, nor does livestock. So how can we hope for our overall farm or ranch operation to grow without considering all the growth factors that allow the business side to thrive or wither?

And, when we see a challenge or opportunity to address a production shortfall, we look at all the options on the table. The growth path decision tree applied to farm accounting allows us to do the same. We look at the accounting decisions that impact our decision making process and assess how we can use accounting methods to improve our operations and profitability.

As a farmer, your day is filled with tasks. As a farm manager, your day is filled with decisions. From small to large, every decision you make will impact current and future operations. While a farm ERP solution helps you gather the data you need to make those decisions, you’re still left with options on when and how you implement it. It’s one reason we suggest creating a growth path decision tree, even when it comes to accounting. Each decision leads to more decisions and different outcomes. So, understanding the accounting implementations options before you, and the ways those decisions can impact your growth, is important.

The world population continues to grow putting more and more pressure on not just natural resources but food production as well. Farmers and ranchers must find ways to meet those demands while still meeting their own goals for growth and success. Thankfully, there’s much more available, in the world of ag tech, to help you do both.

The agricultural community is notoriously slow to adopt new technologies. While it’s easy to see yourself putting off that autonomous tractor for a while, there are an abundance of ag tech opportunities out there for farms and ranches, both small and large, to be leveraging to improve productivity and profitability.

Quick Links

There may be a lot of things that happen on the farm that present challenges, but for a lot of farms, nothing compares to the challenges faced in the back office. While creativity and ingenuity are great assets in the field and barn, the back office requires a different approach. For example, when it comes to applying general accounting principles to an industry that doesn’t necessarily function on other standard business principles, finding a balance between ingenuity and innovation and the right tools, solutions for back office and farm accounting problems are available.

Assets on the farm have value, but so does versatility. For decades, engineers have tried to find ways to increase the versatility of farm equipment and versatile products with multiple markets often reign supreme. Similarly, versatile team members who can move from task to task and handle a wide variety of responsibilities are coveted. The same should be true for your ag tech, specifically, the farm accounting software you use.

There are quite a few aspects of farming that are unpredictable. The best we can do is be prepared and ride out those challenges. We’re used to situations and plans that need to evolve. We’re used to being responsive. Similarly, as farmers, we’re used to production and marketing cycles. They dictate just about everything we do from planting and harvesting to breeding and market. The advantage with those cycles is they’re predictable. Accounting for those cycles, however, is a different beast.

While pastoral images and pictures of farmland often suggest a kind of quiet peace, anyone who’s worked a farm or ranch knows that, most days, it’s far from tranquil; there are just so many moving parts. At any given moment, one might be pulled in a different direction to handle evolving situations or address pressing needs.

But, what if there was a tool to help manage all those moving parts, including outside vendors and suppliers, ensuring that supply needs are met in a way that saves both time and money? Farm ERP software is designed to do just that, including helping with vendor management.

Prior to the arrival of drones, farmers relied on aerial footage from manned aircraft or satellite images to provide a valuable view from above when it comes to their fields and land. In the 1980s, drones or unmanned aerial vehicles (UAVs) appeared on the scene, but they still weren’t  cost-effective for most farmers.

Today, no one underestimates the value of drones in farming. Even that technology has grown exponentially and farmers are learning how to leverage it to improve their operations. Still, all the data in the world can’t help with farm management if there’s no way to aggregate and organize it in a way that delivers the insights you need to plan.

That’s where ERP software comes in. While it’s been in existence for quite some time, advances have provided significant improvements in agricultural ERP software that, much like a drone, can provide a comprehensive and detailed view from above for your farm operations.

Every February, farmers and ranchers from across the country gather at the National Farm Machinery Show which showcases cutting edge farm equipment and machinery to improve farm performance and help you get the job done. What you will rarely find at a show like that, though it’s equally important, is farm accounting software. Both machinery and ERP Software for the farm  have the power to pave the way for farm growth and success. Understanding how to leverage farm accounting to ensure efficiency and accuracy may just come down to how you use the tools you have at your disposal.

MacGyver might have had the television show, but when it comes to working with what’s at hand to get a job done, few people are better at this than farmers and ranchers. We’ve become accustomed to improvising and making what we have work when the right tools or resources aren’t always available. 

In fact, we’ve been doing this for years in the field and in the back office. When it comes to agricultural accounting, we’ve been using tools designed for standard business accounting despite the glaring differences.

While creativity and ingenuity on the farm are definitely assets, there’s plenty to be said for having the right tools for the right job, especially when it comes to efficiency.

Farms don’t exist in isolation; they’re part of a system with multiple variables that impact crop growth, livestock viability, and farm profitability. That ecosystem is carefully monitored as any change in any single variable ripples throughout a farm’s operations and management. For centuries, a failure to predict the impact of those changes or even forecast them could be catastrophic for a farmer. Thankfully, ag tech has grown by leaps and bounds meaning we have the capacity to understand far more about our land, our crops, our livestock, and our operations than ever before. That understanding and the leveraging of that data leads to farm profitability.

Agricultural software is a bit like land management. There are built in features that make acreage more attractive and more useful, but ultimately, how well you know the land impacts your ability to optimize it. But, if you don’t understand the layout or properties of the land and the local environment, it can reduce your  return on investment.

Farm management software isn’t that different. Every agricultural software platform has applications designed to help farm and ranch managers maximize their operation. With agricultural software, if you don’t understand what the programs are capable of, you may be missing ways to increase efficiency, decrease costs, and forecast your farm’s future.

 

 A 2017  K•Coe Isom study showed people who spend time collecting and interpreting financial and operational information will average higher profits and better solvency than their peers. The research also found “power users” of information had greater labor efficiency, generating more revenue with the same number of employees.  Finance and growth consultant Peter Martin defines best practices that pay in the February 2021 Farm Journal.

 

"Labor and machinery variances are just awesome," according to the latest corn and soybean cost of production benchmarks presented by John McNutt, LattaHarris and Moe Russell, Russell Consulting Group at the FBS Ag Software Success Summit on August 20, 2019 in Moline, Illinois.

Other observations by McNutt and Russell:

Ag experts, farm owners and accountants from 13 states and provinces met in Moline, Illinois, to catch up on tech trends and sharpen their management and accounting skills at the Ag Software Success Summit, sponsored by FBS Systems, Conservis,  LattaHarris CPAs, AgCompass and the Mutual Agricultural Software Alliance (MASA).

Mark your calendars for Monday, August 19 through Wednesday, August 21 for the premiere software knowledge and networking event for agriculture's information managers.  This year's Software Success Summit theme is "Moonshot" as we celebrate Apollo 11's 50th anniversary and unveil a high-aiming software development plan funded and directed by MASA (the Mutual Agricultural Software Alliance). 

Presented by:

(Part 6)

The following is a summary of a presentation entitled "Financial and Management Accounting Software--Developments, Implementation Challenges, and Integration Issues" made in July 2018  to the Farm Financial Standards Council Annual Conference in Champaign, Illinois.

If you’re struggling with a main street accounting program today, it might be time to reach out to a higher-level, farm-focused program for...

"What is the value of this kind of information if I can get it delivered to me in a more integrated fashion?"

 

Learn new farm management and marketing skills and network with other producers from around the country at the 2019 Farm Futures Business Summit

For more information or to register click here.