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By Brooklyn Enes

Analyzing Your profit through farm management software

Today, farmers wear more hats as productivity targets for every acre continue to grow. But how do you determine whether the costs to achieve more yield are actually paying off?
Many farmers have replaced the traditional jumble of pen and paper farm books with the latest digital farm record-keeping software. These farm data management tools are designed to store and track all your farm’s data, including crop and farm inventory management, revenue, projected costs and comparing profit margins across your crops and fields. 
To understand your farm’s areas of profitability, it’s essential to dig into your annual farm reports. Good reports depend on accurate data around all moving parts of your ag business. The best farm data management software can ensure everything is available and shareable with your on-farm team and third-party advisors. Incorporating digital farm management software may simplify your quest to drive efficiency and profitability across your entire operation.  
How does reporting generated by your farm data management system improve the profitability of your farm business?
The latest farm data management software can help you conveniently capture all the data produced across your farm for timely decision-making and year-over-year analysis with annual comparisons and five-year average benchmarking. With that insight into your actual numbers, you can see where improvement or changes to your farm may be required. Your farm data management software supports in-depth knowledge of your farm’s profit margins in several ways. Here are a few key areas:
Accurately capture your yield productivity
Your farm’s yield potential is highly dependent upon your land. With this in mind, it’s essential to analyze how each crop variety performs in each field. When you have an accurate picture of what’s happening at the field level, crop planning – including variety selection and inputs throughout the season – is enhanced.
Perform stronger financial analysis across your entire farm
Farm data management software should give you a realistic picture of your current operation, insight into what you have on-hand, what you’ve committed to and what’s already been sold, helping you estimate what you’ll have to sell to capitalize on market advantages. Your operational cash flow statements including equity, assets and liabilities as well as cost and market balance sheets also play a role in your overall profitability. Using farm management software, you can assign pricing to your inputs and know how costs and revenues may impact your bottom line so you can make confident, on-the-go decisions when managing sales during market highs and lows. 
Realize a stronger return on investment (ROI) by leaving tedious record-keeping and tracking to your farm management software
Once you’ve gained an accurate picture of your yield potential and costs for each crop, ROI is calculated through a comparison of your total expenses and sales for each crop on a yearly basis. You can then focus on investing in the areas that are most profitable for more sustainable crop management
Achieve stronger operational efficiency year-over-year
Farm data management software can help drive profitability as you categorically benchmark your costs, revenue and overall performance. When you make effective comparisons year-over-year specific to your farm, or regionally according to five-year averages, you’ll better understand where you’re at and know where to focus to continuously improve your farm’s economic sustainability. Remember, every farm is unique and ROI is defined by more than just yield
Read more about how farm data management software can help understand cash flow and profitability in our Cost and Revenue Tracking blog series

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