GSL Diagnostic Model

Farming is about managing combinations of resources to produce an optimal profit from all available resources. Profit relies on this combination being achieved efficiently plus the achievement of maximum profit relies on the return from any additional input exceeding the cost of that additional input. This is not an averaged return over the total inputs.

In other words Marginal Cost must not exceed Marginal Revenue.

Key points:

  1.  Model optimises the balanced allocation of resources.
  2.  Based on energy its costs and flows
  3.  Calculates numbers of stock to best utilise feed resources available.
  4.  Matches feed demand with expected feed produced
  5.  Reports single $ comparative profit value for the total farm.

Reports include:

  1.  Pasture average cover per 2 weeks.
  2.  Supplements cut/used/bought/fed/cost.
  3.  Applied nitrogen plan based on contribution to profit
  4.  Animal production and requirements figures.
  5. Timelines for feed, stock, sales/purchase.
  6.  Reports form basis for on-going monitoring and management control..
  7. Reports can be updated and farm model run to reflect current position and provide options for change.

Farm management has been historically based on the premise of “More production, more profit” and this has become entrained thinking but general farming industry profit performance now show this assumption needs re-evaluation as farmers generally have improved there farms to the point where efficiency of production is more significant in profit performance than total production from an averaged cost.

Current computer-driven analysis of each operation is now often seen as the means to control management rather than to provide data with which to inform management on available resources and how best to allocate (manage) them to maximise and sustain profitability.

This new ideology of the business of the firm has subsumed the importance of the economics of the total production of the farm.

Each farm business has a unique set of resources in the form of land, capital (fixed assets, stock, plant and machinery), management, including financial expertise, labour, other inputs and time. Such resources are always in a state of change either from natural (climatic) or applied (management) effects. Any management analysis must be capable of rapid re-allocation of variable and at times, fixed resources as conditions change, sometimes within short periods of time.

There is an increasing tendency to assume that production and financially based plans should achieve predetermined results. This has resulted in on-farm decisions being delayed when specific financial and production targets were required to be met

despite changing circumstances particularly those driven by climate.

Conversely, optimal resource allocation methodology makes timely use of monitored data. As a consequence, management is able to retain flexible control and learn from comparing actual with expected outcomes. This alters the perception of how the farm system integrates resources over time and that striving for 100% efficiency of use of one component may ultimately be counterproductive if some other resource is under utilised. The modelling process is also able to adjust for specific managerial objectives and associated risk.

Farmer comments on GSL modelling software:

Reduces risks

–    “The main strength of the product is that it allows the farmer to see what would happen if things were done differently, it allows them to trail different techniques without actually having to implement them.”

–    “It reduces the risk for farmers who are toying with a farm

management decision.”

–    “The system allows you to have an indication of profits and allows for more efficient planning, which is critical for any farmer today.”

–    “It allows you to view options before actually implementing them.”

–    “The model does the comparison work for you, so you can take the

best option for your farm.”

–    “It gives you the ability to critically think about your farm in a way that you never have managed before.”

–     “The system allows farmers to make informed management decision

about their business.”

–    “We are able to calculate profits and plan for the future more accurately.”

–    “Every farmer should be using this, they can’t afford to keep on making decisions based on their own thinking, this allows far more fundamental planning.”

Time saving

–    “The program is a time saver, for if you tried to work the stuff the program does for you, it would take a lot longer.”

–    “In the early days of the system it used to take overnight for it to

compute the outputs, now days it take 5-10 minutes.”