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Leveraging Your Competitive Advantage

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Grain, Young, Beginning Farmers
Home > Education & Events > July 2015 > Leveraging Your Competitive Advantage
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When assessing a grain producer for their competitive advantage/s, here are the management areas we consider: Are they a low cost producer? What does it cost you to produce a bushel of corn or soybeans compared to your peers? In order for a producer to know this they have to have a good set of records. Good financial management is always a competitive advantage.

Production ability as measured by APH. 

If you can’t produce good yields profitably, there is a need to investigate this further.

Overall Land Costs / Crop Acre.

Depending on your APH, how competitive is this? If your corn APH is >185 bu. /ac. - is your overall land cost <$250/acre? At what land cost level are you no longer profitable?

Land Debt/Crop Acre.

Depending on the quality of the land, <$2,000 land debt/crop acre could be considered a competitive advantage, giving you the potential to grow your business should more land come available at a competitive price.

Machinery & Vehicle Investment / Crop Acre.

<$575/acre. The thriftier you are here, the better return on your investment. Can you out farm someone who is @ >$1,000 Machinery & Vehicle Investment/Crop Acre?

Working Capital Position.

Grain producers who have Working Capital/Adjusted Gross Income >30% or >$500 of actual Working
Capital/Crop Acre have a competitive advantage over producers with limited liquidity who cannot weather multiple years of crop losses.

Marketing.

It doesn’t have to be a complicated plan to get good results, but in order to be competitive you do need a written, thought-out plan.

Risk Management.

Not only can you sleep better at night knowing your crop and business are protected, it also allows you to potentially market at higher levels.

There are so many components that come together to make a successful operation. Establishing your competitive advantage and emphasizing that management strength in your business can give you the best chance of achieving your goals.
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