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Resource Consulting Services offers management advice to agriculture industry

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article image Management advice to agriculture industry

Managing a livestock production enterprise is not easy, but there are ways and means of making sure it’s working.

According to Resource Consulting Services , businesses must calculate each animal’s contribution before determining how to take it forward. A number of factors need to be considered.

Management needs too know the cost of doing business. This includes expenses that do not change much in relation to the number of animals held. All such costs are necessary for the business to continue.

If the business runs an enterprise other than livestock, then a percentage of the CoB needs to be allocated away from livestock.

Secondly, management has to know how many animal units (AU) carry this cost. This is the actual stocking rate or carrying capacity converted into a single standardised number, run over a one year period.

Finally, management needs to ask how much does each animal unit contribute.

Gross Margin (GM) is what is left after deducting the direct costs of production (freight, selling, supplements, animal health, fodder, etc. and opportunity cost) from the gross animal production (which includes changes in inventory).

By dividing CoB by the number of animal units, management will find how much each AU must provide to maintain the business. By dividing GM by the number of AU, they canl work out how much each AU contributes to the CoB.

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