Everyone is pretty much convinced that 2008 will be a year filled with red ink for those who only produce and market pigs. The bulk of the problem of course is the unfolding and misguided government policy which is supporting the doubling and maybe tripling of average corn prices with little or no impact on the goal the policy is supposed to address, namely: more freedom from foreign oil.
The cost of this miniscule increase in "freedom" will go far beyond the increased prices users of corn are paying world-wide as a result. I am going to take another stab at those costs soon since more and more is becoming known about the unintended and collateral consequences of all of this. But since we find ourselves here, with legislators of every political stripe in agreement that it is a very wonderful thing, we have to think again about how to reorganize the operation to keep from getting sunk financially.
In keeping with that, I am launching a series about the strategies that you can consider as a means to help right your shaky craft as the waves of roiling cost increases lap over your gunnels and batter your torn sails. Having said that, the first thing I promise in 2008 is to stop using maritime analogies.
There are some categories that I will lump things in as we post this series of blogs. We will take a systematic and thorough tour of the farm and its practices so that you can uncover most if not all of the significant wasters of opportunity profits.
I will start by saying without any fear of contradiction that there are a lot of things that you can do today to lower your costs immediately. I will be sharing a whole list of those things. However, cost cutting, while key to survival and long term health tends to be over done in times like these. Remember that it is profit that you are trying to impact. Profit has TWO parts: Revenue and cost. I am going to do my best to stop you from forgetting about revenue.
There are a lot of ways to increase your revenue immediately too and I will be giving you some imagination boosters in the next few days. The key is to understand the interaction of cost and revenue and to cut those costs which have little or no impact on revenue and to implement those revenue increasers that cost very little to achieve. That is called the low hanging fruit and I will guarantee you that after four or so years of profits, all of you have lots of low hanging fruit that crept in when things were fat.
So stay tuned...the fun begins shortly.
