Fixed operating costs (farm overheads)
Farm overheads include rates, licences, water, administration etc. They represent about 5% of total farm costs and thus small changes have a small impact on overall farm profit. Nevertheless, there are management options to reduce fixed overhead costs including:
- Review insurance policies – are you over insuring the value of your crop, plant or machinery? Can you withstand some risks? Shop around to other insurance brokers. Use your networks to compare value.
- Licences – see if there are options for concessional licences.
- Water, power, internet, phone – costs are a function of usage. Select appropriate plans. Regarding water regularly check for leaks in pipes/troughs that need fixing.
- Consider employing casual administration support to keep accounts and records up to date. Good organisation and presentation of records should reduce time charged by consultants and accountants. Furthermore, administrative support will allow you to allocate more time to reviewing & analysing the accounts to evaluate the performance of the business and make further operating and investment decisions to improve profit performance.
- Leasing more land may spread some of the fixed costs eg. consultant, accountancy fees.