Farm inventory app by Farmsoft delivers precise farm inventory control, reduce farm inventory waste and shrinkage, track farm inventory to individual employees, farm inventory stock-take, farm inventory traceability.
Farmsoft farm inventory software reduces inventory waste, shrinkage, and ensures traceability. Farmsoft Farm Inventory software delivers new ways to increase accountability of farming materials & inventory, and ensures reduced production costs farm-wide, resulting from lower waste and shrinkage.
The Farmsoft inventory software provides a high level of accountability of production materials, allowing multi-site, multi warehouse tracking of all farming materials at all times. Access to accurate stock take information of all farm materials is critical for improving ordering accuracy and cash flow. Shrinkage or waste can be easily detected and traced back to operational areas, departments, or employees, allowing the farm to maximize return on investment for all materials. Downloadfarmsoft Farm Inventory specifications now.
Reduce farm inventory waste
Increase inventory accountability
Reduce waste and increase the accuracy of inventory allocations to specific cost centres
Enhanced traceability reduces business risk
Contact a farmsoft consultant today for a free farm inventory consultation.
Easily allocate traceability information for all inventories, allowing rapid recalls and traceability processes to meet the highest international farming and food safety standards. Simple stock-take processes ensure continual accuracy of stock-take information across the entire farm.
Optionally allow ad-hoc creation of inventory on the fly, this feature allows rapid creation of inventory records during the farm task record gathering process. Traceability is still maintained to a high level for clients using this feature. This feature reduces administrative requirements and expedites record keeping. You can easily disable this feature from the farmsoft Settings module. Install the farmsoft Farming App to go mobile with your farm inventory management today. Farmsoft farm inventory management software includes the following features:
A farm inventory is a list of assets - anything of value - that can be sold. The inventory list can include the price of the item, the value of the stock, the year it was bought, the expected lifetime and the depreciation in value.
Farm Management: The Importance of Inventory Management
Running a successful agribusiness is not easy. To achieve profitable and successful production, farmers have to be skilled in various aspects of farm management. In other words, they have to be successful managers, accountants, consultants, and scientists who are very good at performing all types of field activities. Luckily, we live in the era of modern agriculture in which farmers can rely on smart AgTech solutions to keep accurate records and manage their farm operations. Despite advancements made in AgTech software, one thing can significantly determine the success of crop management and farm operations – that’s inventory management.
Table of Contents
What is Inventory Management In Farm Management Software
Poor Inventory Management Leads to Cash Flop
Still Don’t Have a Suitable Inventory Management Software?
Easily Manage Your Inventory With Farmsoft
Digitalize Your Farm Management Today
What is Inventory Management In Farm Management Software
Inventory – in simple words it means keeping inventory levels, raw materials and other products accounted for and in stock. For example, agricultural inventory, includes various fertilizers, pesticides, fuel, or seeds that farmers use in their production.
Although it doesn’t sound like a big deal, healthy farm inventory management is one of the most important habits of a successful small business. Multiple aspects of agricultural production are closely related to inventory management. These are activity planning and execution, activity record keeping, ensuring complete production traceability, and planning seasonal budget.
Poor Inventory Management Leads to Cash Flop
Occupied with their daily field operations, farmers often forget that healthy inventory management is a very important aspect of their production. The consequences of poor inventory management can be significant to both farm productivity and profitability. The most common example of how inventory management impacts the success of crop production is at the time of crop sowing.
Every farmer knows that most crops, especially arable, need to be sown or planted at a specific time of the year. In order to provide the best conditions for crop growth, sowing needs to be performed during that specific period. If growers start sowing wheat and then suddenly realize that they are running low on seed stock, they need to pause sowing and make the purchase. Meanwhile, certain unfavorable conditions may occur. There is a huge possibility of a rain period and lower temperatures that can greatly impact the germination as well as the final yield.
Sowing a field with a tractor for optimal growth
Another common example of poor inventory management is during the harvest period. Without insight into the real-time inventory stock levels, farmers can’t prepare an adequate quantity of bags, boxes, or pallets for fruit storage during the harvest. The time needed to make a purchase of stocks prolongs the time of harvest, thus affecting the fruit quality and final yield.
These two examples mentioned above are just a drop in the ocean of similar situations of improper farm inventory management.
Step 1: Business Inventory
Business Planning -- Business Inventory: Inventorying Resources and Describing the Current Business
Compare the business with peer businesses
Subsequent steps in the planning process offer opportunities to
Enterprise and Whole-farm Analysis
Farmers often initially describe their operation according to the commodities they produce or the enterprises they operate. For example, a farmer may indicate the primary enterprises with a statement such as "I (we) operate a _______" and fill in the blank with a phrase like "small-grain farm," "wheat and cow-calf operation," "potato and durum farm," or "feedlot."
Farmers usually follow such a statement with a more complete list of commodities they produce or enterprises they operate. Identifying each commodity or enterprise, whether it is a primary or an ancillary activity for the farm operation, reduces the likelihood that secondary enterprises are overlooked when analyzing the current farm business and considering its future potential.
Land Resources and Productive Capacity
Land often is a second characteristic farmers mention in describing their operation. A complete inventory of land usage would indicate the acreage that is
A summary of the acreage used in the farm's primary enterprises also can be helpful; for example, 400 acres of wheat, 250 acres of corn, and 590 acres of pasture. But secondary products or uses should not be overlooked, such as straw for bedding, fall grazing, or fee hunting. The inventory also may indicate the typical yield for each of the products. Past production records are valuable in completing this activity.
It can be helpful to briefly describe the characteristics of each tract. The description probably begins with information about the number of acres in cropland or pasture, but since the emphasis during the planning process is on selecting a strategy for operating the farm in the future, the inventory also should report what can be produced on the land. This production potential is referred to as the land's productive capacity.
Inventory of Equipment and Buildings
The next activity can be developing a list of all non-land assets used in the business. The depreciation schedule already lists equipment and purchased breeding livestock, and is a good document with which to start this process. The farmer would add to this schedule:
equipment and purchased breeding livestock that have been fully depreciated,
raised breeding livestock, and
non-breeding livestock.
Farmers who maintain a detailed balance sheet may have much of this information already compiled, in which case, a copy can be inserted in the manual as part of this section.
Like land, the inventory of equipment could include an assessment of the asset's productive capacity. For example, a farmer does not own a tractor so it can be sold for $37,000. Instead, the farmer owns a tractor to use it in the farming operation; perhaps to complete 1,000 hours of work each year. If the farmer, during a later step of the planning process, selects enterprises that annually require 1,500 hours of work from that tractor, the farmer will have to make some changes.
Another example of productive capacity of equipment would be a tractor and drill that can be used to plant 150 acres of grain in one day. This is somewhat different than thinking about the machines as having an undepreciated cost of $32,000 or a resale value of $45,000. If the normal planting season is about 12 days, the farmer would be able to seed 1,800 acres (150 x 12). Plans to expand the operation to 2,400 acres of small grains would indicate that the present seeding capacity is likely to be inadequate.
Additional factors in describing equipment could include alternative uses for the equipment; other enterprises in which the equipment can be used; and the age, state of repair, acreage capacity, ease of transporting, useful life, and obsolescence of the equipment. Encumbering liens that may restrict disposition of the equipment also could be part of the inventory.
A broader category for the timing of labor would be the seasons. Crop producers may want to distinguish labor available in spring from that which is available during the summer or fall. Having a large supply of labor during the summer when most is needed in spring and fall does not assure the business will complete its tasks in a timely manner. The farmer has to decide the best method of describing when labor is available but categorizing labor according to time is one procedure to accomplish that. The issue of timing will resurface throughout the planning process.
Another challenge could be documenting the labor of an individual with several skills. For example, a multi-skill person could spend 11 hours in a day's time completing management tasks, or 11 hours operating equipment, or 11 hours handling livestock, or 11 hours doing any combination of these tasks; but the person could not spend more than 11 hours working that day. Subsequent steps of the planning process offer an opportunity to revisit this question; therefore, it may be adequate in this step to indicate that the individual's skills are available in any combination but the total is limited to the time the person has for work activities.
Resources Needed to Operate the Farm
The activities of this step, thus far, have focused on what resources are available. The next activities concentrate on the resources necessary to operate the present farm. After compiling these two sets of information (available resources and needed resources), farm owners are prepared to assess which resources are inadequate and which are under-utilized. In either case, some changes in the farm business may be necessary.
Enterprise Budgets
Developing a description of each enterprise is one procedure for compiling a record of what resources are used in operating the farm. A component of the description would be an enterprise budget that includes information about the quantity produced and the revenue generated. Some enterprises produce several sources of revenue. For example, a wheat enterprise could generate income in the forms of grain sale, government program payments, crop insurance benefits, straw, and fall grazing.
A detailed description of each enterprise also would include a list of inputs, the quantity used, cost per unit of input, and total cost for the input. For example, in producing wheat, a farmer may use 60 pounds of dry fertilizer per acre at a cost of $220 per ton for a fertilizer cost of $6.60 per acre. This information could be thought of as the "recipe" the farmer follows in producing the commodity.
Some farmers will conduct more than one enterprise analysis for some commodities. For example, multiple analyses are needed when the operator uses different technologies or levels of input to produce the commodities. A corn enterprise that follows a strategy of "minimum-tillage and high fertility" is distinct from one where corn is produced using "conventional-tillage" practices. Farmers will want to analyze the profitability and feasibility of each "recipe" to understand which one best utilizes their resources.
Opportunity Cost
The next several lines on the worksheet (page 4) provide space for the owners to specify a cost they will charge themselves for using some of their investment. For example, farmers may charge a rent for the land they own and use in their business. The cost business owners impose on themselves for the use of their own resources is referred to as opportunity cost . The definition of an opportunity cost often is stated as "the amount of income I am giving up when I use this asset in my business." For land, a question to ask in determining an opportunity cost could be "how much rent am I not receiving because I use my land in my business rather than leasing it to another business owner?"
An alternative definition could be "the amount of income I want to receive in return for using my resource in this activity." This definition allows the asset owner to consider their own values. For example, a farmer may want to receive $10 per hour for operating a crop enterprise but would want $15 per hour to handle livestock, because the farmer does not like animals. Each person likely could present several examples of when they would impose a different opportunity cost depending on the activity in which the resource is being used. Regardless of the definition used, farmers need to understand the cost of using their own resources in their business.
Another question that arises with this analysis is deciding which resource should have an opportunity cost imposed. It does not matter, except if there are particular goals the farmer wants to reach. One suggestion is that the owner could impose an opportunity cost on the resource the owner considers most important in terms of earning a return. Then, any amount remaining after subtracting that cost is the return to the other owned assets.
Current Practices
A completed balance sheet shows information, such as the total value of assets, total indebtedness, equity, available cash, and value of liquid assets. This information can then be analyzed to determine the business' current ratio, its borrowing capacity, and opportunities to attract equity capital. It also provides insight into the business' capacity to assume risk.
An income statement reports the amount of profit the business generates. Usually income statements are prepared on an annual basis. An accrual income statement often provides a better measure of the farm's performance because it considers changes in inventory, rather than only cash transactions. It is for this and other reasons why an income tax return should not be relied on as measuring the farm's profit.
A cash flow statement reports the sources and uses of the business' cash resources. Such statements not only show the change in the farm's cash resources over the year, but also when the cash was received or spent. As discussed previously, an understanding of the timing of cash receipts and expenditures is critical in managing the whole-farm. Neither an income tax return nor an income statement provide the same information as a cash flow statement.
Compiling the financial documents from the past years is useful because they reveal trends or patterns. Comparing the current statements to past statements reveal what has been happening to the business' financial situation. The balance sheets show changes in owner's equity and risk exposure (whether they have been increasing, decreasing, or remaining the same); the income statements reveal trends in profit; the cash flow statements can help the farmer understand the timing of cash availability and needs.
Related to the ability to assume risk is the desire or willingness to control risk exposure through insurance or alternative strategies. Perhaps one rule of thumb on assuming risk could be "if the activity prevents you from sleeping at night, you may not want to pursue it." Methods of assessing and controlling risk are explored in subsequent steps.
Farmsoft delivers the best farm inventory management solutions. Use our farm inventory management app to go mobile – from your smart phone or tablet. Agriculture inventory software made easy!
Farm inventory app by Farmsoft delivers precise farm inventory control, reduce farm inventory waste and shrinkage, track farm inventory to individual employees, farm inventory stock-take, farm inventory traceability.
Farm inventory app by Farmsoft delivers precise farm inventory control, reduce farm inventory waste and shrinkage, track farm inventory to individual employees, farm inventory stock-take, farm inventory traceability.