Have you ever seen an advertisement that promises dramatic results if you use a certain product? Of course you have! So why not use all these products at the same time? Your performance and profitability would rocket !
Unfortunately, the test of reality has taught us that success in the laboratory, or with a small number of selected farmers, is much less variable than real-life results. Too often, these lab results are used to justify the claims advertised - but what good are they if the majority can’t reproduce the same results?
So how can we know if this product that was recommended to us will give the desired results? There is only one way: to measure its effectiveness with rigor and integrity, even if the answer does not always please us.
It is for this reason that the Co-op network offers tools - such as monthly charts, Agriscan and Aviscan - that improve the rigor of profitability analysis. Rigor is less dramatic, but it gives a clear picture.
In this regard, we still see economic analyses which, without being wrong, do not tell the whole truth about the actual results. The financial impacts of these gaps are significant.
Here are some commonly observed situations.
You want to improve your profitability per cow, but you do not consider the milk transportation costs or joint plan charges. Your results on paper will be better than they actually are.
You use an average milk price instead of considering your actual situation, also including premiums you may not receive. Your results will sadly be different from your expectations.
Another example: you calculate your profitability on a theoretical amount of milk per cow, rather than milk actually produced. Another disappointment.
This type of error occurs also in poultry operations. Often there is some fuzzy math around the feed discounts used in the calculation of margins per kilogram. Make sure you work with the actual discounts received.
The same goes in crop production. Corn yields are sometimes calculated while grain is still in the field and wet. The results will be falsely higher than if the yield was calculated, as it should, on the basis of dry grain.
Whatever your production, there are a few easy tricks to see if the numbers hold up: if your calculations don’t match the books, it is time to ask yourself a few questions!
If you want to make comparisons with published values, check the number of farms used to calculate values. Statistically, 12 farms are not enough to draw conclusions with an acceptable margin of error.
Finally, if you use an economic analysis and you compare it with another, pay attention to the rigor of the methodology. As the calculations are made with different data, the results are as different, even if they have the same name. You may be trying to compare apples and oranges, without realizing it.
When in doubt, remember this saying: if it's too good to be true, it probably is.