By Johan Coetsee
Because most farm budgeting systems on the market did not meet Franco le Roux’s requirements, he developed a model he now uses in his grain farming operation. Franco is the general manager of Klipdale Boerdery near Napier in the Overberg. His model allows him to combine figures and actions, enabling quicker decision-making.
In any farming enterprise, effective planning can take you far. “Planning provides peace of mind and facilitates informed decisions – essential in modern farming,” he says. “Many management programs are available, but most are rooted in accounting. I found that these programs are not as effective when you need to make quick, informed decisions.”
The model he designed won first prize in Landbouweekblad, Omnia and Grain SA’s Farmer’s Plans competition at Nampo Cape in the machinery, implements, and agricultural equipment category.
‘Get your foundation right’
Franco says his model makes it possible to pay attention to every aspect of grain farming.
“It’s not an accounting model; it’s 100% a farm management and planning model. The beginning of any model is knowing what you want to achieve and understanding what information you need to input and process to get the right answers.”
The information he initially enters includes aspects such as the area under different crops and cultivars.
This framework enables thorough input planning for each camp. As the season progresses, budgeted prices shift to actual purchase prices, reflecting what was accomplished in each camp. This information is then entered into the budgeting model, making the exact spending data for each camp and crop available.
The purchase prices are updated with actual prices for a more accurate picture.
“It’s a standard Excel sheet, and I used no special software. It didn’t take long – you adjust it continuously.”
“I redesign it from scratch every year to continuously improve it. My studies have provided me with the logic, and I learned Excel through hands-on experience.”
“The goal isn’t to determine how well you can budget. Its sole purpose is to prevent surprises that can frequently arise and to provide time to adjust decisions and make new ones as the season progresses. This approach ensures you are always aware of your farm’s economic situation.”
Franco inputs the data of what was done in each camp once a week – from quantities applied to actual purchase prices of products.
“As the season progresses, all this data is compiled and compared with the budgeted figures to identify significant discrepancies and determine which cost departments are affected, such as fertilisation or weed control.”
Additionally, accounting data is extracted from our bookkeeping program, and I transform it into a straightforward yet insightful monthly cash flow analysis to effectively manage cash flow.
“I don’t use any ‘formula’. For example, all programs have export options to Excel, and I work through the figures to ensure everything is correct and meaningful.”
Briefly, the main objectives of his model are the following:
- Projections of required products.
- Actual record-keeping of what happens in each camp and with each crop.
- The cost per hectare for each camp and crop.
- Cash flow projections.
- The gross margin per crop branch is crucial for quick financial decision-making when necessary. This includes considerations like acquiring additional land, renting land, purchasing equipment, and adjusting wheat grades due to potential rain during harvest time.
Given the farming operation’s structure, Franco says information must be accessible and thoughtfully organised for the board. “Since we started using the model, I believe it has already added significant value to our farming operation.”
He has been using the model, which he constantly adjusts and improves, since 2018, but displayed it for the first time at Nampo Cape last year. It generated considerable interest and inquiries.
“Making it available to other farmers would be difficult because Excel doesn’t wholly allow for it. Adjustments will mess up the formulas. But if my program has someone thinking and people want to learn from it, we can discuss it.”
Franco obtained an HonsBSc Agric degree in agricultural economics from Stellenbosch University in 2008.
INQUIRIES: Franco le Roux, email: francoleroux@yahoo.com, 082 663 0640.
