Optimum better than perfection for best outcomes

MIND YOUR BUSINESS: Optimum better than perfection for best outcomes

COMMENT
Opinion
Aiming for perfection or maximum production is not always the best option to get the best returns. Photo: SHUTTERSTOCK

Aiming for perfection or maximum production is not always the best option to get the best returns. Photo: SHUTTERSTOCK

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Recently I spent a day teaching the agricultural science students at Cleve Area School and one concept I spent considerable time focusing on was the law of diminishing returns.

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Recently I spent a day teaching the agricultural science students at Cleve Area School and one concept I spent considerable time focusing on was the law of diminishing returns.

If there is one concept budding young farmers need to get their mind around, it is understanding the difference between optimum and maximum production.

To aid the students learning I built a spreadsheet model to demonstrate that as a farmer you should be gearing your planning and production on optimum not maximum production. Once you pass the optimum point for every dollar you spend you are gaining less than that amount in return.

The model allowed the students to assess the economics of post application of nitrogen. I still hear farmers using the word maximum when I think they mean optimum - but knowing the difference is critical to the level of profit you make.

Some may think that I am being pedantic but the efficient use of inputs is what the top 20 per cent of farmers do really well.

Many words in a farmer's language are used interchangeably and I am at times left interpreting what they really mean. Effective and Efficient sound the same but mean quite different things - like doing things right and doing the right thing.

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Running an enterprise effectively could mean you are achieving a lot of production, but are you efficient or cost effective in achieving that result.

I come across a lot of farm employees that are what might be deemed perfectionists at their job but they are very slow at achieving it.

The difference between excellence and perfection can be small and not worth the extra effort or cost to achieve the extra improvement. Quite often you are the only one who can see the difference.

The person who pursues perfection can experience a high level of stress achieving it. Everyone requires a certain level of stress to achieve results, it is knowing when the stress has a detrimental effect on outcomes is the clever bit.

Mention the word stress and it usually has a negative connotation but a certain level of stress is good for you. Working under pressure is a term I use most often, because it tends to be interpreted much more positively.

Other farming words that are used interchangeably are surplus and profit particularly when applied to the farm budget.

One is an output term that can be expressed in dollars and profit is an economic term that expresses and an outcome. A budget surplus on a farm in most instances is the difference between the income and the cash costs incurred to achieve it.

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Profit takes into account the non-cash costs to achieve the end result. Things like depreciation, changes in inventory and unpaid labour become important considerations if you are to realise the true profit of a business.

One question farmer's need to be constantly asking themselves is, are they putting in as much effort into the cause of the problem as they are on the symptoms.

Spraying crop weeds is a good example of treating the symptoms. Many family doctors are good at prescribing a perceived remedy based more on the symptoms than the cause.

If the doctor worked on the later which is a very inexact science, the length of a consult would be prohibitive in most cases. In many ways farmers are doctors in their own business, diagnosing problems and devising remedies.

And speaking of doctors, as one who has been through the Prostate Cancer journey, with the organ removal and subsequent radiation, could I suggest to those farmers over 40 who have not had their prostate checked, please do so before the coming harvest. It could save your life - it did for me.

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