How can record-keeping help you make informed decisions on crop insurance?

Data is the river of gold nowadays, but unless you keep decent records, it will look more like an ephemeral creek. 

This article will help you boost your record-keeping approach, and there’s a spinoff benefit: helping you make evidence-based decisions for your crop insurance.

It’s worth your while. You can reduce your premiums, tap into more financial assistance, and potentially know your business performance in real-time. 

So, why is sound record keeping a big deal for your business?

How records help your business

According to business.gov.au, the benefits include helping you:

• Track the health of your business
• Make better decisions about its future
• Complete your tax returns
• Contribute to your superannuation
• Get a handle on your cash flow
• Reduce the time you spend on auditing from days to hours
• Quickly gather the documentation you need for food safety certifications for easier market access
• Demonstrate your financial position to enable you to borrow money and apply for government support if needed, plus
• Hand your insurance broker the information we need to work out the best insurance package to manage your business risks.

This website details more information about the records you must keep, their form (paper or electronic), and how long you need to hang onto them (usually five years).

You can’t manage what you can’t measure, but understanding what your data is telling you is the key to business growth. That’s a big difference to the traditional shoebox method of accounting – keeping your receipts and paperwork in an old cardboard box to tackle at tax time. 

Crop records under the spotlight

But, what about the records that might keep you up at night – how your crops are faring? 

This is where your records can pull in financial and agronomic data and help pinpoint your past, present, and potential future profit margins. An electronic approach works – it could range from a basic Microsoft Word document, Excel spreadsheets to farm management software, for example.

Drilling into your farm data allows you to make decisions such as whether conservation tillage or no-till is a better fit for your farm. That could dramatically change your labour, equipment investment, and costs. Also, records will guide you on tweaking your fertiliser dosage rates based on past performance evidence and could open up more savings. 

Best practice record keeping

Just using your memory and gut feeling won’t bode well for a successful farming business. As well, legally, you must record your use of agricultural or veterinary chemical products. Your state or territory’s agricultural department will have templates you can download like these from  Agriculture Victoria.

However, best practice record keeping is more than just recording your chemical use. Having written, or ideally, electronic records can build a holistic ‘farm report card’. This useful management tool, for example, allows benchmarking to compare your operation to other producers in your ‘class’, according to the CSIRO. 

That organisation offers this guide on the type of farm records to keep:

• A farm diary such as a small notebook to record essential information about your day-to-day activities
• Crop records – type, fertiliser applications (how much and when), agronomy (including seeding, weeding, sprays), a visual description of the crop, fallow duration, load logs, bin measurements, crop yields, sales receipts, etc
• Livestock records – (if you carry stock) including herd performance and inventory accounting. Zero in on the changing herd size and moves in the unit price
• Unit costs of the significant farm inputs, including fertilisers, fuel, irrigation water, concentrates, forages, and stock you’ve bought. These will give you insights into seasonal changes to help plan for future purchases
• Plant and improvement records such as when you bought or installed the gear, annual depreciation, insurance and registration, fuel use, hours of use (to schedule services), major repairs and maintenance
• Key financial records, which would include details of your interest and principal repayment reschedules
• Other farm management records including your rates and government charges, other overheads such as phone, office maintenance, labourers’ wages, capital improvements, rare weather events, dates of important meetings, credit repayments, changes in the value of land and livestock categories, and
• Personal expenses cover your manager and farm employees’ imputed wages plus the recorded value of farm produce personally consumed.

How your broker can help

As your broker, we’re deeply interested in what your records and cost-benefit analysis reports show. They may well support your case for slimmer interest rates on operating loans. As well, you’ll have real-time information about your business, which means you’re less likely to miss deadlines for potential financial assistance. You could also qualify for increased funding for your conservation practices and water quality efforts too. Further details about current grants and assistance from the agricultural department are here.