Cost Control’s Strategic Role

January 7, 2009 06:00 PM
 

Linda Smith, Top Producer Executive Editor
 
A reader asked us why market advisers always emphasize you know your cost of production when the market doesn't care and may not offer you that much.
 
Here's a response from one adviser…
 
"One of the most profound things I ever heard about the importance of knowing cost of production for competitive reasons was said by the marketing manager for a huge farming operation with nearly $10 million in annual sales,” says Dan Manternach of Doane Agricultural Services.

"He said: ‘We got this big by focusing on one strategic objective. To make sure that among our competition in farming, we were always the last one to start losing money in a down market and the first one to start making money when prices turned higher. It's all about cost of production in the long run in farming. That's why we know our costs to the penny and how we've ended up buying out competitors who didn't.”
 

 
You can e-mail Linda Smith at lsmith@farmjournal.com.
 

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