No one adopts management accounting for the satisfaction of doing paperwork -- they do it because they want to make more profitable decisions, says farm financial management specialist Dick Wittman, Wittman Consulting.
Wittman spoke at Top Producer's first annual Young Farmer Program this week in Chicago on the benefits of adopting management accounting practices on your farm.
One of the top benefits of management accounting today is the way it can support marketing decisions, Wittman says.
"Everywhere I go, farmers tell me what they should have done last year for marketing to capture high crop prices,” Wittman says. "But they didn't act because they have no idea what their costs of production are. They were worried that the corn price would go up, but rents and other costs also could go higher. So may farmers didn't act on a historic marketing opportunity.
"If your biggest risk is that cost structure might go up with prices, and if you can control your cost side of the operation with management accounting, why not take advantage of an amazing market,” he adds.
You can read more about management accounting principles in Top Producer's Profit Puzzle series online at www.topproducer.com