Better margins in Ag - How?

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By Dwain Duxson

Better margins in Ag - How? - Agriculture is rolled out as an industry with low margins. But why does it have to be? And how can we make profit margins of 10, 20 or 30 percent like other industries do? To clarify, I don't have the answers. We run 2 businesses in the Ag space, and both are low-margin businesses. 

Many would argue that if you are attached to the commodity markets, you can only expect low margins. An argument would come from the established Iron Ore guys in Australia who have got their cost of production down under $20 a tonne and are sometimes making 5-10 times that.

I have a mate who makes 50-60 percent margin in an industry that has the same stigma as Ag as a low-margin industry. How does he do it? He planned it that way.

But getting back to Ag, how do we make stronger margins? Is it an enterprise thing? Is it a business model thing? Is it how we are running our Farms? Is it financial literacy? What is the secret sauce? You hear of guys growing high-priced Seed. Others growing Crops that don't own any Machinery and Equipment. I was listening to a podcast where a Farmer had added accommodation and events to their Farm business, and that is their high margin Farming enterprise. It's actually a really good listen. High margins should be a starting point, and then designing a model from there. Looks like it's back to the drawing board for me..... 

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