How do we create more margin?

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By Dwain Duxson.

How do we create more margin? -  We tell ourselves that we are price takers and we operate in a commodity world where prices are dictated to us. So we sort of resigned to the fact that we are a low-margin, high-volume player in the game. We run with that mindset, so we get less creative about how we can add margin to things.

We have written about it before, and as I keep studying Agricultural businesses, the ones that thrive are the ones that find part of some enterprise that returns a high margin.

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I used the example yesterday of the Farmer who bought lambs for $59 and sold them in 2 runs for $220 and $270 a head, all in a 6 week period. There is probably a bit of luck involved, but the commitment to buy the $59 Lambs in the first place meant they were looking to trade and thought it was a good time to enter the market. So this part of the trading enterprise achieved a high margin.

The mindset we are trying to retreat from is one of thinking we are price takers to one where we can achieve a higher margin in spots and, therefore, make a higher average margin. It requires some thinking, but it can be done because there are some out there that do it. What part of your enterprise/s do you think you can ratchet out a higher margin? Reply to dwaind@farmtender.com.au

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