Always keep an eye on your profit
Successful businesses provide for their financial and marketing planning in their management.
Our expert knowledge helps you to optimize your gross margin and supports you with a customer-tailored marketing plan.
This is conducted with the SAATBAU Profit Manager - a software application that allows you to plan your farm revenue in advance.
For each crop, the SAATBAU Profit Manager calculates the profit margin per hectare on the basis of the following equation: [Profit margin = (quantity x price) – cost]. While the quantity is estimated by the farmer, a derivation of futures prices is used in the equation and not an absolute price. This is possible, because prices for the next harvest are already traded today at the futures exchanges. However, both quantity and price derivation are uncertain, so the result is a matrix. This matrix shows how the profit margin develops according to variations in quantity and/or prices – i.e. it visualises the risk of negative profit margins. The revenue risk is a function of quantity risk and price risk.
The quantity risk can be reduced by purchasing crop insurance. A contracted crop insurance is taken into account in the calculation.
With regard to the price risk, things are a little more complicated: the extent at which falling or rising prices influence the profit margins per hectare depends essentially on the current state of marketing. If a farmer manages to sell his product at a good price before harvest or to conclude a basis contract, the risk of sinking prices is significantly reduced. Additionally, the tools of the commodity futures exchange can be used. These exchanges trade futures contracts on e.g. maize, wheat, brewing barley or rape. That way, farmers can lock in a price level for future harvests without having to commit to a single grain merchant. Another important tool is using options on futures contracts, allowing to hedge minimum prices before harvesting while maintaining the possibility of taking advantage of higher prices that may occur later.
All positions on the futures market are transferred automatically and on a daily basis into the SAATBAU Profit Manager and factored into the calculation of the Profit-Matrix. This allows you to always have a perfect overview of the current marketing situation.
Furthermore, the SAATBAU Profit Manger offers comprehensive warehouse management. Storage costs at different storage facilities are accounted for in the calculations and detailed records are kept of all sales.
You are interested in the SAATBAU Profit Manager?
Get in touch – we will be happy to prepare an individual offer for you!