As a farmer, it’s essential to have a plan for your farm to succeed. Planning and forecasting are two essential tools that can help you achieve your goals. While planning is done once or twice per year, forecasting is done on a more frequent basis, such as weekly, monthly, or quarterly. Both planning and forecasting have their unique advantages, and together, they can help you manage your farm better.
1 Frequency
Planning is an essential tool that helps you create a roadmap for your farm. This is typically done once or twice per year and helps you identify long-term goals for your farm. The process of planning is comprehensive, and it enables you to step out of your day-to-day work to revise strategies, tactics, and action plans. During the planning process, you can identify new opportunities, risks, and challenges that may impact your farm’s success.
For example, let’s say you own a dairy farm. During the planning process, you may identify that the demand for organic milk is growing, and you may want to consider transitioning your farm to organic practices to take advantage of this opportunity.
On the other hand, forecasting takes those plans as a foundation and revises them on a more frequent basis. Forecasting is typically done weekly, monthly, or quarterly and is used to adjust your plans based on new information. For example, if there is a sudden change in the weather, you may need to adjust your plans for planting or harvesting.
2 Horizon
Planning is done for one to five years into the future. During the planning process, you can identify long-term goals for your farm and develop strategies to achieve those goals. Planning doesn’t aim to maximize accuracy but links business drivers with expected outcomes. Certain strategies and investments have long preparation and payback periods, which are considered during planning.
For example, let’s say you want to expand your farm by purchasing new equipment. During the planning process, you can identify the costs associated with purchasing the equipment, such as financing and maintenance costs. You can then determine the payback period for the investment and decide whether it’s worth pursuing.
On the other hand, forecasts are updated for the current year or a fixed number of periods, such as 12 or 18 months. Forecasts aim to be as accurate as possible, which is only feasible for a relatively short time horizon. For example, if you’re forecasting your crop yields for the current year, you may need to consider factors such as weather, pest and disease outbreaks, and market demand.
3 Starting Point
Planning translates a company’s vision into strategies, tactics, action plans, and measurement. During the planning process, you can identify your farm’s vision and mission and develop strategies to achieve those goals. Doing that effectively requires a level of focus that isn’t feasible during regular reporting cycles.
For example, let’s say your farm’s vision is to become a leading supplier of high-quality vegetables in your region. During the planning process, you can identify the steps you need to take to achieve that vision, such as investing in new technology, hiring more employees, and developing a marketing plan.
On the other hand, forecasting starts with existing plans and associated measurements to extrapolate trends. For example, if you’re forecasting your crop yields, you may start with the yields from previous years and extrapolate the trend based on new information.
5 Frequency
Farmers can benefit from planning once or twice per year, with forecasting updated on a more frequent basis. Planning can help farmers set goals and develop a roadmap for achieving them. For instance, a farmer may decide to diversify crops to reduce risk or invest in new equipment to increase productivity. Once a plan is in place, forecasting can help farmers stay on track by monitoring progress and adjusting strategies as needed.
For example, if a farmer’s plan involves planting a new crop, they might use forecasts to decide when to plant, how much fertilizer to apply, and when to harvest. Regularly updated forecasts can help the farmer adjust their planting schedule if weather conditions change or if a new pest infestation emerges. This allows the farmer to optimize their yield and minimize losses.
6 Horizon
Planning for farmers is usually done for one to five years into the future, while forecasting is updated for the current year or a fixed number of periods. The long-term view of planning is necessary to allow farmers to invest in new infrastructure, like irrigation systems, that can take several years to pay off. On the other hand, short-term forecasting allows farmers to respond to changes in weather or market conditions.
7 Starting point
The starting point for planning and forecasting for farmers is the current state of their farms. Farmers need to have a clear understanding of their resources, such as land, labor, and equipment, and the current state of their crops. They can then use this information to set goals and develop strategies for achieving them.
For example, if a farmer notices that their crops are not growing as expected, they may decide to invest in soil testing to identify nutrient deficiencies. They may then use this information to develop a plan for improving soil fertility, such as using a specific type of fertilizer or rotating crops to allow the soil to recover.
8 Objectives
Planning enables farmers to track performance and identify areas for improvement, while forecasting allows them to adjust their plans in real time based on changes in weather, pests, or market conditions. By comparing actuals to the plan at the right level of detail, farmers can determine why they performed better or worse than expected, and adjust their plans accordingly.
For example, if a farmer’s plan was to plant a certain amount of a specific crop and the yield is below expectations, they may use forecasts to determine the cause of the lower yield, such as a pest infestation, and adjust their plans for the next planting season.
In conclusion, planning and forecasting can be powerful tools for farmers to make informed decisions about their operations. By taking a long-term view through planning, and using forecasts to adjust those plans in the short term, farmers can optimize their yields, minimize costs, and reduce risk. Ultimately, this leads to better outcomes for the farmer and a more sustainable agricultural industry.
