“Growing Advantage” was the theme of the 2011 Almond Conference earlier this week in Modesto, CA. The theme was well deserved by an industry whose production has ramped up from 516 million pounds in the early 1990’s to around 1.9 billion pounds this year. I attended a portion of the conference, and I was particularly impressed with the panel presentation on the Economics of Almond Production.

A common theme from several growers on the panel revolved around subjects that are near and dear to a CPA’s heart: strong accounting systems, active budgets, and measuring results. The presentations by these growers were a great illustration of concepts that we’ve been talking about for a long time, and I’m excited to see them applied in the ag setting.  

Accounting Systems – the days of pencil and paper are gone for most businesses, and farming is no exception. The most important thing about an accounting system is that it should be able to supply the information needed for informed decisions on a timely basis. We’re seeing more and more ag businesses invest the resources to upgrade or add systems that are leading to better informed decisions. Most people didn’t choose to farm because of their love for paperwork, but those that pay close attention to the financial matters will have an advantage.

Active Budgeting – one grower talked about their operation’s use of budget to actual reports, including the use of cost centers to separate crop production and overhead costs. These were monthly reports with line by line budgeting. Does it take some time and headache each year to plan this budget? Sure, but the reward is better feedback throughout the year in monitoring their financial performance. A budget can look like an overwhelming process, but we’ve helped clients break it down into manageable pieces that are easier to deal with and achieve results.

Measuring Results – several growers talked about measuring Return on Investment and Return on Acreage, both being key components of the farm business scorecard. How does your net return per acre compare to the value of that acre of land? Karen Klonsky discussed the UC Davis cost study results which calculated that it costs $8,738 per acre to establish an orchard – what kind of price and production results are needed to make that a profitable investment over the next 25 years? [As an aside, the UCD cost study can be found at http://coststudies.ucdavis.edu]

In summary, the conference was well worth attending. The presentations highlighted the fact that the growth of business expertise in the almond industry has kept pace with their expanding crop production. Financial measurement and analysis is just as pertinent for the farm as it for the factory, and we enjoy helping our clients make these concepts a reality in their businesses. Best wishes to the industry for a great 2012!