Milk Profit Margin
Why it’s important
Milk Profit Margin is an essential financial metric within the Dairy Farming industry. Milk profits can generally be calculated by multiplying your Milk Profit Margin by your Total Milk Production. Therefore if your Profit Margin is low, you will have to produce more milk to achieve the same level of Profitability as could be achieved at a higher Margin. This could make the difference between growing your revenues or running at a loss. Like all Profit Margin based metrics, your Milk Profit Margin also highlights how efficiently you are translating revenues into profits. The higher your margin, the more efficient your operation.
Making the KPI
To calculate your Milk Profit Margin you will need to know both the revenues you are generating from Milk Sales and the associated costs you are incurring leading up to the point at which you sell your produce. These should be being sourced from your Accountancy Platform of choice using appropriate nominal codes for each item, however if this isn’t the case, you can can pull this data into FUTRLI via CSV.
Once you have the necessary data available to you, you can calculate your Milk Profit Margin by subtracting your associated revenues by your associated costs, and then dividing the result by your associated revenues.
With your formula built you can now report on your data.