Does Safety Improve your Farm’s Bottom line?
Workplace safety and health is important especially in farming where the industry is known for its high fatalities most of which are machinery related. However, injuries and illnesses are preventable. That is why it is so important for producers to take the necessary preventative measures in creating safety and health systems that fit their operation. A few simple preventative measures go a long way towards establishing a safe working environment.
It is time for farm safety to be part of the farm business risk management plan. There is evidence that investing in farm safety programs directly contributes to profit for your farm. Your return on investment outweighs your cost.
What is Return on Investment?
Return on investment (ROI) is a popular financial measurement for evaluating financial results of specific investments and actions. ROI measures the amount of money you make, relative to the investment's cost. This kind of measurement addresses questions like:
· What do we gain from our spending?
· Are the expected returns outweighing the costs?
· Do the returns justify the investment?
In short, when you figure out the ROI, you figure out the efficiency of an investment. In the last few decades, ROI has become a popular general purpose measurement for evaluating capital acquisitions, projects, programs, initiatives and traditional investments in stock shares or the use of venture capital.
Using ROI in Farm Safety Programs
Using ROI to justify an investment in farm safety may have implications on how producers view and manage safety. ROI works best where economic benefits are easy to identify, measure and manage. Though the benefits of investing in safety do not always meet these criteria, there are ways you can evaluate and manage your safety investments.
Farm accidents are costly in both financial and human terms. Direct costs may include:
· delayed production
· wages
· insurance premiums
· attorney fees
· fines and penalties
Indirect costs include:
· accident investigation costs
· costs of fixing damaged property or equipment
· the cost of installing safety devices
· training and compensation of replacement workers
· lost productivity because of employee stress
· low employee morale
· increased absenteeism
· poor reputation
· difficulty finding skilled labour
· loss of business
The Canadian Agricultural Injury Reporting (CAIR) estimates the economic burden of injuries is $275,000 for a fatality, $143,000 for permanent disability, $10,000 for hospitalisation and $700 for injuries that don’t require a hospital stay.
As a producer, you need to demonstrate that investing in safety programs and compliance isn’t just a necessary evil or moral obligation. It’s an investment that directly contributes to a profit for your farm business. You can prepare and present a proposal to spend money on a safety program in exactly the same way as you would for buying a new piece of equipment. You need to prove that investing in safety programs generates a positive rate of return on your bottom line.
The value of farm safety is more than the dollar saved or the returns earned. The ROI on preventing the human costs far outweighs the earnings. SAFE Work Manitoba has developed tools and resources you can use to customise your farm safety investment for a positive ROI. Visit safemanitoba.com/farms for more information.
