How Benchmarking Can Improve Your Farm’s Long Term Performance

Discussion groups and professional advice are essential for farmers looking to get a handle on the strengths and weaknesses of their farm enterprises

It is said that no man is an island. But given the solitary nature of farming, some farmers can become very isolated, particularly in the strange times we are living through.

Lack of regular contact with like-minded farmers and farm advisers can create uncertainty and anxiety about how the farm enterprise is performing. It can be very reassuring to know how your business is performing relative to the industry norms or relative to what is realistically achievable. This is where benchmarking can play a vital role.

Goals

The comparison of physical and financial information between similar businesses is key to identifying best practice and setting goals.

This information is often acquired through a semi-social setting such as a discussion group or by regular contact with your agricultural advisor.

Benchmarking is used most commonly in dairying, but is not exclusive to dairying and can apply to any enterprise,

Benchmarking is about identifying the practices which lead to enhanced performance, be it from a financial perspective or working smarter and more efficiently.

Identifying these better practices enables informed decisions to be made about the way your farming business needs to change.

While no two farms are the same and each farmer has his/her own management style, all farmers have a common goal and that is to be as good as they can be at their job while also enjoying a satisfactory work life balance.

Benchmarking is used most commonly in dairying, but the same principles can apply to any farm enterprise,.jpg

Benchmarking has four key elements:

  • Identifying key performance indicators
  • Collecting and collating the information
  • Comparing the findings
  • Discussing and exchanging the findings

Key Performance Indicators

When benchmarking, irrespective of the management style, there are certain key performance indicators that can be used as comparisons. In a typical dairying benchmarking exercise, the following indicators might be used:

  • input costs per litre
  • overhead costs per litre
  • profit per cow
  • return on assets employed
  • milk solids per cow
  • grass grown per hectare
  • herd fertility

Collecting The Information

There are many software packages available to dairy farmers to help them record both the physical and financial performance of their holding.

For example, the Herdwatch and ICBF apps or financial packages like the Kingswood system have proven very beneficial in recording and assembling information gathered throughout the year. Recording information such as pasture covers or recording day to day expenses are all required to ensure accurate results are achieved.

Comparing The Information

Once the information has been assembled, it can then be collated and presented in a format suitable for discussion.

You should benchmark all the financial and physical performance elements of your holding be they good or bad. When you have established your performance over the relevant period, you should then compare it with reliable outside sources and your own historical figures.

The following is my recommended list of comparisons:

  • Your current year versus your previous years’ (possibly up to three) performance.
  • Own farm’s figures against targets you may have set for yourself.
  • Own farm’s figures against results from other farms locally (for example discussion group farmers) or nationally.
  • Own farm figures versus Teagasc Profit Monitor performance results.

Benchmarking comparison tools include the Teagasc Profit monitor, the National Farm survey, ICBF Co-op performance reports and other software packages like Agrinet or Pasturebase.

All dairy farmers should be members of any online portal that gives them as much information as possible about their operation. However, these systems are only as good as the information you feed them throughout the year.

The next stage in the process is discussion that can involve family members, employees, discussion groups and your agricultural advisor and accountant,

Discussion Groups

Results are usually discussed in the early part of the year and participants in discussion groups usually say such meetings are probably the most enjoyable meetings of the year for the group.

This is one of the social dividends of benchmarking. There must be a willingness to be open and frank about the results; otherwise change will not happen. And while information should always remain confidential, the more open you are with your results the more you will gain.

Finally, talking one-to-one with a trusted advisor or consultant is where informed decisions can be discussed and planned. Consultants or advisors have the tools, training, knowledge and experience to help guide your farm performance and achieve lasting results.

Diarmuid Foley is an agricultural consultant with O’Sullivan Malone Accountants email: info@som.ie

(Source – Irish Independent – Indo Farming – Diarmuid Foley – 17/11/2020)

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Rural Enterprise Skillnet

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