Farm Benchmarking Best Practices

Benchmarking is a technique used by businesses to compare their performance to others. Within agriculture, benchmarking can be used to monitor revenue, expenditure and farm operations data—including crop yields and animal performance—critical for business success.

Benchmarking can offer a lens for decision-making by providing you with up-to-date facts and figures to use when making informed business judgments. By leveraging benchmarking data, you can better understand your farm and take steps to reduce inefficiencies, boosting corporate competitiveness in the process.

Consider the following benchmarking best practices:

• Utilize available resources. Various tools are available to help benchmark your performance against others. For instance, some companies publish free benchmarking reports online that allow you to compare your ratios with others in your industry. Utilize these and other resources when devising a benchmarking program.
• Leverage technology. Sophisticated precision farming software is developing rapidly. This software can import soil and yield data, making it easier to compare year-over-year performance. Some software solutions include cash flow and cycle forecasting to help determine when to apply chemicals and fertilizers to achieve maximum crop yield. Regularly analyze any collated information from performance software to diversify or become more efficient.
• Be specific. Some provinces gather all farm data in one report, requiring more scrutiny during assessment as other farms may have a different climatic zone or moisture content to your own. As such, be careful when comparing benchmark results and choose specific data from agricultural businesses that match your geographical location. The more general your benchmarking information, the less useful it will be.
• Identify problem areas. If your numbers don’t compare favourably to industry averages, analyze why this may be. Common reasons for poor financial output include poor yields and high labour costs.
• Set objectives. Remedy any identified problem areas. For instance, if your grain profitability is low compared to others, aim to improve crop marketing going forward. If necessary, engage the services of an agronomist to boost yields.

For more information on risk management, farm insurance, or to find out how to reduce your insurance costs call CMB at 780.424.2727 or click here to get a quote.