The benefits of benchmarking your farm
15 December 2020
In today’s business market, you should take advantage of all tools at your disposal that give you the ability to work on your business rather than in it.
Benchmarking is one of these tools and can prove useful when farmers, bankers, accountants and consultants need to make informed decisions about the productivity of a business (farm or non-farm) relative to others with similar businesses.
As most farmers have recently prepared or are in the process of preparing 2020 annual accounts, now is the perfect opportunity to benchmark your farm and see how your results compare with the rest of the farming community.
How do I use benchmarking data?
Having your farm benchmarked gives you the ability to pinpoint areas of improvement such as lambing and calving percentages and returns and economic farm surplus per stock unit and per hectare (ha).
Benchmarking should form part of your annual business review practices and the data should help inform your goals and KPI’s for the following year.
How do I benchmark my farm?
A number of factors and definitions come into play to form an accurate benchmarking report for your farm and it is important that your data is comparable and realistic as this is a key factor in how benchmarking data is analysed.
Depending on your circumstances, you may need to determine key comparison data across calculations such as:
Stock units per ha.
Gross farm income.
Economic surplus per ha.
Farm working expenditure as a percentage of gross farm income.
Looking at historical trends gives an indication of where your farming business is heading and where it has come from. And analysing the data and historical trends of the top performing farms such as the top 25%, can provide the basis for establishing annual targets and key policy decisions.
Utilising all available data and financial tools will provide a fresh independent perspective on farm performance and continuous improvement. If you’d like any assistance getting started with this process, please contact the Findex Business Advisory team.
Findex NZ Limited, trading as Findex
While all reasonable care is taken in the preparation of the material in this communication, to the extent allowed by legislation Findex accept no liability whatsoever for reliance on it. All opinions, conclusions, forecasts or recommendations are reasonably held at the time of compilation but are subject to change without notice. Findex assumes no obligation to update this material after it has been issued. You should seek professional advice before acting on any material.
The information contained is of a general nature only and does not take into account your objectives, financial situation or needs. You should consider whether the information is suitable for you and your personal circumstances. You should seek personal financial advice before acting on any material.
The title 'Partner' conveys that the person is a senior member within their respective division and is among the group of persons who hold an equity interest (shareholder) in its parent entity, Findex Group Limited. The only professional service offering which is conducted by a partnership is the Crowe Australasia external audit division. All other professional services offered by Findex Group Limited are conducted by a privately-owned organisation and/or its subsidiaries.
© Findex Group Limited 2020. All rights reserved