Benchmarking

Benchmarking formats

Benchmarking provides you with the opportunity to take a really close look at, and compare, your farm's performance with that of others and yourself year-on-year to see just where things might be improved, or where you're already ahead of the game.

Most farmers already compare their performance informally, for example, discussing milk yields with neighbours. However, confidentially comparing a whole range of data with a select group such as a discussion groups, helps farmers identify areas where performance can be improved and profits increased.

As part of a discussion group many benchmarking formats are open and AHDB Dairy can provide you with a Comparable Farm Profit (CFP) format for your use that will stimulate discussion and encourage you to look further at specific areas of your business.

 

Comparing data

AHDB Dairy provides analysis on the production economics and performance of GB dairy farming. This helps levy payers determine the key drivers for profitable systems, the industry understand its international competitiveness, and AHDB Dairy direct future research and knowledge transfer towards areas of most benefit to levy payers. Data for this was previously collated through Milkbench+, now this is being outsourced to provide a stratified sample that represents the industry. 
The latest 2015/16 Evidence report can be found by clicking here.

 

Other bodies and organisations also publish figures such as detailed average and above average gross margin calculations, which allows benchmarking (or comparative analysis) between similar sized enterprises, farms or herds. This kind of performance analysis can help to pinpoint differences between farms or herd performance and the level of information required can suggest or justify means in which a business can change, invest or adapt.

For benchmarking to be effective, it is important to compare like-with-like. For example:

  • Where two different businesses are being compared it is important and fair that they are compared for the same time period.
  • Cost definitions must be identical; some enterprises may be able to apportion certain expenses to defined enterprises as variable costs, whereas with other farms those expenses may be accounted as an overhead, due to accounting complexities. Similarly, some costs may be separately-defined in some accounting systems, but included in other cost categories in other systems.
  • Some comparisons account for unpaid labour on farms; some farms may be fortunate to employ family members at little or no pay but this may make comparison unfair with those who employ paid workers, particularly where labour requirements are similar.
  • Owner-occupied farms may have to include an imputed rental value, in order for their performance to be fairly and accurately compared with tenanted farms.

Often, for a simple comparison, costs, overheads, outputs and margins are compared on a per hectare basis, simply by dividing them by the area farmed.