Agriculture is one of the most important industries in the world. Without the fruits, vegetables, grains and livestock produced, your community simply could not thrive. As a farmer, you strive to keep your operational costs in control while trying to produce enough output for grocers and consumers so you can bring in a profit. Yet while it seems as if you are barely scraping by, other farmers are harvesting enough produce and livestock to continue to expand their farms.
How to figure out what you are doing wrong
You have to evaluate what it is about your operations that is not working or could be improved. Farm benchmarking is a type of survey analysis that allows you to compare how your farm stacks up to the operations, revenue and costs expended by other farmers. This analysis gives you a more transparent look at what success other farmers may be experiencing and how you may be able to reach a similar success for your own farm operations. It is a tool that you can use to make better management and cost control decisions for your farm.
Using farm benchmarking to help your agricultural business
Farm benchmarking will take several accounting aspects of your farm into consideration. The survey requires an honest view in regards to your finances and agricultural output. Using your accounting software, you can pull up your financial account records for the entire past year. Then you can perform the following analysis:
- Determine fixed costs based on different types of farms
- Check your farm performance by either gross margin per hectare or gross margin per head
- See if farm performance is at an acceptable or unacceptable range
Northern Ireland farmers can perform farm benchmarking by using performance indicator data provided by the Department of Agriculture and Rural Development. The statistical reports are available for downloading so that you can compare the previous farm year to your previous year’s records. With this information, you can make the necessary improvements so the current year can have a better output based on the modifications and operational changes you implement.
Simply asking the neighbours about their farming techniques doesn’t guarantee that you will suddenly see a boom in your business, especially if you don’t know what the source of the issue may be. By first evaluating your farm and then comparing it to other farms that are the same size and type as yours will allow you to better understand your operations. You may decide to purchase new equipment that can ensure a greater output of produce. You may also notice wasteful spending in certain areas of your farm as you can take a more cost-effective approach.
Having the most accurate and current financial data will allow your farm to bring in revenue and reduce costs. Look toward hiring an accountant to ensure your bookkeeping records are accurate and up-to-date. Also, invest in accounting software that will easily allow you to report on your farm’s financial health and make the right management choices so you can expand and grow your farm business.
Food Wise 2025 which was launched with much fanfare by Stephen Coveney earlier this year could play a pivotal role in the future of your business. Food Wise 2025 identified significant growth opportunities across all sub-sectors of the Irish agri-food industry so there is a golden opportunity for small indigenous food producers to build an export market on the back of this initiative.
Using farm benchmarking to help your agricultural business will enable you to play your part in Food Wise 2025 and more importantly, claim a seat at the table.