| Bob's new approach |
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 “We
participated in a benchmark study to help improve our farm business. Numbers
don’t lie – if you don’t have an idea of your cost of production, you better
have a big pocket book. You need to know what your costs are or you won’t be in
business for long.”~Bob Gordanier, livestock producer, Orangeville, ON Benchmarking: a powerful tool for farm business Do you know how your farm business stacks up to others? If so, you already have a handle on your operation’s strengths and weaknesses, and where you can make some tweaks to better your bottom line. If you don’t know how you compare to other businesses, it may be time to consider benchmarking. In simple terms, it’s the age-old process of learning from others’ experiences by comparing figures and practices in order to improve your own performance. One farmer who believes in the value of comparing his farm to others is livestock producer Bob Gordanier. In business for the past 25 years, Bob and his family have a 100-head cow-calf operation north of Orangeville, Ontario. They also raise 250 sheep and grow hay, barley and beans on 900 acres of owned and rented land. Continually learning and sharing knowledge with others is essential in the ever-changing world of agriculture. “The beef business has changed so dramatically in the last five to eight years. You can’t sit in this business and do the same thing as your dad or grandpa did,” says Bob who is director-at-large for the Ontario Cattlemen’s Association. Asking important questions Bob participated in the “Agricultural Performance Benchmarking Study” along with 45 other cow-calf producers from across the province. Funded by the Agricultural Management Institute (AMI), the study was carried out by the Centre for Food and Agribusiness Research and Management (CFARM), which is part of the Food, Agriculture and Resource Economics Department at the University of Guelph. To date the CFARM study has involved cow-calf operators and asparagus growers, but the benchmarking process can apply to any commodity sector in Ontario or other provinces. The study required each participant to complete a comprehensive management survey and financial summary of their enterprise. After researchers crunched and analyzed the numbers, each participant received a report comparing their farm to the other 44. “When you see what other people are doing compared to you, you say why?” says Bob. That’s a powerful question because it motivates you to find the answer and to potentially make changes. In fact, the study aimed to help the participating farmers by prompting answers to other questions too: How good are we? How good can we be? How do we get better? While the answers vary by farm, the study identified management practices that can be applied to lower the cost of production for many operations. “There were some surprising findings,” says Bob. “For instance, people making the most money were actually buying feed instead of growing it.” Another finding underscored the importance of marketing. “Guys who could market cattle and do a good job were far ahead in dollars,” recounts Bob. In addition to the traditional focus on financial data and production processes, the study included a unique element – personal management characteristics. The study concluded that during times of shrinking margins, those with management talent will be most successful. Towards an action plan Bob admits the process wasn’t easy. “To be honest with you, I didn’t like my numbers. They were the numbers I gave them, but when you compile and analyze them, and see the results compared to others. I thought maybe it’s costing me too much to keep these cows.” However, the numbers also confirmed all the things that Bob was doing right. The intent of the exercise wasn’t to focus on negative aspects, but to reinforce that building on existing strengths and making some tweaks to current practices will allow farmers like Bob realize greater success. Bob was impressed with the amount of information he was provided, but recognizes there is more work to be done to boost his farm’s efficiencies. Bob is looking forward to developing an action plan. “The program isn’t finished until you can analyze the numbers with someone who can help you do better,” he says. Bob hopes to get together with about five of the other producers who participated in the study and tap into the expertise at the Ontario Ministry of Agriculture and Rural Affairs (OMAFRA) to add more meaning to his benchmarking results and continue the process of learning from others. How can your farm benefit from benchmarking? Benchmarking is key to highlighting what improvements can be made for a more successful farm business. It’s a powerful management tool that can help identify your operation’s strengths and weaknesses to allow you to make better management decisions, and ultimately improve profit. |
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