Beyond the numbers: How benchmarking can improve your farm business

Beyond the numbers: How benchmarking can improve your farm busines

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Every dairy farm operates differently. From production systems and feeding policies to staffing and animal health, there are many factors that influence a farm's financial performance.

But how do you know whether your farm is performing as well as it could be?

Benchmarking can help you answer that question by comparing your farm's financial and physical performance against similar farming businesses, as well as your own results over time. You can identify areas of strength, uncover potential inefficiencies and make more informed decisions about where to focus your efforts.

"At MBS Advisors, we've used DairyNZ's DairyBase benchmarking system since its inception, recognising the value of accurate, timely reporting for contract milkers, sharemilkers, owner-operators and hybrid farming systems." says Nigel McWilliam, Director at MBS Advisors.

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Why benchmarking matters

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1. Understand how your farm compares

Benchmarking provides a clearer picture of how your farm is performing relative to others in the industry.

Comparisons can help you understand where your costs, production and overall financial results sit alongside comparable farming businesses. If a particular expense is higher than expected, for example, it gives you a reason to investigate what's driving that difference.

The goal isn't necessarily to have the lowest costs. Different farming systems have different requirements, and spending more in one area may deliver better results elsewhere. What matters is understanding whether your spending is delivering value and supporting the performance of your farm.

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2. Measure progress within your own farming system

"The value is not only comparing again your peers but also against your years - meaning comparing your own system over time to measure improvements through policy and timing of decisions." says Nigel

Comparing your own performance year on year helps you assess whether changes to your farming policies, staffing, feeding strategies or timing of decisions are delivering the improvements you intended.

Rather than relying on how you feel the season has gone, you have financial information to help measure progress and determine whether your approach is working.

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3. Uncover opportunities hidden in your costs

Sometimes, the most valuable insights come from looking at several expenses together rather than considering each one in isolation.

"For example, low labour costs alongside high animal health, feed wastage and repair and maintenance costs may warrant a closer look at staffing, training and farm management practices." Nigel explains.

Could additional staff training help reduce animal health issues, feed wastage or equipment damage? Would investing more in experienced, motivated staff improve overall farm efficiency?

These are the kinds of questions benchmarking can help raise.

As Nigel expresses, increasing labour costs may be justified if it helps reduce other farm working expenses per kilogram of milksolids, improves production and lowers the farm's break-even milk price.

The important part is being able to measure the impact. Benchmarking helps turn assumptions into informed decisions by showing where costs are occurring and providing a way to assess whether changes are delivering results.

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Turning farm data into better decisions

Benchmarking is most valuable when you use it to guide action.

The numbers can highlight where something deserves a closer look, but understanding the reasons behind those results is just as important. Your farming system, goals and circumstances all need to be considered before deciding what changes to make.

At MBS Advisors, we work with farmer owners, contract milkers and sharemilkers to interpret their financial results, understand what the numbers are telling them and identify opportunities to improve performance.

With the support of DairyNZ's DairyBase benchmarking, we can help you look beyond the totals, assess your progress and make decisions that support the long-term financial performance of your farming business.

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Want to understand what your farm's numbers are telling you?

Talk to Nigel and the team at MBS Advisors about your farm's financial performance, benchmarking and opportunities to improve.

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We're more than just year-end accounts. Contact MBS Advisors here.

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