Looking Beyond Yield: What Benchmark Data Really Shows
When you bump into other farmers at the local coffee shop, the conversation usually revolves around the same metric:
How are your yields?
Yield is one of the easiest and quickest ways to understand how your operation is doing. It’s also a metric that naturally sparks pride for farmers. It will always be important to keep an eye on yield data.
But higher yields don’t always translate directly to higher profitability. And using yield as the sole metric to grade success could be obscuring part of the picture.
That’s where benchmarking comes into play.
What is benchmarking?
Benchmarking is when farmers utilize FBFM to compare their operation’s numbers with those of their peers. The goal is to compare data with other operators similar to you in size, age, soil type, and other factors. This process digs beyond the surface of yield data and can provide deeper insights into profitability, efficiency, liquidity, and long-term business health.
For example, Joe and Bob might end a season with similar yields. But if Joe spent an extra $50/acre to produce those yields, Bob will come away with higher profits. And if Joe’s extra $50/acre is far and above the average for similar farmers in his region, benchmarking data can help illuminate where he might have room to improve next year.
This visibility is the end goal of benchmarking: not judgment. Benchmarking can highlight where there’s a deviation from the average. But it doesn’t label a specific outcome as “good” or “bad.”
With visibility into potential outliers, farmers can make more confident management decisions. These decisions can help them not just produce more yields, but do so more efficiently.
How to use benchmarking to measure your operation’s success beyond yield
If you’re looking for data besides just final yield numbers to help you make better management decisions and improve profitability, benchmarking data can help you:
Reveal your overall cost of production
If yield is the only number you pay attention to each season, you leave out part of the picture. Yields may have been high, but how much did you pay per acre to produce that harvest? And did your revenue make up for that cost of production?
Benchmarking data can help you understand, on a per-acre basis, what you spent on seed, chemicals, fuel, fertilizer, or other factors, compared to other similar farmers. Seeing how your cost-of-production stacks up to the norm can help you pinpoint where to improve or where to double down.
Flag opportunities for cost control
It’s easy to assume sometimes that your expenses are the same as everyone else’s. Other farmers in the area have probably shared their vague complaints about how high fertilizer is, and you’ve agreed, without asking specifics.
But your neighbor down the road might be getting more from their fertilizer and is actually paying much less per-acre than you. Benchmarking data can help you identify that gap and investigate where you could potentially spend less.
Farming is filled with uncontrollable factors, from the weather to the market. But costs are an avenue where you might still be able to exhibit some control and maximize efficiency. Identifying outliers via benchmarking can be a great way to measure that efficiency.
Identify strengths and weaknesses
Many farmers might think benchmarking data only serves to show when something is going wrong or harming their profitability. But it can also be the source of good news. The goal of benchmarking data is to show you where something on your operation deviates from the norm. These deviations can go in either direction: either lower or higher.
Maybe your chemical costs per-acre are actually way lower than your peers and now you have the opportunity to spend a little more. If you’ve had issues with pests over the past couple seasons, maybe benchmarking data can help you see that an extra pesticide run next year is actually well within your budget.
Working with your FBFM Farm Business Consultant can help take information from a benchmarking report and turn it into actionable management decisions.
Ask your Farm Business Consultant about benchmarking
Good yields matter. But understanding what’s behind those yields matters even more. Benchmarking (using current, validated data) is a critical tool to illuminate that context.
At FBFM, our farmer cooperators can access benchmarking data for their region all year-round. No need to wait until final yield numbers are tallied. With this valuable benchmarking data throughout the season, farmers have access to one extra tool in their toolbox to make better decisions, improve efficiency, and maximize their profitability.
If you want to understand the broader context of what your numbers are telling you, contact your local FBFM office. Your Farm Business Consultant can help you learn how to leverage benchmark data to better understand your operation’s financial performance, efficiency, and long-term business health.
