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Benchmarking has made my business more profitable and resilient

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AHDB is a statutory levy board whose purpose is to inspire our farmers, growers and industry to succeed in a rapidly changing world.

Mixed farmer Donald Ross says benchmarking with Farmbench has cut his input costs, improved profits and made his business more resilient – and it’s not as hard as he thought it would be.

Donald Ross and his family have been farming at Rhynie Farm, Easter Ross, at the northern tip of Scotland for five generations.

But the challenges of modern farming – squeezed incomes, increased volatility and an uncertain political landscape – mean Mr Ross has taken to doing things differently.

Five years ago he started comparing his business using the AHDB’s benchmarking tools. He also joined an AHDB benchmarking group for arable farmers.

He remembers getting his first report from the benchmarking coordinator after submitting his data: “We were handed out the report and what ran through my head was, ‘Oh, really? Output’s good, variable costs are okay, fixed costs…what happened there? My fixed costs are through the roof.’”

Since then, he’s drilled down into the figures, stripped out what he can, and the result is improved margins and profitability.

“The benefits of Farmbench are that we have an understanding of where our costs are,” explains Mr Ross.

“We know what it’s costing us to produce a ton of barley, a fat bull, a fat heifer, a lamb – and where the costs are coming from.”

He also feels more confident in his business decisions.

“At the moment we’re under a lot of pressure. Being able to make comparisons gives me confidence in what I’m doing.”

Farm facts

  • Fifth generation family farm in Easter Ross, northern Scotland
  • 162ha owned of wheat, barley, oil seed rape and oats.
  • 12ha rented for potatoes.
  • 100 suckler cows
  • 250 ewes – selling progeny for fattening

Drilling down and making changes

Before he started benchmarking, Mr Ross says he didn’t know his costs very well.

“I had an idea of where we were making money and where we weren’t, but I didn’t have an idea of where my comparisons came from.

“In Farmbench, you can drill down from a local, arable, or Scottish perspective, to a national perspective. So I can compare my sheep enterprise to those in Wales, or in the south of England and see who’s making the most money, or doing things differently.

“It’s taking that wee 5% more to extract 15% and to just do as much as we can to drill down”.

As a mixed farm, it can be hard to separate out the costs between the different enterprises, but Farmbench has helped Mr Ross do this.

He’s also created a second farm using the tool so he can see what would happen if he added or removed certain costs.

The impact of an event, such as this year’s drought, or changes in input costs, can also be measured and used to plan ahead.

“You can input the information and say; ‘instead of getting 3.8 tonnes per acre of wheat, I’m going get 3.2 tonnes and the price is going to be up a bit but my costs have gone up a bit, so where are we going to be?’.

“You can input your fuel costs and compare and contrast on that, or feed costs, such as with the hard winter last year. It certainly helps in that way.”

Support from other farmers

Being part of a farm benchmarking group has given Mr Ross an added layer of support too.

“The arable business group has been very good. We discuss, for instance, whether we are paying too much for insurance, repair bills, or fertiliser, and we compare and contrast.

“Although our information is confidential, we see each other’s figures by consent. So, rather than being an insular farmer sitting on the top of a hill, I can see into other people’s businesses and compare and contrast to see what situation I am in.”

Farming can be a lonely business too, and a benchmarking group can give a real sense of camaraderie, says Mr Ross.

“When you’ve got six, eight, 10 people around a table, discussing costs and really opening up and having a good chat about it, you become friends and you will end up telling them your most innermost secrets.”

Business impact

Overall, benchmarking has helped Mr Ross become more resilient.

“With the political turmoil that’s going on, life is fairly unpredictable,” he says. “We don’t know what’s round the corner with Brexit, so it’s good to know your costs so you can actually pare things down.

“That’s one thing that’s come from the benchmarking – that you can actually build a wee bit of resilience into the business.”

He’s made some small and big changes to achieve this.

He used to buy a lot of machinery, but after looking at his costs he realised that on 400 acres of cereals he couldn’t afford to do this and instead now buys second-hand.

He’s also stopped using contractors.

“It’s costing me £15/acre to drill my grain and I know that a contractor is £25/acre, so I know I’ve got £10 more in my pocket per acre, which is £4,000 more in my pocket just from one event.”

Those savings are worthwhile too – he’s putting the extra money into his pension, or investing it back into the business.

Understanding more about his business has given Mr Ross confidence in his decisions and allowed him to more carefully plan for the future.

“Benchmarking gives us confidence for the year,” he says. “There is a budgeting tool on Farmbench, so you can plan for the year ahead.”

Getting started

Getting started with Farmbench was not too difficult, says Mr Ross. With his arable benchmarking group he learnt how to use the software and input costs.

“AHDB was very good at helping us – there’s always somebody at the end of a phone. Our benchmarking manager was very helpful in getting everything set up and she’s still there for us if needs be.” The information obtained from Farmbench is definitely worth the time needed to use it.

“Purely because I now know what each part of my business contributes to the bottom line, and also it gives me an idea of where the cost-benefits are, and where my problems lie. I think in this day and age, we need to know our costs.

“For the business, what I hope to see is that I’ve improved the land, that I leave a better farm for my son, as my father has, that we can go forward and live here in a beautiful area for many generations to come.”

What is Farmbench?

Farmbench is an easy-to-use online benchmarking tool for farmers and growers that helps to identify where strengths and weaknesses lie within a farm business. Farmers can also take part in an AHDB Business Improvement Group alongside Farmbench.

By comparing results anonymously to farms with similar enterprises, Farmbench allows farmers to improve individual business performance and manage many of the challenges facing the sector, such as price volatility, Brexit, and economic uncertainty.

At present, Farmbench is available for beef, lamb, dairy, combinable crop, potato and sugar beet enterprises.

Farmers receive information on their financial and physical performance, such as yields and daily-live weights, which they can compare with other farmers regionally, nationally and internationally.

Farmbench is funded by the AHDB levy, and so it is free to use.

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