An increasing number of farmers are using benchmarking techniques to reduce operating costs and increase efficiency, according to research conducted by the Food Chain Centre. It found that almost one in three farmers now benchmark their business on a regular basis, compared with just 8% in 2002.
Historically farmers used to rely on informal techniques: 15% of farmers told the FCC they benchmark by talking to friends and colleagues, getting information from consultants and picking up information from the press.
The FCC research found that such an approach can, undeniably, be useful. No one would deny that farmers in similar enterprises can learn how to minimise costs and maximise profits from one another, and that this can often be done in an informal manner.
However, the research also shows some drawbacks with this approach, which suggest that informal benchmarking will often be less likely to deliver the savings and profits which are the reason for benchmarking in the first place.
The FCC data confirm that the financial benefits of joining a group to benchmark are likely to be greater. Of the farmers surveyed, 69% reported gaining a better understanding of costs while 45% gained a better insight as to what drives business profitability. Most importantly, 34% increased financial returns and 27% have increased the quality of their products.
The key to learning something beneficial from the exercise is recognising that as a farmer you are not always the best at everything you do. Whereas sharing information might once have been seen as giving away your competitive advantage, there is now a growing realisation that lower-cost producers from overseas are the greater threat.
Benchmarking allows farmers to continually make small improvements to their business approach, based on others experiences and findings, rather than on a hunch.
This formal approach is starting to pay dividends with many businesses.
One convert, Mary Quicke of Quickes cheeses, Devon benchmarked the dairy enterprise of her business and identified savings totalling seven pence per litre, reducing her cost of production to 14.4ppl. “I had rose tinted glasses about the way the business was operating,” said Ms Quicke.
For more information on benchmarking, or Farm Business Improvement Groups, please contact the FCC at www.foodchaincentre.com or call 01923 857 141.