How does your farm business make strategic decisions? Maybe decisions are based on business goals or targets that were set ahead of time, or a vision statement that has been in place for years. Hopefully there is a specific decision making practice in place for every farm operation, but in case there isn't consider using benchmarking as your new farm management tool.
Benchmarking is the process of comparing your own farm business performance measures to other farm business industry competitor's practices. Measures typically looked at are quality, profit and loss accounts, gross margins, balance sheet and performance measures. In the process of benchmarking, farm producers identify the best and/or similar size/type of farm operations, and compare the results of those measures to one's own results and processes. This allows farm managers to learn how well their business targets perform and, more importantly, helps the business understand which processes are proven successful.
One example of a farm financial database that is very accessible to any and all farmer producers is called FINBIN. FINBIN is one of the largest and most accessible sources of farm financial and production benchmark information in the world. FINBIN places detailed reports on whole farm, crop, and livestock financials at your fingertips. By using tools for benchmarking such as FINBIN, producers can accurately gauge their financial performance in relation to their neighbors and industry competitors.
Tina LeBrun & Wayne Schoper
A database such as FINBIN summarizes actual farm data from over 3000 agricultural producers who use FINPACK for farm business analysis. FINPACK is a comprehensive farm financial planning and analysis software system developed and supported by the Center for Farm Financial Management at the University of Minnesota. Farm business management associations that currently contribute data to FINBIN include: Minnesota State Colleges and University Farm Business Management Education, University of Minnesota Farm Business Management Associations, North Dakota Vocational and Technical Education Adult Farm Business Management, Nebraska Farm Business, Inc., Nebraskaland Farm and Ranch Management Education Program, The Ohio State University Extension & Ohio Farm Business Planning and Analysis, Missouri Farm Business Management Analysis, Utah Farm Business Management Programs, and Southwest Wisconsin Technical College. This list demonstrates the depth of the FINBIN database and how likely it is to find farms similar to one's own farm type.
Farm Business Management programs allow producers to compare their own farm practices to those farms similar in size or demographics. Some examples of benchmark reports created through Farm Business Management programs include; dairy operations with over 200 cows, beginning farmers who have farmed for less than 5 years, corn producers with 100-300 acres, reports on demographic farm locations all are completed to aid in farm management practices. Producers can compare the results for their business with average or above average performance through these types of reports. By sharing these reports with their management team, farm producers determine what sectors of the farm operation is doing well and what areas there is room for improvement. Benchmarking really becomes the ultimate measure of farm management by setting achievable targets and goals from what these reports unfold.
To access FINBIN simply go to: www.finbin.umn.edu/ where you can create a benchmarking report based on the characteristics of your own farm operation to analyze and compare against. To be included in benchmarking databases such as FINBIN contact your local Farm Business Management Instructor. If you are a farm producer and are keeping accurate financial records go the extra step to compare your own farm business with the network of other farms that are not only your neighbors and peers, but also your business competitors.