Benchmarking 2001 - 02

Why Benchmark?

Benchmarking is a very useful tool that enables us to review different farm management strategies. From these, we can identify systems that are related consistently to better financial performance.

From an individual farmer perspective, benchmarking provides two useful outcomes.
  1. It determines, on an annual basis, the economic performance of the farm, with the ability to compare between years using standard costs and income values.
  2. It allows comparisons to be made with other dairy farms within the region.

This is an important and valuable tool since it enables an individual farmer to monitor performance against the more entrepreneurial leaders within the industry. The pace of change in Western Victoria's dairy industry has been substantial in the last 20 years. Benchmarking assists us to keep pace with these changes.

How can benchmarking be simplified?

Many benchmarking programs require detailed inputs of all costs of the business. The program that we offer, includes only the costs that have significant effect on the operating surplus. These are purchased feeds, labour, pasture and crop costs. Outputs are milk and stock income with adjustments made for stock and feed inventory changes.

Rather than ask farmers to provide the actual cost of the feeds, we collect data on the tonnes of feed purchased, area cropped or conserved, and the amount of fertiliser and nitrogen applied.<p>

We then apply a standard value to these that can be applied to each farm each year. This avoids the variations that traditional benchmarking programs have due to different farmer inputs and purchasing prices.


The data input sheet for this information is one page only.  It requires minimal effort to complete, for farmers who have recorded feed and fertiliser inputs for the year.  There is no financial data required other than milk and stock income.  This is because input costs are all standardised.

How will the data be presented back to the farmer?

An individual farm will be benchmarked using three criteria:

  1. Dollar value of milking area and cows combined
  2. Milking area
  3. Cows

The main indices that will be compared using these criteria will be:

  1. Production and income
  2. Production and income less total feed costs


Other performance figures such as pasture utilisation rate, asset turnover ratio and labour costs, will also be compared between farms.

How will this information be collected and presented?

For farmers wishing to participate in this program, the one page data collection sheet will be delivered for completion by 31st July.  A visit will not be made to the farm. However, on completion of the sheet, any queries will be sorted out by phone contact.

In mid August, when the data has been compiled ready for presentation, each farmer will receive in the mail, a report detailing their own performance.  If there is data provided from previous years for this farm, it will be compared with the current season.

The farm data will then be presented as a comparison with the other farms, (which are represented anonymously) in the program.  An individual report will be provided to the farmer highlighting the significant points in the benchmarking comparison.

There will also be an evening meeting of those who contributed to the program, to discuss the results.

What is the cost of the program?

The fee to participate in this program is $250 plus GST ($275).  This includes data entry, analysis, the final report and evening meeting and discussion.

For further information on this program, contact The Timboon Veterinary Group office.



Click here to view the rest of the 2001 July newsletter.