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Benchmarking can boost your bottom line

Farmbench is helping one Warwickshire arable farm move up-the-pack through more efficient machinery spend and cropping choices.

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Hamish Stewart. Photo credit: Lorentz Gullachsen
Hamish Stewart. Photo credit: Lorentz Gullachsen
Benchmarking can boost your bottom line

Benchmarking is a bit like running a marathon and trying to beat your personal best every year, believes farm manager Hamish Stewart.

 

“It is about constantly trying to improve,” he says. “Like any business, profitability is key. We are a Linking Environment And Farming [Leaf] demonstration farm, so it is about sustainability, trying to improve things and we are not afraid to change, question and better things as we go.”

 

Farmbench provided the opportunity to compare the farm’s performance with itself year-on-year, as well as to similar farms in the area.

 

“Benchmarking enables us to identify what is possible in the area,” says Mr Stewart, who believes comparing data will help him focus on areas that will deliver the highest level of performance. He thinks this is particularly vital in light of Brexit.

 

“Brexit was a big incentive to do things [benchmark]. Brexit has not changed what I do overall, but it has perhaps brought things to the front of the mind.”

 

As a result, in November last year the business started working with George Badger of Strutt and Parker, who runs the Farmbench group in the area. The group includes 11 arable farms, running similar systems.

 

Accuracy Going through Strutt and Parker appealed to Mr Stewart, as he felt this ensured accuracy of data recording and true benchmarking.

 

He says: “Having someone ensuring the data was consistently entered, and what was going into different parameters was the same, meant farms could compare accurately.”

 

Farm comparison data within the group showed that Ragley Home Farms sat in the middle for a lot of things. This in itself spurred Mr Stewart on to do better.

 

He says: “We were not the best or the worst, but that means we have room for improvement.”


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Photo credit: Lorentz Gullachsen
Photo credit: Lorentz Gullachsen

"Having someone ensuring the data was consistently entered meant farms could compare accurately"

Hamish Stewart

Compare and be open to change to achieve top progress

Compare and be open to change to achieve top progress

Benchmarking is second nature on all top performing farms, according to AHDB’s Horizon Report, ‘Preparing for change: The characteristics of top performing farms’.

 

The report highlights how most high performing farmers undertake benchmarking activities, allowing them to use other people’s knowledge to identify where performance is edging forwards and where expectations for performance should be.

 

Having a mindset for change and innovation was also identified as a key attribute of high performing farm businesses.

 

Challenge yourself to:

  • Attend discussion groups
  • Record/set key performance indicators, such as horsepower per hectare of arable land
  • Set goals and strive to achieve them
  • Have the right mindset, be positive and adopt a ‘growth mindset’
  • Read up on the latest thinking around farm management and go on farm walks

Mr Stewart says looking at fixed costs was one of the biggest benefits of the process. He says: “Historically, we have benchmarked yields and variable costs.

 

This takes you a step further and looks at the fixed cost elem- ent, which is more complicated, and to net margin.”

 

Farmbench weights some of the costs depending on the cultivation passes entered for each crop.

 

For example, oilseed rape was identified as needing a high intensity of management through the season and thus had higher fixed costs.

 

As a result, last year’s poorer yielding spring crops had a better net margin than oilseed rape. In fact, over- all, spring crops, such as spring oats, performed better as they required less management.

 

First wheat, in particular, was identified as the highest per- forming crop. This further underlined its role as the mainstay of the rotation. A minimum of 405 hectares (1,000 acres) is put down to first wheat annually, with 121-162ha (300-400 acres) planted with oilseed rape.

 

Mr Stewart believes oilseed rape still has a place in the rotation, however he is continuing to improve the crop’s performance.

 

This means stretching the rotation to get on top of weeds such as Shepherd’s Purse and Cranesbill. Labour and machinery costs were the next areas pulled out for attention as part of the benchmarking process.

 

Machinery With much of the farm’s machinery hired or leased, labour and machinery costs were one of the highest to the business.

 

Mr Stewart, who is now striving to own more machinery in the long-term, says: “Ultimately, the guys owning machinery and running it longer and taking more risks on break downs; their machinery costs were lower.”

Farm Key Facts

  • Ragley Home Farms on the Ragley Estate, Stratford-upon-Avon, Warwickshire
  • 1,619 hectares (4,000 acres) total farmed area, including 283ha (700 acres) of grassland
  • Higher Level, Entry Level and and Mid-Tier Countryside Stewardship
  • Mixed soils consisting of one-third light, one-third heavy and one-third medium
  • Arable rotation stems around first wheat, followed by a break crop, or barley and then a break crop Break crops comprise oilseed rape, oats, linseed, echium, poppies, salad onions or sugar snap peas
  • 1,200 Mule ewes put to a Texel or Meatlinc terminal
  • Ragley Estate runs events out of the stately home, has a property business and butchers shop, Ragley Estate Meats, which takes one-third of the lamb from the flock

Identifying this through Farmbench encouraged him to undertake an Arable Crop Production Review with Strutt and Parker. This took the process to the next level by drilling down on indi- vidual machine costs.

 

As a result, an older owned tractor has been upgraded to enable it to do a wider array of tasks. This has removed the need to hire an additional tractor at harvest, which should save the business about £6,000-£8,000/ year in the long-term.

 

Mr Stewart was also keen to reduce the workload of a large owned tractor to enable it to be run for longer. As a result, the current seed drill is being replaced with a more versatile drill, which can be pulled by a smaller tractor.

 

This takes the pressure off the larger tractor and reduces the need for contractors. With running costs of £25/hour for the smaller tractor vs. £55/hour for the larger model, this more than halves running costs.

 

Moving forward Contract hiring a tractor and combine will also be reviewed moving forward. Making efficient use of machinery in such a way was identified as one of the main factors adopted by the top 25 per cent of farms in AHDB’s Horizon Report (see panel, above).

 

Mr Stewart says both benchmarking tools are vital in the drive to improve performance efficiencies, as both drill into different areas.

 

For example, Farmbench looks in more detail at property costs and admin costs, while the Arable Crop Production Review looks in more detail at individual machine and labour costs.

 

When it comes to Farmbench, Mr Stewart believes being able to anonymously compare performance and discuss ideas within a like-minded group is of particular benefit.

 

He says: “They are all very open guys with an enquiring mindset, which gets more out of the group. That is half of the benefit, the open discussion.

 

“It gives you focus on where you can make gains and where you sit compared to farmers in the area. They are all experiencing the same things and the problems you may be experiencing.”


For more AHDB information, go to www.ahdb.org.uk

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