Comparing your costs of production against others is an option open to all farmers, but it is not always utilised.
Alex Black spoke to Richard Orr about how AHDB’s Farmbench programme is allowing him to delve into the story behind the figures...
Scrutinising every aspect of his figures and asking if he could justify the money he was spending was a move which was starting to pay dividends for Northern Ireland (NI) AHDB monitor farmer Richard Orr.
Farming 165 hectares of mixed crops, including potatoes, vegetables and cereals at Downpatrick, Co Down, Mr Orr attended the first NI business discussion group meeting last week after uploading his farm data into Farmbench.
The group brings growers together to discuss best practice, share information and focus on the issues affecting their businesses and is part of AHDB Cereals and Oilseeds’ Farm Excellence programme.
He had already been benchmarking for about 10 years, but the Farmbench system allowed him to ‘take it to the next level’ and compare his results against a larger sample.
The benefits began as soon as he started uploading his data.
Mr Orr said: “I think a lot of learning has come from seeing the figures as you put them in regarding the costs and can see it is costing X to do Y.
“You ask, ‘did I spend that much on a particular thing’? Once you get it all together you are delving into it and looking whether you are spending too much compared with a big pool of people.”
After attending the first meeting on Thursday, February 14, Mr Orr was impressed by the positive attitude of the new group and found dissecting his numbers with other people useful.
“We were sitting around a table discussing everybody’s figures, asking could I justify it and could I say why I was spending that. We were getting a reason behind those figures,” he said.
“Looking at all the average figures does not give you the information behind the figures.”
And regional variations also impacted their input costs. He gave the example of machinery costs, where his figures were much higher than average.
But working in the Northern Ireland climate had impacted his costs as they were operating in a smaller area than many others and had a shorter window to operate in, without impacting yields and quality.
“You have got to balance expenditure against what it would cost in yields and the negative effect it has.”
He gave the example of using the system to measure whether applying a new fungicide was beneficial.
“You can say applying it increased my yields so it was worth the spend or, on the other hand, it did not increase my yields so it was not worth it.”
He added many of those who attended the meeting were encouraged by the results.
“The farmers came away positively. Some of the areas they thought needed improvement were not actually doing any worse than anybody else.”
Farmbench and the better understanding it provides has already enabled him to make changes to cultivation and drilling methods on-farm. Previously they had been using a contractor, but decided it was beneficial to bring it in-house and use their own machinery.
“This is for two reasons; firstly, we can manage our soil structure and soil health and, secondly, we can do it with our own machinery.”
His next focus is on becoming more efficient with their self-propelled sprayer and seeing if they could utilise this piece of equipment to apply liquid nitrogen fertiliser to the arable crops.
And it is this constant search for improvement which has brought Mr Orr together with fellow monitor farmers.
Herefordshire monitor farmer Martin Williams visited Mr Orr in November to help him establish best practice for the Northern Ireland group as they started out. He farms 800ha of arable and grassland and first started benchmarking about five years ago.
He said: “They had been doing some benchmarking, but Farmbench is slightly different. AHDB is really keen to roll this out.”
And he believes there is nothing to worry about when it comes to comparing your figures with other people’s.
He added: “Everyone is a bit nervous of putting their figures up at first. They say I do not want my neighbours seeing them.
“Actually, you are all in the same boat together.”
Mr Williams has also visited Denmark and France on study trips to see how costs compare between their farming industries and the UK.
“We went to France and had this grand vision that group buying and selling was the way forward,” said Mr Williams.
However, he said that while the cooperatives were successful they were not as farmer-focused and the mood on-farm was not as positive as they had assumed it would be.
“They use them but they are not as farmer-friendly as we thought,” he said.
“We went over there expecting them to be light-years ahead of us, but they are probably 10 years behind in terms of attitudes towards precision farming. It was quite encouraging.”
But one positive was the co-ops sponsoring young people coming into the industry.
“In Denmark they are absolutely buzzing. There are some very nice businesses out there. They are very cheerful, making good money and are very forward- thinking.”
He said in Denmark everyone was ‘sharp’ when it came to understanding their costs and budgets in detail and he was particularly interested in their innovations in grass seeds, rotations and oilseed rape.
“It was an interesting style of farming, a fresh approach. We have a way to go until we are as switched on,” he said, adding the UK could learn from the ‘buoyancy’ and attitude of the mDanish farmers.
The results from benchmarking had thrown up some surprises, with Mr Williams initially expecting variable costs to be where the biggest differences came from and the area with the most potential to improve.
“But variable costs are very similar. Actually, it is background costs which are the biggest difference.”
As the group was now becoming much more aligned on their costs of growing through their meetings, they were looking to expand the information they covered into other costs such as rent and additional background costs.
Both Mr Orr and Mr Williams believed benchmarking was ‘vitally important’ and encouraged farmers who were not doing so to get started.
They said farming was one of the only industries where businesses did not always know their costs of production inside out.
“Anybody running a business today who does not know their costs of production is crazy. Farming is one area of the economy that does not do it,” said Mr Orr.
“It leaves you in a better position, especially thinking about the new crop.”
Mr Williams said he believed anyone who had not been benchmarking should be.
“There are not many businesses in manufacturing who do not know their costs.”