Is The Farm Prospering And Why ? A Method To Spot Good Or Weak Performance And To Do “Benchmarking”
In Swedish agriculture “mixed farming” is common. The manager may choose among several crops, with or without livestock production, or to produce services to other farmers or to customers outside the farm sector. Farmers with diversified production feel the need to know which enterprises that do really contribute to farm profitability on the whole even if gross margins appears to be rather good.
With our method we evaluate the economic result of the most recent year in cooperation with the farmer. We analyse the profit and loss account based on farm records on quantities and monetary information. Revenues and costs are allocated to the enterprises where they belong. The systematic approach includes even farm enterprises that produce “internal products” i.e. feed production, straw production etc. This procedure is implemented, not only for the easily found variable costs, but also for labour, machinery and energy costs as well as for for buildings and some other capacity costs. We use definitions of gross margin 1, gross margin 2, etc in steps down towards finally computing the rate of the return on investments.
The system produces results both on the farm business- and enterprise level on many key numbers regarding economic and technical efficiency.
In the end we undertake “benchmarking actvities” individually (with the farm-staff) and with groups of farmers through organized workshops. This method has been in use since 1949 with 120 customers currently utilising the system.