Benchmarking = making more Mooola?? A new study proves it.
I know I know benchmarking has been booooring, but just humor me.
Benchmarking = making more Mooola?? A new study proves it.
2 days ago·4 min read
Dairy farmers are known for many things, hard work, early mornings, and wearing funny boots to name a few, but I think all of us in agriculture would agree on this one, dairy farmers disagree on EVERYTHING!
I was a herd manager on a 1,000 cow dairy some years ago so the farm owner could be on the board of directors at the US largest dairy Coop. He thought he could get a lot done and it wouldn't be easy… but you know possible at least. I remained skeptical, to say the least….
I remember when he came back late one night and I asked all excited (quite sarcastically I must admit) “Welcome back boss man! Did you save us all??”.
He laughed and said “you wise-ass”, “ The board is made up of 52 dairy farmers, and you can just imagine how much we agreed on”.
He was right the board had 52 farmers from every nook and cranny of these great American states, bringing with them every management style, farm size, and theory on how to run a co-op with yearly revenue of $13.5B.
I ran into this every day in my dairy consulting career, every farm has its own management style and theory on how they want to run their farm, unlike most farm consultants I always would say “This is your farm you are the boss, I am here to help you achieve your goals, I will say from time to time how I would do it if it were my farm, but this is your farm”.
But I was always interested in the more objective question, what makes a more profitable farm? What do these farms do in common? Is there a way many different management styles could all improve without huge capital costs or a lot of time invested?
I am an avid reader every year of the Cornell and Farm Credit East Dairy farm business summary’s, it's easy to see that farms can be profitable, with vastly different sizes and management styles, hence my agnosticism on pushing my favorite management style on farmers when I was consulting.
A recent study in the March 2021 Journal of Dairy Science wanted to investigate if benchmarking could be a strategy farms could use.
In short, YES benchmarking statistically improved dairy farmer's key performance indicators or KPI’s.
The study follows 5,945 farms over 9 years in Europe using a benchmarking tool they call Profit monitor or PM.
They break farms into frequent PM users (7–9 yr), infrequent PM users (4–6 yr), low PM users (1–3 yr), and nonusers.
The frequent PM users had statistically significantly higher rates of gain in milk production and profit.
Non-users had the least growth in milk production and profitability over the study period.
I would be the first person to push back and argue “sure it is highly correlated but you know correlation doesn't equal causation!” And that the farms that answer it will tend to be the more business and numbers-minded farmers and well yea they will be more profitable.
And that in fact is the WHOLE point! And why it is at least partially causal.
Benchmarking with peers also has other advantages, it games most farmer's instincts towards competition and local status, (ie DHIA rolling herd averages published by county). As well as sharing and learning with similar other farmers.
In summary, if you want to have a more profitable farm a very good way that doesn't cost much in time or money would be to start benchmarking herd and financial metrics, comparing yourself over time and to a peer group and or industry averages.
We are working on a new dairy farm benchmarking and community platform, that makes benchmarking fast and fun. Stay tuned for the details!
You can see the prototype here CowSheetZ.com