Benchmarking
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6 min read
DairyBase provides a range of benchmarks for dairy farmers based on ownership, location, and production system, such as organic or winter milk farms. You can use a DairyBase benchmarking report to discuss your farm business with consultants, accountants, or bankers. The report is more impactful when discussed with an advisor.
DairyBase's benchmarking includes two types of Key Performance Indicators (KPIs): financial and physical, such as "Operating Profit per hectare" and "Cow efficiency." For data to be considered valid, a minimum of 20 farms must be in a benchmark group. DairyBase's data shows farm comparisons across various regions and highlights top-performing farms. It's essential to check DairyBase regularly as the data updates daily, and new benchmarks become available.
A wide range of benchmarks are available on DairyBase, largely based on ownership type, regional location and production system, including organic or winter milk farms.
How to use benchmarking data
There are several ways to work through a DairyBase benchmarking report - it just depends on business goals and what information is in the reports.
A benchmarking report is an ideal starting point for discussion with a consultant, accountant or banker to talk about the farm business. The impact of a report is magnified when it is discussed with an advisor.
For more information contact DairyBase.
Key performance indicators
Financial
- Operating Profit/ha: Measure of dairy farm profitability by ha. This is the dairy operating return after an allowance for the value of change in: dairy livestock numbers; non-paid labour and management; supplementary feed inventory change; owned run-off adjustment and depreciation.
- Farm Working Expenses/kgMS: The total dairy farm cash expenditure, including labour, stock feed, and other working expenses and overheads per milksolids.
- Operating Return on Dairy Assets (%): Dairy operating profit (as above) plus owned run-off adjustment, less rent as a percentage of opening assets (last years’ closing). The return on assets employed at beginning of the year to generate the income.
- Return on Equity (%): Dairy operating profit (above) plus owned run-off adjustment plus net off farm income, less rent less interest as a percentage of opening equity (last years’ closing equity). This measures the return on the funds employed by the owner. There are two calculations - one is calculated taking into account the change in capital value of assets, the other is based on recorded costs per the financial statements (which may or not maybe re-valued).
- Growth in Equity (%): The change in owner’s equity during the year as a percentage of opening equity.
Physical
- Pasture and crop harvested tDM/ha: Pasture and crop harvested is the amount of pasture and crop (tonnes dry matter) that has been grown on the milking platform and harvested by mouth (dairy cows) or machine.
- Cows milked/person/hour: Number of cows milked per person per hour measured at the time of peak milksolids production (milking time).
- KgMS/ha: Total kilograms of milksolids produced per hectare effective milking area.
Valid information
To ensure the information is statistically reliable and that individual data remains confidential a minimum of 20 farms must be entered for a benchmark group before statistics become available. The greater the number in the sample, the more accurate the data will be.
DairyBase benchmarks
DairyNZ’s DairyBase has collated provisional farm data showing comparisons between seasons and information for top performing farms.
The DairyBase data gives an indication of what dairy farmers were producing last season and how much they were spending across eight regions – Northland, Waikato, West Coast-Tasman, Marlborough-Canterbury, Otago-Southland, Bay of Plenty, Taranaki and Lower North Island.
Farm working and operating costs do not include interest payments which are deducted as part of the business profit calculation.
DairyBase has a range of benchmarks available which farmers can access.
More information about the figures used
Downloads
More information
- At least 20 farms are required for a benchmark category to be available. This is to ensure the confidentiality of farmers’ data and to avoid the identification of individual farms. Therefore for a top 50% benchmark we need to have analysed at least 40 farms.
- Benchmarks correspond to the average values for farms in a specific category.
- Farmers should check DairyBase periodically as farm data is entered daily into DairyBase and new benchmark categories become available once the minimum number of farms is reached. Existing benchmarks can also change as the number of farms contributing to them grows.
- Dairy farmers can contact DairyBase to arrange the collection of physical and/or financial data for their farms.
- The figures below show some of the key performance indicators (KPI’s) in DairyBase reports. By logging in to their DairyBase account, farmers can generate reports (tables and graphs) with benchmarks for other physical and financial KPI’s. And at district rather than regional level or by farm system type; once enough farms have been analysed.
- Cows/ha and milksolids production per cow determine milksolids production per hectare, which contributes 85% - 90% of gross farm revenue per hectare.
- Physical KPIs such as kg ms/cow at peak and per day throughout lactation, ms/ha total and the % drop in ms from peak to 31 December provide information about the shape of the lactation curve.
- Days in milk, production per cow and imported feed per cow are used to calculate platform-grown pasture and crop eaten which is a key determinant of profit per hectare. Imported feed is feed that is not produced on the milking platform in the current season.
- Labour efficiency (cows/FTE and kg milksolids/FTE) influences farm operating expenses, which in turn determines the farm operating profit.
- Milksolids production and farm operating expenses are the drivers of farm operating profit available to pay interest charges, drawings, tax and capital purchases.
- Farm working expenses include cash expenses only. Farm operating expenses add in depreciation and non-cash expenses to reflect unpaid family labour, changes in feed inventory and a lease adjustment if the farm owns a support block.
- It is important to understand that farm working and operating costs do not include interest payments which are deducted as part of the business profit calculation.
- A consistent difference between the top 50% and the whole group is that the top farmers have lower farm working and operating costs per kg ms.
DairyNZ Econ Tracker tool
The DairyNZ Econ Tracker is an online tool that brings you economic information relevant to the New Zealand dairy sector right now.
DairyNZ Econ Tracker tool