Did you know that in 2006/07 some of the top beef producers in Tasmania had an operating profit of 43 ¢ in every dollar of revenue they received from their business?
This strong profit margin would provide an important buffer against rising input costs and variable weather conditions in the future. But how did they achieve it?
The most recent figures from the DPIW funded benchmarking project have shown that the value per kilogram of their beef wasn't any different to the group average; they just sold a lot more of it! This group produced about 510 kg of beef per hectare that year, with an average live weight per head sold of 498 kg. At $1.01 per kg live weight, their cost of production was also about three quarters that of the group average, so they were making a good margin on each kilogram of beef sold.
Knowing if you are making or losing money on the red meat that you produce, and why, is critical information. A military strategist once said ‘If you know the enemy and know yourself, you need not fear the result of a hundred battles'. The relevant question is ‘how well do you know your business and are you in the best position you can be for the future?'
The Tasmanian Government through its SMART farming initiative currently is subsidising financial benchmarking for commercial beef and sheep enterprises in a project that will run until mid 2010. They are doing this using Red Sky Agricultural, an international company specializing in farm performance analysis to demonstrate the value of benchmarking as a business management tool, and to develop useful information about the performance of the local beef and sheep industries.
The aims of the project include:
- Providing the first industry-wide financial benchmarking of Tasmania's beef, wool and sheep-meat industries
- Helping identify the key underlying profit drivers for industries in Tasmania
- Providing farmers with opportunities for comparison between enterprises, and within industry comparisons of individual businesses
Benchmarking enables farm business performance to be measured and compared across time, different enterprises and other farms. It is a tool for individual farmers to identify opportunities to increase profitability, and can provide the confidence to make any necessary changes.
As Jim Cox of Deloraine commented after he started using Red Sky benchmarking to analyse his farm performance "We have a mixed enterprise business with beef, cropping and dairying all part of the mix. Previously we had struggled to quantify which parts of the business contributed most to our profitability and where the opportunities were to improve performance. Once we had our farm on Red Sky the comparisons were easy and we have been able to confidently make changes to how we operate as well as improving the enterprise mix.
It was surprisingly painless to get the data together to complete the analysis, and once it was done it was easy to identify the key profit drivers in our business. We could see where our strengths and weaknesses were, and made plans for us to action. The reports were easy to understand, especially the graphical report, and I'd really recommend other farmers give it a go."
If you would like to receive some valuable benchmarking data on your business, as well as contribute further to the development of the Tasmanian red meat industries, then please consider this opportunity and take part in this project.
Participation costs only a small amount of your time!
What is involved?
- You complete a short questionnaire describing your livestock enterprise(s)
- Red Sky Agricultural or participating accountants will process that information, and data from your tax accounts
- You will be sent a confidential benchmark report for your own enterprise(s)
- You can participate in group discussions and receive industry level information at regional field days.
You can also chose to participate in a second part of the project which is supported by MLA, TIAR, and DPIW, which is comparing collected benchmark data and the physical characteristics of farms, including characteristics such as; soil type, slopes, weather data, and other management information collected during the benchmarking process. They are doing this to try to develop industry level decision support tools for the Tasmanian beef industry.
Please be assured that personally identifiable information is strictly confidential and will not be released publicly. Benchmark data is combined with a sufficient number of datasets that individuals cannot be identified. If this is not possible the information is not released.
To participate contact Red Sky Agricultural:
Freecall: 1800 733 759 or
Email: info@redskyagri.com or
Fax: (03) 5560 5892.
For project information contact
Dr Dale Miller
Red Meat Targets Research Leader
Phone: (03) 63365340
Email: Dale.Miller@dpiw.tas.gov.au
Useful links:
For more information on Tasmanian benchmarking see Red Sky Agriculture project information site
