How to apply financial benchmarking in practice: A look at grain/oilseed and dairy farm comparisons

February 21, 2020

Our report, Farm Profitability: Benchmarking for better decisions, examines the ways in which benchmarks taken from farm financial statements can be used to assess operational and financial performance. To take this one step further, our team examines two sets of example farms—grain/oilseed and dairy farms respectively—to illustrate how these benchmarks work using real examples to compare results.

Applying benchmarks to three example grain/oilseed farms

Let's explore three example grain/oilseed farm results to illustrate how the ratios and their benchmarks can be used to measure performance, diagnose problems, and help focus on what can yield the highest payoff. These are generic examples whose ratios are within the boundaries of the sample from our report.

For comparative purposes, we set all three farms with revenue of $1.5 million and see their performance differences showing up in their operating and net incomes (earnings before taxes, or EBT). Why do these three farms have such widely different outcomes? The individual ratios can help tell the stories.

Financial ratios of three example grain/oilseed farms

If you'd like to learn more about how to measure performance, diagnose problems, and focus on specific areas of improvement, our team would be happy to continue the conversation. Please reach out to us here to discuss further.