benchmarking and passion what the top farmers say about their substantial profits… graeme...
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Benchmarking and PassionWhat the top farmers say about their substantial profits…
Graeme McConnell, Peter White, Gerard Obrien28 February 2012
What can be done to make your farm more profitable?
The best farmers are achieving 174% of the average farmers profit
Year in year out…….
• On our survey average farm size of 3139ha this equates to $226,008 more operating surplus…… every year.
• Over the six years this translated to an additional $1,764,815 in equity growth. – The best farmers actually grew by $2.8m
Average Top % Difference
Total Effective Area 05 2695 ha 2818 ha 105%
Total Effective Area 10 3139 ha 3529 ha 112%
Ave Rainfall May-Oct (05-10) 238 mm 240 mm 1%
Some basics about the businesses….
• They started the period with similar size farms.
Input levels and enterprise mix (2010 only)
Average ($/ha)Top
($/ha) % Difference
Fertiliser 70.10 83.95 20%
Fuel & Oil 22.17 25.63 16%
Weeds & Pests 32.76 40.80 25%
Plant Repairs 21.12 22.73 8%
Average Top
Ave % Crop (05-10) 61% 73%
Ave % Legumes (05-10) 16% 15%
Crop performance
Average Top % DifferenceAve Wheat T/Ha (05-10) 1.85 t/ha 2.26 t/ha 22%Ave Lupins T/Ha (05-10) 1.17 t/ha 1.39 t/ha 18%Ave Barley T/Ha (05-10) 1.95 t/ha 2.32 t/ha 19%Ave Canola T/Ha (05-10) 1.03 t/ha 1.10 t/ha 7%
Key points from the data
• Difference in profits too large to ignore• Consistent points
– Passion– Planning– Preparation– Commitment/determination– Timeliness– Getting the job done
Production lessons
• Very integrated approach eg • Dry seeding average 35% of program• Depth of thought to rotations• Weed control driven around having paddocks
available to dry seed
• Must get seeding right• Only relatively small changes to enterprise
mix or program during seeding• They seem to be able to match inputs to
seasons very well.
Management Lessons
• Approach to business is very rational – profit focus
• The thinking and awareness of their business is intense.
• The ability to understand the impact of a decision on their system is very good.
• Not early adopters of new technology or varieties.
Management Lessons
• Planning and preparation is key.• Know their enterprise margins well• Relatively set rotations, although not usually on
paper past 1 year
• Actively moving larger decisions outside periods of stress
• Rarely make losses
The Human Element
• Most have significant levels of experience• Many have children that are engaged in the
business and actively pushing for improvement
• Involved in management decisions from early to mid 20’s
• Training and succession – they seem to be able to keep someone in the business operating in their prime.
The Human Element
• They estimate they work 103 hours per week on average during this time
• Average off peak hours are also high at 54hrs/week
• Good communication• They don’t do it alone
Average Top % DifferenceEquity 1 Feb 2005 $5,253,501 $4,998,998 -5%Equity 1 Feb 2011 $6,275,744 $7,785,815 19%
Compound annual growth rate 3.0% 7.7% Ave Return on Capital % (05-10) 1.3% 4.4%
Equity and Return on Capital
Where does BYG fit with WMG?• Increase productivity by 2 million
tonnes by 2015 but only if profitable
What is WMG contribution to this?
• Local target- Increase profitability by 5% in 3 years?
How are we going to achieve this?
• Survey- top growers don’t do it alone
• Small grower groups
• Focus- management options for non-wetting sands
What’s the benefit?
To the Growers involved• Explore the opportunities with access to
experts, consultants and economists• Best ways to implement• Short term & long term impacts
To the WMG• Short term & long term impacts of picking
up new technology options
Questions?Gerard O’Brien (BYG Advisory Board)Email: [email protected]: 0428 945 901
Graeme McConnell (Planfarm)Email: [email protected]: 0418 900 065
Peter White (DAFWA)Email: [email protected]: 0427 003 774
Some basics about the businesses….
• Investment in plant
Average Top % DifferencePlant $985,726 $1,170,730 19%
Ave Plant Value $/Crop Ha $535.79 $467.90 -13%Ave Plant Value/Crop Income $2.62 $1.28 -51%
Average Top % DifferenceAve Opening Sheep Nos (05-10) 4,666 4,170 -11%
Ave Lambing % (05-10) 84% 88% 5%Ave Lambs/WGHa (05-10) 2.10 2.31 10%
Ave Wool Kg/WGHa (05-10) 23.55 27.83 18%Ave Stocking DSE/WGHa (05-10) 5.49 5.75 5%
Some basics about the businesses….
• Livestock performance
Some basics about the businesses….
Average Top % DifferenceAve Open Farm Value $/Cl Ha (05-10) 1,829 2,073 13%
Ave Debt to Income Ratio (05-10) 1.47 1.13 -23%Ave % Income From Crop (05-10) 66% 78% 18%
Ave % Income From Livestock (05-10) 30% 18% -41%
Some basics about the businesses….
• Operating results
Average Top % DifferenceAve Gross Income $/Ha (05-10) $355 $470 32%
Ave Op. Costs $/Ha (05-10) $259 $302 16%Ave Op. Surp/Def $/Ha (05-10) $96 $168 74%