Benchmarking

Understanding your own financial profile is important for the success of your farm operation. Benchmarking helps you assess your farm operation and determine its strengths and weaknesses as well as areas where improvement is possible by comparing your farm's performance with industry benchmarks based on Agriculture and Agri-Food Canada and Statistics Canada's Whole Farm Database of over 150,000 records.

The 2009 Updated Version of Benchmarking is now available through the Canadian Farm Business Management Council at agribenchmarking.com. The tool provides:

• access to up to five years of financial industry benchmark ratios (2003-2007);
• the ability to input up to five years of financial information;
• new revenue and production categories;
• graphics to display 2-or 5-year results;
• a financial tutorial.

After you have entered financial information into the simplified income statements and balance sheets, a series of financial ratios are calculated for your farm operations and compared against industry benchmarks for three ranges (i.e. top 25% of farms, mid-point and bottom 25%).

Five categories of financial ratios are calculated:

• efficiency, liquidity, debt management, asset management and profitability.

Industry benchmarks are available for thirteen regions, ten farm types, eight revenues classes and highly specialized farms.

This tool should be seen as the first step to assessing your farm's financial performance. More thorough analysis can be conducted by your local agricultural office.