MANAGEMENT ▶▶▶
Financial benchmarking: update from Canada
Canada’s pork producers are using benchmarking information to make better decisions – compared with each other and compared with past results. This will help them gain further insight into their international competitiveness.
B
René Roy, mem- ber of a pork producing benchmarking group in Que- bec, Canada.
BY TREENA HEIN, CORRESPONDENT
enchmarking in agriculture is becoming more com- mon throughout the world and that’s because it provides producers with many tangible benefits. Knowledge is power and the more information a pig farmer has about his/her operation and how it compares with other operations, the better business decisions will be. There is research which proves the value of benchmarking to a farm’s bottom line. A study by VIA (the farm management organisation in Quebec), for example, shows that the operat- ing profits of farmers who have participated in provincial business management/benchmarking groups for a number of years are 43% higher than those who did not take part. Participating farmers have also seen a return on assets that is 2.2% higher, as well as a higher overall net worth.
Farm management group in Quebec The first farm management group formed in Quebec as long ago as 1968, with 50 members and one advisor hired by the
farmers. Now, of about 29,000 farmers in the province, around 1,500 have joined one of the roughly 20 groups, paying half the basic membership fee with the other half paid by the pro- vincial government. While the fee comes with information and an individual consultation with the advisor, members can also pay the advisor for further analysis or consulting to help with a farm expansion or another major financial decision. These groups began to include benchmarking around 1990. René Roy is part of a pork producers’ farm management/ benchmarking group in Quebec and has owned a farrow-to- finish pig farm with 125 sows since 2006. He is among many independent Quebec pork producers contracted by the major Canadian pork processor Olymel. Every year when his group’s average cost of production (COP) figures come out, he and fellow group members always look at whether they fall above or below the average. “I also dis- cuss costs with other producers that have a similar type of management system or are in my region and therefore get similar weather conditions,” Roy says. “Continuous discussion with colleagues is good. Over time, you can see if you are advancing with the group, and also compare with yourself. It’s good to figure out maybe why you’re not progressing as fast as others. You can look at the options if you are under the average. It could be genetics or something else.” Like other Quebec producers, Roy notes that the cost of feed is higher for them compared to those in other provinces, putting more pressure on their COP. One factor in that is the comparatively higher level of grain trading in Que- bec; the number of grain sellers is small and the grain supply smaller too, compared with other provinces.
How is each enterprise doing? In addition, benchmarking also allows pig farmers with multi- ple enterprises to assess how each enterprise is doing, notes John Molenhuis, business analysis and COP specialist with the Ontario Ministry of Agriculture, Food and Rural Affairs ( OMAFRA). A typical farm enterprise on hog operations in Ontario is growing field crops. “The farm is growing grain crops for homegrown feed, or to sell as cash crops, or both,” he ex- plains. “Choosing to grow crops for homegrown feeds can be part of the farm’s strategy to control feed costs…[but farm- ers] will need to do the cost analysis.”
24 ▶PIG PROGRESS | Volume 35, No. 9, 2019
PHOTO: BERT JANSEN
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