Farm managers can now visit an Internet site, select a group of farms and see a breakdown on production costs for farms similar to theirs. Such benchmark reports can help others in farming by providing a reference for comparisons. Researchers also will use the site to analyze the economic performance of farms.

All farm managers want to do a better job controlling their costs, according to agricultural economist Gary Frank. However, controlling costs can take a great deal of time.

“Farm managers can”t scrutinize every bill. Even if they could, how would they know if that area of cost is above average?” asks Frank, the interim director of the UW-Madison”s Center for Dairy Profitability. “This is where a comparison to financial benchmark values is necessary. By looking at financial benchmark values generated at this site, managers can more easily identify areas in their businesses that are more costly than the average. Now they can concentrate their limited time on those areas or categories of costs.”

For example, dairy farmers might access the site and produce a report for other dairy farms sorted by their location, the year, their herd size, milk production or other factors. The reports cover farm earnings, balance sheets, cash flow statements and more, says Frank. By looking at a group”s average for different categories of production costs, dairy farmers can see where they might focus their efforts to improve their businesses.

Frank says the reports can be expressed for whole farms, per commodity unit, per cow, and per product year. The reports can be for a single year or a series of three years.

Developed over a three-year period by Frank and others with the Center for Dairy Profitability and UW-Extension”s Farm Management Education Team, the site was set up to accommodate a range of livestock and crop operations. The site contains more than 5,000 financial records from farms for 1995 through 2001. Currently, the vast majority of these are Wisconsin dairy farms. Farm records in the database are entered in a standard format that allows anyone to compare reports from different farms that produce different commodities, from farms in different regions, or from farms of different sizes.

The information about each farm included in the database is anonymous. The site won”t produce reports for any group with fewer than six farms. Therefore, those who access the web site can”t determine how an individual farm is doing.

The UW-Madison group also developed the computer program used to enter, sort and analyze the farm financial information on the site. Known as AgFA, for Agriculture Financial Advisor, the software is also available to those who want to use it to analyze their farm financial records. [See AgFA sidebar]

The data at the site will allow economists to do statistical analyses and produce research reports. Researchers have already used the site to study the financial success of dairy farmers in the Great Lakes Grazing Network. UW-Madison specialists will use the site to prepare annual reports on each year”s financial benchmarks for Wisconsin dairy farms and their cost of producing milk.

To visit the benchmarks site, go to the home page for the
Center for Dairy Profitability and click on “Financial Benchmarks.”