Strategic Review and benchmarking help drive profit improvement
A major change in the family farming business prompted Port Kenny farmer Craig Kelsh to get involved in the Rural Business Support Grains Industry Farm Business Strategic Review (FBSR) – a new program he describes as “gold” in simplifying the benchmarking process and helping farmers to get the most out of their businesses.
Craig and his brother split the family farming business at the start of the year, and he believes being involved in the strategic review program will strengthen the performance of his new venture.
The Kelsh family were cropping about 10,000 hectares and running about 20,000 sheep on the Eyre Peninsula.
Craig grows wheat, barley, canola, peas, lentils and lupins, and manages a predominantly Merino wool flock with some prime lambs.
Craig attended the Wudinna FBSR workshop followed by family review meetings on-farm with a farm business analyst.
“Going forward I’m interested in getting it right,” he said. “Because we split the business at the end of the year, I started the review with the land that I’ll be taking and the crop that I’ll be putting in and the sheep I’ll be running.
“I was a bit of a different case. Lots of others in the review had plenty of years of data whereas I had to split the data I had and go with that, which was challenging because there’s different types of land.
“It was hard to do but it has given me some really good figures to start off with.”
Craig wants to start benchmarking with his new business “from day dot”.
“I haven’t been able to do as much industry benchmarking as I’d like. I’m really interested in that side of things,” he said. “I don’t particularly want to benchmark against other businesses but I want to benchmark against myself. I know where the benchmarks are for the top 20 per cent and I want to get myself into that top 20 per cent. I want to get the most out of our business that we can.”
Craig says while the farm has been performing very well, he is interested to discover if there’s any room for improvement.
“We’re growing good crops and the sheep are doing well but I’ve got no indication of where I’m at. I want to know if we can we improve. Should I be growing more lentils? Should I be growing more peas? Should I be going back to a pasture/cereal rotation? I just want to improve every facet of each aspect of my business.
“Should we feeding the sheep more? Should we be giving them pellets? Should we be giving them more grain? Should we be cutting more hay? I want to get my costings right so I know what will give us the best bottom line.”
The variable nature of Craig’s land – he estimates that its value varies from $500/hectare to $6000/hectare – means these questions are especially important.
“Currently, on the poorer soils we mainly go with a barley/sheep rotation or sometimes barley/oats then back to sheep, whereas I continually crop on the real good country – wheat/barley, canola/wheat/barley and then maybe lentils or back to a nitrogen builder,” he said.
Craig said they had finished with a reasonable harvest.
“Canola, peas and lentils have all gone 2 tonne/ha or a bit better right throughout,” he said. “We’re probably 2.5 t/ha average here for wheat and barley and the price is exceptional.”
Craig also says the wool and lamb side of the business are faring extremely well, with overall production at an all-time high, making it a great time to get involved in the Strategic Review and maximise results.
He is an enthusiastic advocate of the Grains Industry Strategic Review and highly recommends others get involved.
“I just really like the program, I think it’s fantastic. I got my son to sit down and do it with us and it really opened his eyes to what is involved and what is needed. “I reckon the program is gold for any young farmer in this business. It doesn’t matter where they are, to sit down and put everything into the program, it benchmarks you.
“You put all your numbers into the program and it comes up with exactly where you’re at, where you’re going wrong, what you need to be doing and where you need to be at to be in that top 20 per cent.
RBS CEO Brett Smith says the Strategic Review has been developed to help families quickly understand their financial and strategic position.
“The new web tools enable families to understand their position relative to industry and bank benchmarks,” Brett said. “Many families who took part in the grains pilot identified significant cost savings.
“The exit surveys show that once families understand the cost benefit of benchmarking they are far more likely to engage consultants and independent advisors to help improve their profitability.”