Top 5 KPIs: John White
We talked to fifth generation farmer and Trev Director John White about some of the Key Performance Indicators that he measures, and the impact they have on his farming outputs. John has extensive dairy farming experience across New Zealand, in the Waikato and now Southland, as well as in Missouri, USA and Chile.
1. Pasture grown (kgDM/ha)
Land is your biggest asset. You’ve got to make the most of it and get a return on your investment by optimising what you can do with that land. Maximising pasture growth over the season gives you the cheapest feed available for your farm system.
This KPI, based on the cumulative sum of growth rates throughout the season, shows your pasture growth potential and is an indicator for achieving both target post-grazing pasture and planned grazing round length.
2. Daily feed demand (kgDM/ha/day)
Measuring daily feed demand allows you to identify and plan for surpluses and deficits, and evolve your farm system to meet seasonal demands and fluctuations. Planning for surpluses and deficits correlates to your pasture growth (see #1). Managing your daily feed demand and measuring your pasture growth is important to allow you to manipulate and achieve your targeted pasture cover.
To calculate our daily feed demand, I multiply the demand within a mob by the number of animals in the mob, then add up all the mobs and divide it by the number of hectares.
3. Profit per hectare ($/ha)
These days “after profit” expenses are a lot greater than they used to be. Tax can take a third, then there’s capex, debt repayments and, with any luck, dividends to shareholders. Without profit you’re going to struggle to meet those expenses, and when you’re in a sub $6 payout environment it’s necessary to measure your profit per hectare to give yourself options and prioritise spending.
You’ve got to be moving the dial, making sure you’re meeting your legal obligations, evolving your farm systems and strengthening your business financial position. Permanent upward pressures on capex and compliance capital spend is a reality.
By measuring profit per hectare, you’re able to prepare for payout fluctuations between seasons that could affect how you meet your expenditure after profit. At the end of the day you’ve got a business to run and profit per hectare tells you whether you’re doing a good job at surviving over the long run.
4. Staff retention (% retained)
Our farm business considers itself an important part of the community and within our ranks, a family. There is a social responsibility from the farm owners towards their teams which starts right back at pre-employment. While this KPI quantifies the excellence of both the business and the staff into a percentage, how we retain staff is more than just a metric - at a high level, it’s about working with good people with the knowledge and skill sets relevant to the farm business. A change in staff can cost $10-20K. This comes from a combination of unintentional mistakes and inefficiencies, and the required training and time to get the team collectively back up to speed.
While you can calculate the exact percentage, measuring this metric starts right back at the initial discussions around the expectations and obligations of both staff and the farm business, and in ensuring that contracts and position descriptions are clear. We aim to support those initial discussions with structured training and review processes, with two formalised reviews per year, two goal setting sessions per year and options for position promotion and succession within the business. Pay reviews are also part of our review process, as is open communication and a chance for the employee to say what they need to say.
We’ve developed a process around forming, storming, norming and performing, and when we put a team together we’re aware we will go through these stages. Once we get to the performing stage, if you can maintain that for 2-3 years you’re in a strong position with a performing team and a forward looking business. Comparatively if you’re constantly managing staff changes you’re stuck in the forming and storming phase where costs can occur and performance is sub-optimal.
5. Compliance rating (%)
Increasing compliance regulations and pressure is part of farming in today’s environment, so while it’s not a conventional KPI, quantifying your compliance rating helps you ensure that some of the bigger issues don’t slip through the cracks. You can then focus on evolving your business to meet the smaller obligations.
A farm’s compliance rating should be at a standard that most people should be able to achieve with some effort. We aim to be compliant every day of the week as a farm business. We have a checklist of compliance matters and we aspire for these to be 100% completed at all times, however at any time we know there’s always room for improvement.