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Financial key performance indicators
The business measures that all year round and block calvers should know, understand and benchmark their performance against.
Back to dairy key performance indicators
The KPIs shows targets for excellent, good and average performance based on industry dairy farm data.
Financial KPIs
| Key Performance Indicators | Performing well (Top 5%) | Room to improve (Top 50%) | Review performance (Bottom 50%) |
|---|---|---|---|
| Full economic net margin (ppl) | 12 - 5ppl | 5 - 0ppl | 0 - -10ppl |
| Return on tenants capital (%) | 30 - 20% | 20 - 3% | 3 - -20% |
| Full economic costs of production (AYR) | 23 - 27.5ppl | 27.5 - 34.5ppl | 34.5 - 41ppl |
| Full economic costs of production (Block) | 18 - 24ppl | 24 - 30ppl | 30 - 40ppl |
Financial KPI definitions
Key Performance Indicators | Why you should do this KPI | Definitions |
|---|---|---|
| Full economic net margin | This is a key driver of profit. It allows farms of different and similar farming systems to be compared. Knowing the costs of the business is vital. By achieving this KPI the industry will improve its profitability. By setting and achieving a low target for total costs the industry will become more resilient to market volatility and periods of low milk price payments. | Difference between the income and costs of milk production as follows: Income = Milk and dairy livestock sales + Livestock valuation change + Other dairy related income (e.g. muck and 13th payment). Less costs of milk production = All cash costs + Value of home-grown cereals and proteins + Depreciation + Value of all unpaid labour + Rental value of owned land |
| Return on tenants capital | Return on capital is a very useful measure of business performance and links both the performances of the balance sheet and the profit and loss account. It is also an indicator of the business's ability to generate income. If the business struggles to meet the return on capital targets, it could indicate that it is over capitalised for its size and or underperforming in trading. | |
| Full economic costs of production | This is a key driver of profit. It allows farms of different and similar farming systems to be compared. Knowing the costs of the business is vital. By achieving this KPI the industry will improve its profitability. By setting and achieving a low target for total costs the industry will become more resilient to market volatility and periods of low milk price payments. | Including for milk, replacements and other dairy livestock = All cash costs + Value of home-grown cereals and proteins + Depreciation + Value of all unpaid labour + Rental value of owned land |
Financial KPI case studies
Practical examples from our strategic dairy farms who openly share their KPIs so you can see how they perform.