Benchmarking from Granular: Are you Paying Too Much for Inputs?
admin | December 17, 2015
In most industries, businesses compare themselves to their competitors every day. It happens as they compete for business (“Why did my competitor win that customer?”). It happens when employees move around the industry (“We did it this way at my last company”). It happens when competitors release information to the press or online. For companies of all sizes, comparison to their peers drives innovation and progress.
Farm businesses have a much more limited understanding of how they compare to their peers. In commodity crops, customers provide no feedback on each farm’s product. Farm managers seldom switch jobs to other farms. Extension universities and the USDA provide some useful industry data, but it may not be necessarily relevant to individual farms. Mainly, farmers rely on informal conversations with other farmers and bankers, retailers, advisors etc. to understand how they are performing relative to their true peers. These informal feedback channels are helpful, but not always timely or detailed or easy to arrange.
Granular farms are different in a lot of ways – they farm different crops, they’re of different sizes, located in different geographies and are organized in different structures. However, they all share a high level of professionalism and commitment to improving their management every day and every season. Granular is linking these farms together in a software-enabled peer group, to enable them to benchmark themselves in ways that are valuable, timely, accurate and fully anonymous.
Benchmarking Example: Input Prices
Granular customers use our software to build field-level budgets and manage their input inventories, from the moment they order them until they apply them. This means they select individual products from our database (e.g. Asgrow soybean variety “AG4632”) and specify packaging units, quantities ordered and price paid. For any individual customer, this information on negotiated prices is highly confidential. But, when it is properly aggregated and analyzed, this pricing information can be valuable and actionable for all the farms in the Granular network.
We recently released an input price benchmarking report that shows the median price paid and variance around that median for all inputs with sufficient sample size. This data is only available to Granular customers, but to share a couple example data points:
- The median price Granular customers paid for AG4632 is $58.28 per bag, and the variance is 21%
- The median price Granular customers paid for DKC60-67RIB is $289.88 per bag and the variance is 9%
This information is available to our customers in real-time and will get more and more detailed as Granular quickly expands its customer base. For many products, we already have a large enough sample size to show pricing trends at the regional level. Of course, there are all kinds of valid reasons why an individual customer might have paid a higher or lower price than others in the network (e.g. early order or volume discounts). However, customers who consistently see their prices coming in above median across multiple product types will probably want to have a tougher conversation with their suppliers and retail partners – and having this report in hand may be a valuable tool.
What’s Coming Next?
We are developing a broad range of financial, operational and agronomic benchmarks to help customers identify where their business is performing well and where there are opportunities to improve. In addition to input costs we are working on benchmarking across other areas of the farm business: operational benchmarks, grain marketing benchmarks, etc. Our vision for benchmarking is not only for you to be able to compare your to peers, but compare yourself to relevant peers and do so when it matters the most. And with no travel.
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