Agriculture sectors also need metrics and KPIs for their business. Data analytics and similar professionals often use key performance indicators, or KPIs, to refer to measurements relevant to contemporary business.
KPIs are noticeably lacking in the context of agriculture, though. This isn't logical when you think about it. The price mechanism affects farms and other associated businesses just as much as everyone else. Agriculture-related businesses fail if revenues fall and costs grow.
It's that simple- KPIs and metrics are absolutely vital to track within agricultural organizations and farms. They must be equally concerned with their own performance as everyone else in any other industry.
Farm managers frequently make assumptions about how they perform or only receive feedback once a year when they prepare their accounts. The constant drip feed of data you see in other businesses is not there in this one. It isn't easy. You must pay more attention to data in farming. In this guide, we'll look at some key metrics that agriculture industry professionals need to monitor.
Top 9 Metrics for the Agriculture Industry You Should Be Monitoring
1. Asset Turnover Ratio for Agriculture
The asset turnover ratio calculates your assets' effectiveness in creating value, which helps determine your total revenue. With a higher asset turnover ratio, farms and ranches use their assets more effectively, resulting in better time and resource management.
Low numbers might indicate ineffective production management, making this farm measure vital to comprehend and monitor. Increased sales, improved production and sales efficiency, the sale of non-used assets, and quicker client payment collection are some strategies to boost your asset turnover ratio.
Since farming and ranching are considered dangerous professions, implementing these precautions might help shield you from unanticipated events.
2. Yield of Stock
Land and structures for housing cattle are scarce resources for agricultural operations. The yield on the stock is an effort to gauge how well you're utilizing the resources at your disposal. For example, it informs you how many bushels of maize you can plant on a particular acre or how many cattle you can raise in your current sheds. The weather, natural calamities, and your practices for raising animals are just a few variables that might affect yield.
3. Wages to Revenue
In an ideal world, you would outperform your rivals in income for every dollar spent on compensation. This indicator will show you whether or not you are hiring people effectively. Your workforce is more productive the more money you can make for every dollar you spend on salaries.
4. Overall Feed and Water Use
Water and feed are essential and expensive agricultural inputs. Your farm will be more profitable the more you can reduce them without compromising productivity.
5. Debt Over Assets Ratios in Agriculture
Each farmer and rancher should know, understand, and keep an eye on the debt-to-asset ratio as a measure of farm management. This ratio determines how much of your assets are borrowed. By multiplying this result by 100 and dividing assets by liabilities, you may get this amount and have a clearer idea of operational risk exposure.
A high debt-to-asset primary ratio may indicate that you are treading carefully. You could not have the money to fix or replace a crucial piece of farming equipment in the weeks before harvest, which would prevent you from having the option of applying for further financing.
Knowing these figures and keeping a healthy ratio will provide you the freedom to take on more debt in the future if you need to for a particular reason.
6. Working Capital
Working capital, sometimes referred to as the sum of money available for operating costs, is a farmer's primary source of income. Whether you run a farming or ranching enterprise will affect your working capital to gross income ratio.
Aim for 30 percent or more for crop farms and 20 percent for animal farms as a general guideline. Even if numbers fluctuate, you should never place yourself in a position where uncontrollable circumstances compel you to make unwise financial choices.
Maintaining careful control over your working capital gives you the freedom to invest in things like field analyzers, weather forecasting services, and machine learning technology. It also enables you to make wise judgments in an emergency.
7. Goods Pricing by Region
It is essential to employ innovative technology to monitor the market and maintain tabs on the cost of items in the area. Market prices for commodities like maize, soybeans, wheat, and animals can fluctuate significantly in a single day.
8. Human Capital
The agriculture industry isn't just about food output. It's also about people. This indicator considers employment prospects and accessibility and helps supply persons in the sector with marketable skills and aid for future generations.
As a result, metrics should consider apprenticeship and training programs to provide chances for further education and innovation. Sales and commercial knowledge, marketing expertise, and information and communication technology abilities are among the talents that may grow more and more valuable in agriculture. Concerns for the safety and well-being of farmers and growers are also included in this area.
9. Commodity Pricing
You can quickly go into the red and produce more than the market can handle if you don't have a firm grasp of commodities prices and how they affect your organization. Since the figures fluctuate based on supply, demand, and other external variables, no one can accurately anticipate how commodity prices will alter over time. However, keeping an eye on these patterns can enable you to make wiser choices when deciding how many crops to sow or animals to rear.
How DashboardFox Helps with Agriculture Metrics
By now, you might have established that metrics are needed even in fields such as agriculture. You need these metrics to help you manage your business seamlessly and as streamlined as possible. These will also help you identify key points to improve so that you can go towards an upward trajectory leading to your success in the industry.
Now that you know which metrics to keep an eye on in terms of managing your agriculture business, whether you own a farm, livestock, or a combination of these two, the next thing you need to do is to look for a helpful tool that would make the monitoring of these metrics a piece of cake.
What more to look for other than DashboardFox?
DashboardFox is a business intelligence tool equipped with the perfect tools and features you need to monitor, interpret, and present your metrics to the stakeholders in a way they can easily understand. It is designed to make KPIs and metrics easily monitored, presented, and its data is quickly interpreted into layperson's terms for everyone to understand.
Data visualization tools and features are also present in DashboardFox, so you don't need to worry about presentations to your stakeholders. The Fox can do it for you if you want to present a dashboard, a map, a chart, or even a graph.
You can never get more systematic with DashboardFox.
It is also designed to be used by everyone, even those with little to no computer programming language proficiency. It's also secure with its self-hosted setup to protect your precious data.
Add to that their enticing payment scheme (pay once, use forever), and DashboardFox can help you step up the game in shaping your business and preparing to soar to greater heights.
Feel free to schedule a live demo session with us, or we can discuss more through a meeting to see how we can help you. We'll be waiting!