Turning Data into Decisions
Maverick Ag Ltd If we already know the answer to the decision, is it really a decision?
Agriculture advancement in terms of technology and data has grown exponentially in the past decade. Primary producers are now faced with large scale, multiple decisions that are coming at them faster than ever before. The idea of turning data into decisions encompasses the movement from the “big data” generation into “data analytics”. This allows farmers to have the answers to questions that have not been asked. It provides a decision matrix that takes the gut feeling out of farming.
When Netflix approached Blockbuster for a purchase acquisition in 2004, it was a turning point in the technology advancement world. Blockbuster was on the leading edge of the rental industry and felt that streaming and online was not the wave of the future. This is where agriculture is at today. Numerous corporations have come up with technology that will revolutionize the industry, which farms will be early adopters and which farms will choose the Blockbuster path?
The easiest way to get a point across is personal experience. The 2019 strategic plan for Hebert Grain Ventures is built around data analytics. Based off Danny Klinefelter’s Progressive Farmer article “Boost your Odds of Business Failure”, the farm’s focus is shifted to data driven decision making and how it affects numerous areas of the operation. The fact that making small changes in many areas can have a compounding affect across the entire farm.
The first area of improvement at Hebert Grain Ventures is in terms of farm culture and human resources. People has always been, and will continue to be, at the top of the strategic plan. Employees are identified as an investment in both the business and ownership group as they allow leaders to work “on” the business rather than “in” it. Most agriculture enterprises identify them as a cost and treat them as such. Therefore, the sectoral job vacancy rate sits around 7%, highest industry in Canada. Furthermore, many farms reported to the Canadian Agriculture Human Resources Council that they have delayed an expansion and have increased stress due to shortages in labour.
Hebert Grain Ventures made it a focus to concentration on both hiring and retention moving into the 2019 growing season. By creating an employee handbook filled with farm information and processes, they improved the onboarding process which has been shown to improve hiring success by 66%. Also implementing other behaviour tools such as Kolbe and Unique Ability allowed them to identify the best areas of business for new employees. They also made moves towards retention as they have a company pension plan, benefits package, employee truck incentive and other bonuses for long term labour. They follow the metrics of 2,000 acres per full-time employee (1.25 hours paid per acre estimate) and set weekly and monthly hour limits with shift implementation. This allows them to monitor and control burnout and employee motivation, which is a real issue on primary producer farms. Mental health is at the forefront in agriculture, these are steps to reduce this moving forward.
The second area of the strategic plan revolves around labour, power and machinery costs. On many operations the highest increase to cost of production is in relation to equipment. The misconception in agriculture is that quality (new machinery) is the culprit; however, on most enterprise it is quantity (number of machines) that dictates the cost structure. Machinery optimization and utilization should be on every farm’s radar as the cost of ownership is not going to increase moving into the next decade.
One-way Hebert Grain Ventures uses data analytics is to compare their working percentage on their machinery to industry averages. In the 2017 growing season the working percentage on their high clearance sprayer was around 38% while the industry using the same brand machinery was at 37%. In 2018 they focused on a decrease in fill times by implementing stop watches and making it a competition to see what times they could accomplish. The result was a reduction in fill times from 22 minutes to 7 minutes numerous times a day. This adjusted the metrics up to 55% which increased the bottom line by approximately $1 per acre. On their 22,000-acre grain farm that meant an additional $22,000 on the bottom line.
Other area of improvement was also implemented into their combine planning as based on data analytics they were over-machined by almost one full unit based on the average. This was a $3 per acre adjustment to the bottom line. Through data analytics they can reduce their labour, power and machinery with small scale changes leading to large scale results. The train of thought on the farm is that can’t be not an option, it is a challenge. The ability to reduce excuses and come up with solutions.
The next step in the strategic plan was around agronomy and how data analytics can make decisions in terms of fertility packages and probably of weather occurrences. Using water moisture probes the farm has been able to make significant changes in the way they make decisions. During the 2018 growing season, the farm was sitting at 40% of their normal average rainfall. Most farms had already made the decision to stop fertilizing and to cut back on fungicides and other extras due to dry conditions of the top 2″ of dirt. However, the moisture probes identified that there was still 11″ of available water and the probably of rainfall based on 30-year historical data was high. They made the choice to top dress their wheat crops and the return on investment was finalized at 7:1. A protein premium on the entire crop and an 11 bushel per acre improvement from the check strips.
“You don’t know, what you don’t know”. This phrase is used in many aspects of business at Hebert Grain Ventures. The ability to apply data to decision making has allowed them to dream bigger and achieve more. When their ground moisture analysis identified that if they received 100% of normal rainfall, they could achieve 82 bu per acre canola, this was outside of any limits they had seen before. The only issue was that this was around 200 lbs of nitrogen required, which was not usual on most farming operations. The reason it was not usual is that this was not possible, a can’t statement. Through top dressing and granular application outside of seeding, they were able to achieve these amounts of fertility. It also provided them with the ability to identify that canola uptake of nitrogen is best at 180 to 220 lbs. Data driven decision making is changing out they farm.
The main thing to identify in terms of data is that no capital expenditure is required to start the process. All farms file tax returns and all farms “should” have accrual financial statements. This is the easiest and most relevant data used for decision making. Know the cost of production of the farm, know the worstcase scenario in terms of loss and insurance and know what bank ratios drive your future financing availability. These are not expensive areas of data, but they are important. Lastly, identify if you have achieved replaceability of management. Most farms are not self-managing meaning that the owner is so involved “in” the business that if something changed the farm would not be able to continue operations. Team dynamics and human resources must change on primary producer operations for them to continue past the current generation.
The legacy statement at Hebert Grain Ventures is to leave the dirt, financial statements, team members, community and industry in a better state than the last generation. Maverick Ag focuses on how to change the mindset of financial business risk management and consulting in agriculture. Hebert Grain Ventures is the trial of new data driven decisions, while Maverick Ag is the catalyst to provide this information and technology to the industry after such trials. The aim is to continually push the envelope and make the industry better as whole because we have dared to dream.
If we already know the answer to the decision, is it really a decision?