The survey included 604 farms of all types and sizes and farmers of all ages across Canada in the grains and oilseeds, beef, hogs, poultry and eggs, dairy, and horticulture sectors; 183 respondents were grain growers.

The work was commissioned by the Guelph-based Agri-Food Management Institute (AMI) and Farm Management Canada for the Ontario Ministry of Agriculture, Food and Rural Affairs.

According to study results, leading farm businesses in the top quartile financially out-perform those in the bottom quartile by a wide margin: 525 per cent increase in Return on Assets (ROA), 155 per cent increase in Gross Margin Ratio, and 100 per cent increases in Return on Equity (ROE) and Asset Turnover.

Specific to grain and oilseed growers nationwide, the top quartile shows a 10.8 per cent ROA compared to 1.4 per cent in the bottom quartile; 47.6 per cent Gross Margin Ratio compared to 21.6 per cent; 36.4 per cent ROE compared to 8.4 per cent; and 28.6 per cent Asset Turnover compared to 7.2 per cent.

“The research clearly identified linkages between specific business management practices and financial outcomes. Overall, management matters and we’ve identified the seven activities that will make you more money in your farm business,” says AMI executive director Alison Robertson.

The seven activities

By far the most significant driver of farm financial success is continuous learning. Farms in the bottom quartile are three times more likely to not seek out new information, training or learning opportunities.

No. 2 is keeping finances current and using software with the latest updates so that key farm decisions are made based on an accurate financial picture of the business.

The study found that farms in the bottom quartile are three times more likely to have financial records that are months behind and are not being used on a regular basis for decision-making. They’re also almost three times more likely not to monitor their cost of production.

Rounding out the top three is the benefit of using professional advisors for outside perspectives. Results show that farms in the top quartile are 30 per cent more likely to work regularly with a trusted farm business adviser or team of advisers.

The next four most impactful activities include having a formal business plan to help meet long term goals, monitoring cost of production, assessing and managing risk, and having a financial plan with budget objectives in place.

The scope of these activities may seem like a daunting task, and Robert­son says that jumping into all seven at once could prove to be too overwhelming, recommending instead farmers move ahead with a more moderate approach.

“Consider working on one or two items off the list during the less busy times of the seasonal cycle, for example. Even doing one activity can make a difference,” she says. “Change doesn’t need to be a big and overwhelming task.”

The report also identified other important management habits, such as human resource management, communication, risk management, and transition planning, but Robertson says the top seven were clearly shown to have the most significant impacts on a farm business.

Overall, 73 per cent of grain farmers surveyed across Canada felt the financial health of their farm was a little or much better now compared to five years ago.

Specific to grain and oilseed farms across Canada, the results also showed:

• 74 per cent of respondents have the ability to read and use financial statements.
• 62 per cent make use of financial risk management planning.
• 59 per cent use an accounting system to assist in business decision-making.
• 55 per cent use cost of production for benchmarking and decision making.
• 50 per cent feel they have the propensity to learn and improve.
• 45 per cent of respondents feel they have a clear vision and goals for the future.
• 37 per cent have a financial plan with budget objectives.
• 31 per cent use farm business advisers.
• 28 per cent have a formal succession or transition plan.
• 24 per cent have a formal business plan.
• 18 per cent have a formal human resources plan in place.

Financial support for the study was provided through Growing Forward 2.

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That number contrasts to Canadian National’s 95 per cent order fulfillment for the same week. The Ag Transport Coalition reports that CP also started the year out much stronger, before dipping the week of January 3. CN’s order fulfillment has been relatively high throughout the year, according to the report.

CP met 83 per cent of grain car orders in the Vancouver corridor, 96 per cent in Thunder Bay, and 72 per cent in other corridors the week of January 10. CN met 94 per cent or more of demand across the board for the same week.

So what do those numbers mean? It depends who you talk to.

Comments from the Ag Transport Coalition

Greg Northey is director of industry relations at Pulse Canada and is also part of the Ag Transport Coalition. The Ag Transport Coalition has only been measuring the railways’ performances for two years, so it’s hard to know what the norm is, he said.

“At this point in the grain year, in all corridors, CP’s performance on the timeliness of car delivery is better than last year,” Northey wrote via email. CN has also performed better than last year, he added.

Northey sees several potential factors, including lower demand from other shippers, operational improvements, and a milder winter. CP’s dedicated train program “seems to function very well,” Northey said.

He also noted that CP has “decent order fulfillment in bulk corridors,” but poor in other corridors, such as the U.S./Mexico and transload. He said that performance is similar to last year.

“Certainly, it indicates a similar pattern to what we have heard qualitatively from shippers for many years,” said Northey.

He speculated that CP’s decline, which started the week of January 3, could be related to weather or an internal decision to cut capacity. Any effect from CP’s layoffs would not have shown up until the following week, he noted.

Canadian Pacific’s response

I asked CP for a comment regarding CP’s apparent slip in performance, its dedicated train program, and whether there were other factors involved in its performance improvement from last year.

Jeremy Berry, CP spokesperson, emailed me a statement.

The Ag Transport Coalition reports on “cars ordered,” but CP doesn’t use orders for the majority of its grain movements, Berry wrote.

“The AG Transport Coalition continues to present information that is misleading and irreconcilable with our own data, which detracts from the goal of enhancing transparency. This does little to improve supply chain performance, collaboration and daily execution,” he said.

At press time, CP had moved 128,500 carloads of grain, which is 4.1 per cent greater than last year, Berry said. He added that is 19 per cent about their five-year average.

Berry said the dedicated train program has been well-received by grain customers, and accounts for 70 per cent of CP’s grain traffic.

The Ag Transport Coalition represents several agricultural associations, including Pulse Canada. It is funded through Growing Forward 2. You can sign up for the coalition’s weekly reports on grain movement at agtransportcoalition.com.

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