KPIs in Agriculture: Sustainable

Practices for Farmers

Agricultural practices have been continuously developing in the past years due to science and
technology. However, progress comes with a cost. A 2021 study reports that food and agriculture
are responsible for 25% to 35% of global greenhouse gas emissions. 
Modern agricultural systems are different compared to organic farming systems. The former uses
heavily agrochemicals that increase pollution and negatively affect the underground water
supplies. Most nutrients in organic agricultural systems come from biological matter additions,
including manure, compost, and cover crops. These supplements feed not only the plants but
also the land’s microorganisms.
Technological advancements influenced the agricultural sector as well. A method to monitor the
impact of technology on the agronomical field is the use of key performance indicators (KPIs).
While designed to make farming efficient, modern machines require energy use and other
resources that could generate high emissions levels.
By using KPIs in the monitoring process, every farm owner will be aware of both its positive
impact on the environment and the damage it may cause. FAO estimates that emissions from
animal agriculture represent 14.5% of annual anthropogenic greenhouse gas emissions. By
measuring the inputs and outputs, farmers can control and implicitly reduce emissions. 
According to The KPI Institute, a KPI is “a measurable expression for the achievement of a
desired level of results in an area relevant to the evaluated entity’s activity.” In the agricultural
sector, KPIs increase productivity and profitability, help manage daily operations, and contribute
to informed business decisions.  

KPIs in Farm Management

The increase in crop yields has been attributed to modern agronomy, plant breeding,
agrochemicals such as pesticides and fertilizers and technical advancements but at the expense
of ecological and environmental degradation. Selective breeding and advanced animal
husbandry procedures have enhanced meat output, but these methods have generated
concerns regarding animal welfare and environmental pollution.
Some of the KPIs that should be considered in the agricultural sector are: 

 # Farm size
 % Irrigated farming land
 # Pesticides consumption
 $ Cost per hire
 # On-farm trials and demonstrations
 # Area of land cultivated
 $ Cost of harvesting

These KPIs support the decision-making process and give an evolutionary overview of the farm.
For example, monitoring the farm size over the years shows the dimensional growth of the initial
placement (storage spaces, land, stables). Knowing the percentage of irrigated farming land
gives insights into future costs (water supply, irrigation system). It can help approximate the time
until the entire surface will be properly irrigated. Cultivated land area and costs for harvesting
insights can predict future harvesting costs of a larger (or smaller) surface. Monitoring pesticide
 consumption indicates the level of soil degradation, water contamination, and the risks of
accidentally killing beneficial insects and non-target plants. 
Meanwhile, it is important to note that each farm type has specific KPIs based on their
characteristics, goals, and operations. For example, farmers on a dairy farm should consider
monitoring: 

 # Milk yield per cow

 # Milk flow rate
 % Dairy calves deaths under 1-month-old
 $ Daily cow replacement cost
 $ Concentrate cost per liter of milk produced
 # Cows managed per person employed

Agricultural Productivity and Costs

A 2022 study affirms that through accessing finances, the U.S. agricultural sector sequestrated
more carbon in 2020 compared to 2019. Overall, U.S. greenhouse gas emissions decreased
from 2019 to 2020 by 10.6%. Thanks to technological advancements and innovation, farmers
and ranchers maximized their productivity while using the same quantity of inputs.

When analyzing costs, a Market Intel article highlights that chemicals and fertilizer make up the
largest share of on-farm expenditures, up to 17.5%. To optimize expenses and lower the
contribution to environmental degradation, the use of these materials should be reduced. 
In addition, a 2019 study concludes that effective scheduling of land preparation, plantation, and
harvesting; use of early maturing crop varieties, seedbeds, and transplanting procedures for
intensive land through crop rotation; selection of disease, insect, and weed control methods; and
efficient irrigation and fertilizer use are all feasible measures to increase crop yield and
production and revenue. 
To monitor productivity and costs, farmers can use these KPIs: 

 # Unit production time

 $ Energy costs per unit of production
 # Energy used per unit of production
 % Input waste materials
 # Production per day

FAO describes productivity “as a ratio of a volume measure of output to a volume measure of

input use.” It can be determined at any geographical scale for a singular instance (farm,
commodity) or a group of farms. Most ranches produce multiple commodities with many inputs
that generate costs. 
As previously said, advanced technological solutions that enhance productivity without increasing
costs have emerged on the market. If the farmer does not have the finances to invest in these
technologies, another solution would be to decrease the commodities types and increase the
quantity and quality of produced items. This way, the brand focuses on a few product types,
gains customers, and increases sales. While constantly developing a customer base, the
commodities price could be adjusted to increase profit.
To acquire an in-depth understanding of KPI measurement challenges and ways to address
them, join The KPI Institute’s certification program in KPI measurement. The KPI Institute
provides toolkits, templates, case studies, and good practice examples from some of the world’s
most successful firms, as well as thought-provoking exercises. Enrolled participants will also get
free access to the smartKPIs.com premium content, the world’s largest library of documented
KPIs.
KPIs for agriculture industry
When commentators talk about KPIs, or “key performance indicators,” they’re
usually referring to metrics that apply to modern industry. KPIs, as applied to
the world of agriculture, however, are conspicuously absent. 

When you think about it, this doesn’t make a lot of sense. Farms and other
related enterprises are just as sensitive to the price mechanism as anyone
else. If revenues tumble and costs rise, agricultural companies go out of
business. It’s that simple. They need to concern themselves with their own
performance, just as much as anyone else. 

Of course, this doesn’t anyway happen. Farm managers often engage in

guesswork about their performance or get feedback once per year when they
do their accounts. They don’t have the same continual drip feed of data that
you find in other industries. It’s a problem. Farming needs to become more
data-focused.

Examples of agriculture KPIs

While the total number of agricultural KPIs is too extensive to list here, it’s
worth looking at a few examples of the types of metrics that the industry likes
to monitor, if it does.

 The yield of stock. Agricultural businesses have a limited supply of

resources, be it land or bildings to house livestock. The yield of stock is
an attempt to measure how efficiently you’re using the assets available
to you. It tells you, for instance, the number of bushels of corn you grow
on a particular acre, or the number of heads of cattle you can rear in
your existing sheds. Lots of factors can affect yield, including your
rearing processes, the weather, and natural disasters. 
 Wages to revenue. Ideally, you want to generate more revenue per
dollar spent on salaries compared to your competitors. This metric will
tell you if you’re employing people to real effect or not. The more
income that you can generate per dollar spent on wages, the more
productive your people are. 
 Feed and water consumption. Feed and water are significant and costly
farm inputs. The more you can minimize these without damage to
production, the more profitably your farm will be. 

Why use KPIs in agriculture?

We’ve touched briefly on why farmers should use KPIs, but here we’re going
to delve a little further into the rationale. KPIs provide essential insight that no
agricultural business should be without. 

Increase productivity and profit 

KPIs are essentially, just a form of feedback. They tell you what you’re doing
right and where you’re going wrong. They’re vital pieces of information that let
you know whether changes you’re making on the ground have a positive
impact or not. 

You can probably see where this is going: the more feedback you have on
operations on your farm, the more you can tweak them. And the more that you
can tweak them, the more profitable and productive they can be. It’s a virtuous
circle. 

The effects on productivity can be remarkable. You could, for instance, set up
an experiment. One year, you might choose to use a particular type of fertilizer
on your corn and then the next year a different sort. You could then use KPIs,
like the yield of stock, to tell you whether you which system performs better. 

Save time on your agriculture

program 
Time is a significant constraint on agricultural businesses. You only have a
certain number of hours in the day to get everything done. KPIs, however, can
help save time on your agriculture program. You can use them to figure out
where you should be diverting your resources and which areas are the most
productive. You can also use them to tell whether some of your programs are
unprofitable and if you should close them down. 

Knowing how you’re spending your time and whether it’s generating significant
revenue is worth knowing. Sometimes it’s not worth engaging in particular
activities because the marginal benefit to your business is minor. Similarly,
you may find that there are some aspects of your enterprise where you’re
dedicating too little labor, and it’s coming back to bite you. For instance, you
may have decreased the time you spend on animal hygiene which may have
led to a decrease in livestock quality and issues with disease. 

Make more informed business

decisions 
Operating within the confines of reality is important. You want your business
decisions to reflect the conditions you face in the real world, not what your
thoughts might tell you should be correct. Agricultural businesses, just like
everyone else, are prone to making decisions that are not optimal when not
based on evidence. 

KPIs, however, tell you something about the state of your operations. KPIs are
measurements like you’d have in a scientific experiment, informing you about
whether your practice is valid or not. If your KPIs are weak, they’re telling you
that you’re doing something wrong. 

What’s more, KPIs are dynamic in the sense that you collect data and follow
them over time. If one month your yield per stock is riding high and then the
next it’s crashing; there’s a good chance that something changed. What was
it? And can you fix it?

KPIs let you make more informed business decisions too. You can use them
to see whether it’s viable to employ new people or grow a different kind of
product. It can sometimes be difficult for agriculture businesses to know
whether a change of focus is profitable and making good use of their existing
assets. KPIs go some way to answering the question, showing farmers
whether their decisions are making them more money than before or not. 

Farming is a tricky business to be in: margins are razor-thin, and taking risks
is challenging. You don’t want to hamstring your capacity to make money in
the future. Collecting data and tracking KPIs, however, can help considerably.
The more data you have at your fingertips, the better able you are to

Measuring KPIs for Increasing

Productivity
By Tanja Folnović | Agronomy, Blog

Key Performance Indicators (KPI) are measures used to evaluate success of

organization or to evaluate the success of a particular activity in which it is
engaged. Simplified, KPIs help an organization define and reach it’s goals. When
an organization has analyzed its mission, identified all its stakeholders, and
defined its goals, it needs a way to measure progress toward those goals. KPIs
are those measurements. For example, a KPI may be to keep the ratio of costs to
income below a certain percentage. Characteristics of KPIs:

 Quantitative: They can be presented in form of numbers.

 Practical: They integrate well with present company processes.
 Directional: They help to determine if a company is getting better.
 Actionable: They can be put into practice to effect desired change.
They differ from business to business, and of course, we can measure
them in agriculture industry too.
Why measure KPIs in agriculture?
KPIs for agriculture track feed usage, evaluate production, and monitor
costs. Three most important impacts KPIs have on agriculture and its
productivity: 1. Increase productivity and profit 2. Save time on your
agriculture program 3. Make more informed business decisions It is
essential to take more notice on data in agriculture management if you
want to make your business more profitable and increase your
productivity. Agrivi lets you track all KPIs and gives you insight to exactly
where you are, so you can take the right measures to reach your goals.
Hereafter you can find some KPIs for agriculture industry and in the next
few articles we will present them to you by categories, with detailed
explanation of each KPI.