Analysis of the experiences of four farmer groups set up to learn how to jointly manage local natural resource issues shows that the groups are going though two simultaneous processes. One builds technical competency in natural resource management and the other is the underpinning social process that allows the groups to make decisions and work collectively, which builds social capital. Natural resource management practitioners and farmers are practical people. They are likely to be more comfortable with a process that develops monitoring tools and benchmarks for natural resource management than a process of group development and social capital formation. Yet the two are intrinsically linked. This paper reflects on and analyses the experience of establishing and working with farmer groups as they go through a process of identifying environmental issues, setting and monitoring environmental benchmarks and identifying and implementing sustainable farming practices to meet the benchmarks. Two questions emerged from the analysis. First, how do the four groups compare to other measures of effective natural resource management groups? Second, what are the characteristics of the groups that make them more or less effective and what has occurred in the groups (either before or during this project) to make them more or less effective? Social capital emerges as a key determinant of group effectiveness. Social capital is most effective when it comprises a balance of bonding and bridging networks, and includes shared values in relation to the purpose of the group. Policy makers and extension workers need to understand the link between the two simultaneous processes occurring as people come together in groups to define and implement best practice at a local level, and how to use knowledge of social processes when designing the more concrete process of developing and implementing best practice monitoring and benchmarking with groups. An understanding of how people build social capital as they work in groups will assist with designing and facilitating group projects in a range of contexts, not only natural resource management.