Best Practice Benchmarking in Australian Agriculture: Issues and Challenges

Abstract

The quest to shape Australian agriculture for improved and sustainable profitability is leading Research and Development Corporations, agri-service consultants and government to devote substantial effort into development of new farm business analysis and benchmarking programs. ‘Biz Check’, ‘Pork Biz’, ‘Wool Enterprise Benchmarking’, ‘Dairy Business Focus’ and ‘Business Skills and Best Practice’ for beef and sheep meat producers are examples of current farm management and training programs where business analysis and benchmarking are integral components. Benchmarking is currently very popular with farmers, service providers and funding agencies. However, benchmarking has been likened to comparative analysis with both criticised by past and present prominent agricultural economists as ‘random numbers’ and ‘rampant empiricism’. The authors agree with advocates of benchmarking that it has potential as a supply chain and farm business improvement tool. They also agree with critics that much of what is currently flagged as benchmarking is actually financial analysis, lacks linkage to underlying enterprise operations and fails to add value in between-business comparison. Most packages do not encompass off-farm, supply-chain environment factors. Further, some ‘benchmarking’ employs some unsound methodology. Reconciliation of current conflicting, polar positions is recommended in the development of best practice benchmarking, differentiated by its process based, diagnostic power. In best practice mode, benchmarking should be capable of delving beneath performance outcomes and into a logical framework for making changes to enterprise processes that are systemically linked to productivity and profitability.