2006, Volume 14, Paper 12

ISSN: 1883-5675

Is farm benchmarking the new acceptable face of comparative analysis?*

Euan Fleming, Terence Farrell, Renato Villano & Pauline Fleming – School of Economics, University of New England, Armidale, NSW

Abstract

In this paper, we assess the potential for rehabilitation of comparative analysis under its new guise of benchmarking. After a brief description of comparative analysis, we discuss the deficiencies that surrounded its fall in reputation: neglect of economic principles, limited scope for action, failure to establish causal relations between farming practices and performance, lack of a holistic approach and failure to take account of production risk. Each of these deficiencies is diagnosed, and it is argued that they can be overcome through the careful selection of farm performance criteria and use of long-established and recent methods of efficiency and productivity analysis.
The case is put for widespread application by benchmarkers of recently developed methods of efficiency and productivity analysis. These methods have so far remained
almost wholly in the province of research. If successful, their application would enable a benchmarker to examine economic efficiency and its components over many variables by using frontiers to capture the complex relationships between several inputs and several outputs. This form of analysis is useful where farm inputs are not monotonic and where both substitute and complementary relationships exist between them. Examples are provided from benchmarking case studies that show progress has been made in some but not all areas of concern. Regardless of the progress made in methodology, skilled and experienced benchmarkers familiar with the data are needed to interpret and apply results.

Download full document here