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Benchmarking
can cause Poor Resource
Use
Benchmarking can lead to
poor use of resources and excessive use of
inputs, according to farm consultant Barrie
Ridler.
Speaking at a
Holistic Management conference in Christchurch
last week, Ridler was disparaging of the
emphasis being placed on comparative
benchmarking and key performance indicators at
field days and in the rural media.
He says measuring
tools and sophisticated analytical machines
have made measurement an occupation in itself,
and while measurements such as pasture
production, liveweight gains, and scanning
data can be made very accurately, Ridler
questions the practice of judging one farm
against another using computer
analysis.
Benchmarking and key
performance indicators imply that any
successful farm conforms to a narrow set of
standards that are universal and that such
benchmarks can be used to compare efficiencies
between farms.
This is not so.
He adds that key
performance indicators are a unique set of
circumstances only.
“There were initially
used to stimulate thinking which is good, but
they are not the recipe.”
Ridler says farms are
often compared on their economic farm surplus,
on which is better and which is worse, but he
likens this to comparing apples and
pears.
“we don’t take into
account numerous other
factors. All farms
have different resources, so if we exclude
particular types of farms we come down to
groups of one.
This is because each farm is unique in terms
of resources and management.”
Ridler believes
individual farms should be looked at in terms
of the best use of its resources, which are
based around location, contour and soil
types. “We need to
use science to decide the best use of
resources.”
While most farmers
measure success on increased productivity,
Ridler believe they should be measuring
success on efficiently they use their
resources.
Unlike manufacturing
systems, he says in agriculture increased use
of inputs will at some point lead to a
decreasing rate of
output.
“This is the concept
of diminishing returns and it is important to
be able to distinguish between marginal cost
and marginal return rather than using average
cost when increasing production.”
He says as increasing
production increases the profit will only
increase if the marginal productivity of the
inputs being uses is greater than the price of
the additional resources.
“Efficiency ratios
are calculated using average prices and cost
and should not be used in determining best
resource use between farms or between
activities on the same farm.”
Ridler is critical of
the use or what he sees as overuse of nitrogen
to push production on farms in this
country.
“There is the old
mantra from the seventies of the more P, the
more stock, the more production goes up and
we’re still hearing
it. What we are
tending to do is skim over the information and
not mining the information we have
available.”
A proponent of
computer modelling, Ridler believes farmers
should be using modelling to see of a farming
system works on a particular property.
He says it is like
building a plane, putting the pilot in it and
then seeing if it flys, while a computer model
can tell whether it will work before putting
the pilot in.
Taking a holistic
management approach, Ridler suggest farmers
ask themselves what they are trying to do on
their farms and look at the benefits of
overall wealth and a sense of well-being and
enjoyment.
He says farmers have
been lead to believe there is only one way to
run a farm, while they can look at changing
all sorts of options that can result in the
same financial results.
Country- Wide southern
edition, September
2004. Reprinted
here with the kind permission of
Country-Wide
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