The futility of Benchmarking

‘Benchmarking’ and the term “comparative analysis” are often used to describe a process that is more akin to “reading the tea leaves” than objective analysis.

The ability to gather then manipulate a large number of figures has increased as computers and programs have improved. But what has not improved is the understanding that such manipulation has only a dubious link to improving farm systems.

Indeed some observers would comment that the ability for an increasing number of farmers and accountants to connect the dots has diminished as their ability to process such numbers has increased.

This can largely be attributed to the ease with which various components or resources can be mistakenly be linked to output by those who do not comprehend what the term “system” means. A case of mistaken causal relationships brought on by naïve exuberance.

Looking at the averages of technical and financial measures of parts of other peoples farms has a number of deficiencies:

Trying to incorporate a change into an existing system alters the current resource use of ALL inputs and outputs. They are related. Averages give no knowledge of how a marginal set of resources will react to the change.

As the financial data is also an average, the point at which adding another unit of input will provide no added return is also hidden.

Resources will therefore be used way past the point of being profitable. This excess use of resources will also have implications for nutrient run-off and the wider environment.

To be relevant any such “benchmark” requires similar farm systems within localised areas where the objectives of the managers’ are also similar, otherwise the averaged data from one farm will at best be merely aspirational. Trying to clone resource use decisions between unlike farms will of course result in differing outcomes without being able to distinguish by how much or why.

The theoretical and practical case that technical efficiency measures of productivity are meaningless for management has been well made, as illustrated by Candler and Sargent in 1962, and then by Mauldon and Schapper in 1970 and 1971.

Extract: The Futility of Benchmarking
‘Benchmarking’ and the term “comparative analysis” are often used to describe a process that is more akin to “reading the tea leaves” than objective analysis.


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