Autumn 2021: Perspectives on measuring agricultural performance

Autumn 2021: Perspectives on measuring agricultural performance

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‘You can’t manage what you don’t measure’ – the well-used adage that often appears when discussing the need for farm businesses to keep good records. It holds true no matter what scale of farm business may be discussed, and indeed equally for understanding performance of aggregates of businesses or an entire industry.

The questions then arise: why do you need to measure industry performance? Can an industry be managed? To a degree, yes. Government policy is often directed at addressing structural deficiencies or competitive disadvantages within industries that are underperforming (relative to the rest of the economy). To understand whether intervention or other action is needed, industry performance needs to be quantified and tracked over time. Productivity is the economic construct that is most often used to report on industry performance.

Productivity is an index calculated by dividing outputs by inputs. If productivity is increasing it means that there are more outputs for the same number of inputs, or the same output is being produced with less inputs. While productivity indexes in the conceptually broadest sense provide information about industry growth and sustainability (whether an industry is doing more with less), they are nonetheless at times problematic for the purpose of accurate measurement of industry performance in terms that industry participants would relate to.

Published 13 Apr 2021

Industry performance measures are vital indicators for understanding return on industry investment, judging appropriate levels of government and other public support and how industries contribute to economic health and wellbeing. Total Factor Productivity (TFP) is a standard measure of industry performance which describes a ratio of all outputs relevant to…

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