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We can be better than just benchmarking! by Nathan Scott

  • By: Nathan Scott
  • Jan 29, 2018

Is benchmarking leading to mediocrity in our livestock industry?  In my opinion, it is.  Firstly it is actually just comparative analysis, and doesn’t provide “benchmarks” to aim for, just indications of what others are achieving.  In my opinion, targets should be set based on what is possible, not what others are doing.

For those lovers of benchmarking amongst you, preparing to launch at me, let me qualify all of this first.  I quite like benchmarking for comparing gross margins, and particularly variable and fixed costs.  I quite like it for comparing enterprise types.

So given all of that, what do I have against them?  Well there are a few things.  Some basic, and some more philosophical –

Farm businesses (livestock businesses in particular) are so individual that it is rarely comparing apples with apples. More often grapes with pineapples.  Or perhaps it is apples with apples you are reading about, but your own business is a banana.  For instance the latest Holmes Sackett prime lamb benchmarking data released by MLA has an average flock size of 10,000 ewes.  Is that an apple, or a watermelon?

Benchmarking tries to simplify things for comparison sake.  I can understand the reasons for this, but in the particular case of labour efficiency it becomes an absolute farce. How can labour be measured in Dry Sheep Equivalents (DSE)?  Just quickly, you are running 2000 merino ewes each with a DSE rating of 1.8DSE (total 3600 DSE), and I am running 2000 composite ewes each with a DSE rating of 2.3 DSE (total of 4,600 DSE).   Based on a labour efficiency measure using DSE, I am around 30% more efficient than you.  Seriously?  Based on that if you want to be more labour efficient, just run the biggest ewes you can find… Simple (please don’t!)

I believe our industry is far too fixated upon being average, or better than average, or in the top 20%.  All of that would be fine if I thought we were anywhere near our potential.  If benchmarking is how we set our sights for the future, then all we will ever be is better than the rest.  But what if the rest really aren’t doing that well at all, and being better than them still doesn’t get us anywhere near where we need to be?

The most exciting thing about sheep right now isn’t the high prices, new technology, or scientific breakthroughs, but simply the untapped potential that sits within our industry.  The science tells us that we can be doing SO MUCH BETTER.  It is never going to be easy, but it is certainly possible.

So if someone tells us that trying to mark more lambs isn’t the most profitable, because that is what others have found, should we stop trying???  If someone tells us that cutting more wool is the only way to be more profitable, should we stop trying to breed a balanced animal that can do more??? If someone tells us we should be running 10,000 DSE per labour unit, should you sack someone???? Simply. No.

The opportunities exist through being better. Not bigger, not smaller, but better.  I hear people tell me that they don’t have the scale.  “We can’t do that because we don’t have the scale”.  Guess what happens when they do. “We can't be expected to do that on our scale”.  Scale is an excuse, and both the big and the small are guilty of using it.  If we are going to keep ourselves ahead of the cost price squeeze then we need to be better, and we need to be more efficient.  Keep a close eye on costs (benchmarking if you need to) and set production targets based on what is possible.

Let’s not kid ourselves that our industry as a whole is performing anywhere near where it should be. The industry talks in averages, which are barely where EVERYONE should be.  The fact that it is an average tells us that half the results are worse than that.

I guess you could say that my frustration isn’t with benchmarking itself (actually it plays an important role), but with the way that it is used, and the very real potential for it to justify someone’s current level of performance rather than drive improvement.  We are better than that.  Stand up industry and show some leadership.  Aim for what is possible, not what everyone else is doing.