1.06 - Industry benchmarks

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Primary farm business and beef industry benchmarks with questions answered, methodology and a guide to performance using publicly available references.

Table 1: Whole-farm benchmarks
Whole-farm benchmarks Question answered Methodology Guide to performance*
Net profit before tax profit KPI Will the profits meet your drawing and provisioning requirements? Earnings before interest, lease payments and tax > $90,000 = strong1
Return on assets managed profit KPI Is the farm meeting its operational efficiency targets? Earnings before interest, lease payments and tax
÷
total assets under management		 > 4% = strong2
Return on equity profit KPI Is the farm meeting your wealth creation targets? Earnings before interest
÷
total assets under management		 > 4% = strong3
Interest cover solvency KPI Is the farm generating enough profits to meet debt servicing obligations? Earnings before interest, lease payments and tax
÷
interest and lease payments		 3 = strong
Peak debt Will your finance arrangements cover your working capital requirements? Lowest working account balance for the year n/a
Expense ratio risk KPI Are you generating enough income to meet your ongoing expense needs? Profit before interest and tax
÷
gross income		 > 30% = strong2

 

Table 2: Enterprise benchmarks
Enterprise benchmarks Question answered Methodology Guide to performance*
Productivity efficiency KPI Is this enterprise as productive as it should be? Quantity of product produced
÷
grazed hectares		 > 35kg beef lw/ha/100mm = strong3
Price received efficiency KPI Are you getting the price for this product that you should? Gross income for the product
÷
quantity of product produced		 n/a
Cost of production efficiency and risk KPI Is the cost of producing this product more than it should be? Total expenses
÷
quantity of product produced		 < $0.80/kg beef lw = strong2
Stocking rate efficiency KPI Are you running as many sheep and/or cattle as you should be? Stock numbers as DSEs
÷
grazed hectares		 > 2 DSEs/ha/100mm = strong2
Gross margin Is this enterprise as profitable as it should be? Enterprise gross margin
÷
grazed hectares		 $20/ha/100mm = strong2

 

KPI = Key performance indicators
* These are provided as a guide only and will vary depending on rainfall (total and seasonality), growing season etc.
1 Farm Management 500 (2006). Business Health Indicators for Professional Farmers.
2 Holmes Sackett and Associates (2007). AgInsights 2006 – Knowing the Past: Shaping the Future. Holmes Sackett and Associates Pty Ltd.
3 Department of Primary industries (2005). Monitor Farm Project 2004/05. Victorian Department of Primary Industries.