Primary farm business and sheep industry benchmarks:
The table (below) lists the questions answered and methodology behind these industry benchmarks, and a guide to performance using publicly available references.
Whole Farm
Benchmarks |
Question Answered |
Methodology |
Guide to Performance* |
Net Profit Before Tax |
Will the profits meet your drawing and provisioning requirements? |
Earnings before interest, lease payments and tax |
>$90,000 = strong1 |
Return on Assets Managed |
Is the farm meeting its operational efficiency targets? |
Earnings before interest, lease payments and tax
÷
Total assets under management |
>4% = strong2 |
Return on Equity |
Is the farm meeting your wealth creation targets? |
Earnings before tax
÷
Net assets under management |
>4% = strong3 |
Interest Cover |
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 |
Are you generating enough income to meet your ongoing expense needs? |
Profit before interest and tax
÷
Gross income |
>30% = strong2 |
* 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 (2006). AgInsights 2005 – Knowing the Past: Shaping the Future. Holmes Sackett and Associates Pty Ltd.
3 Department of Primary industries (2005). Monitor Farm Project 2004/05. The State of Victoria, Department of Primary Industries.
Enterprise
Benchmarks |
Question Answered |
Methodology |
Guide to
Performance |
Productivity |
Is this enterprise as
productive as it should
be? |
Quantity of product produced
÷
Grazed hectares |
>5kg clean wool/
ha/100mm rainfall =
strong2,3
>15kg lamb dwt/
ha/100mm =
strong2,3 |
Price Received
|
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
|
Is the cost of producing
this product more than it
should be? |
Total expenses
÷
Quantity of product produced |
<$6.50 per kg clean
wool = strong2
<$2.50 per kg lamb
dwt = strong2 |
Stocking Rate
|
Are you running as many
sheep as you should be? |
Stock numbers as DSEs
÷
Grazed hectares |
>1.5 DSE's/
ha/100mm = strong
for wool2
>2 DSE's/ha/100mm
= strong for prime
lamb2 |
Gross Margin
|
Is this enterprise as
profitable as it should be? |
Enterprise Gross Margin
÷
Grazed Hectares |
>$20/ha/100mm
= strong for prime
lamb2,3
>$40/ha/100mm
= strong for wool
flocks2,3 |
* These are provided as a guide only and will vary depending on rainfall(total and seasonality), growing season,etc.
1Farm Management 500 (2006). Business Health Indicators for Professional Farmers.
2Holmes Sackett and Associates (2006). AgInsights 2005 – Knowing the Past: Shaping the Future. Holmes Sackett and Associates Pty Ltd.
3Department of Primary industries (2005). Monitor Farm Project 2004/05. The State of Victoria, Department of Primary Industries.
Examples of Secondary Enterprise Benchmarks
Wool
|
Lamb
|
Price as a % of micron indicator
|
Weaning % |
kg clean/adult shorn
|
Sale weight |
Average adult fibre diameter
|
kg lamb/DSE |
% DSEs as wethers
|
DSE/labour unit |
Weaning %
|
Enterprise size |
DSE/labour unit
|
|
Enterprise size |
|
Dry Sheep Equivalent (DSE) ratings:
For DSE ratings for a range of livestock and livestock classes, see tool 11.1 in Healthy and
Contented Sheep.
|
