A business performance index model that measures wealth change in Australian farm businesses

This paper presents an evaluation of a farm-business assessment model that uses financial performance measures and tracks ‘wealth change’ to evaluate performance trends over time, and ranks the relative business performance of commercial participants. Its core component involves the use of comparative analysis, which is structured as an introductory rapid-assessment model, together with a ranking system that has been designed to differentiate the relative performance levels of farm businesses. The system has been labelled as the Business Performance Index (BPI) model to reflect its performance-ranking role that explores the relationships, if any, between farmer attitudes and business performance. The BPI model is discussed within the context of the debate as to the role and shortcomings of comparative analysis and benchmarking methods. The data collection method and the analysis have been field tested across 200 farm families throughout Victoria and New South Wales. During the interviews, data were collected from financial statements, supporting documents and farmer comments. The model’s results have been statistically compared to results obtained from two other ‘aggregate score’ methods of assessing business performance.