Physical performance / financial performance... Ne'er the twain shall meet?

I.F. Kirton, K.I. Mackrell, J.A. Stone

Department of Accountancy, Massey University, Palmerston North, New Zealand

Proceedings of the New Zealand Society of Animal Production 1994, 54:423-428

The historic development of farm reporting systems has meant an overemphasis upon accounting concepts and formats. The compulsion, in New Zealand, of compliance reporting inhibits reports which reflect progress toward farmer and farm objectives and the underlying nature of the production processes. The utilisation of more sophisticated planning tools and the uptake of objective measures of system performance provide an opportunity to rethink and reconstruct farm management report contents and formats.

A model report is presented which attempts to harmonise the physical production processes and the financial consequences of these processes. The report undertaken for a winter milk dairy farm; extends the concept of enterprise to separate land, conservation, herd and replacement activities; clarifies input-output relationships within and between these activities; and analyses financial consequences of these relationships.

The model provides; a framework for understanding the relationship between production and finance; a framework for developing comparative measures of performance which take account of systems differences which current industry benchmark's ignore; and a basis for meeting the compliance demands all individuals face.

Keywords: NZSAPAB; Economic Value Added (EVA); value chain; profitability; intra- farm analysis.

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Last Updated 25-01-1997