Benchmarking (DEA & SFA)
Benchmarking uses information of similar organizations or processes to overcome the gap between current and achievable performance. In agriculture, a relative performance evaluation is the systematic comparison of the performance of farms producing under similar bio-geophysical conditions using the same resources to produce the same type of products. Benchmarking studies are performed to estimate efficiency or to determine the impact of different policies. Efficiency is often measured in relative terms of benchmarking since it is usually not possible to include all influencing factors leading to absolute efficiency. An important goal in improving efficiency is to use as few inputs (resources) as possible to produce the most outputs. With benchmarking, effects on environmental issues such as water conservation or soil protection and the overall climatic conditions are considered.
Modern benchmarking analyses use best practice to provide a set of good management examples, or frontier analysis methods such as Stochastic Frontier Analysis (SFA) and Data Envelopment Analysis (DEA), which are the most common parametric and nonparametric approaches. Both methods show strengths and weaknesses influencing the choice of which analysis is used.