An easily comprehended representation of the inputs and outputs of the farm system, most useful at this level of analysis, is the circular diagram method. It shows the relationship between the various factors determining the output and also as a way of defining subsystems within the systems because of the complexity of the whole system.


The first step is to put in the centre of the diagram, the output of central interest. The major factors which are thought to influence this output are grouped in a ring about the centre with arrows pointing inwards. The diagram also shows the effects of these factors on each other in the same ring by arrows travelling around the circle - see diagram 3-4. All of the inner ring factors can in turn, be controlled or influenced if enough is known about them.


Those factors which influence the inner ring are shown in a second outer ring. However, the analyst should avoid excessive complexity and include only those factors which are major determinants of the central output. There can be further rings showing the expansion of the analysis aimed at achieving greater understanding and improved capacity of a successful operation.


The subsystem is concerned with the effects on the central output of changes in one component of the system. The subsystem consists of the centre, a component in one of the rings and all the factors that link the two. Even the process of developing the diagram is useful as it helps to clarify and understand the farm system. Underlines that the system consists of subsystems and that it itself is part of a bigger system. For example, the Australian farm model is directly subject to a number of international environments.


There are a number of ways to monitor farm performance. For example, the use of physical performance, yields, or gross margins. Monitoring can also be classified according to the position of the criteria used in the farm system. For example the use of central outputs such as yields and profits or key determinants such as the soil's organic matter, nitrogen and phosphorous levels, soil moisture. The other method is the use of "indices of efficiency" including "output/input" ratios.


Crop and animal production rates are governed by the availability of many growth factors such as minerals in the soil and climate. Process rates are determined by the level of the most limiting factor which when overcome raises the level of production to the next limiting factor. If it were possible to overcome all the limitations, the yield potential would be obtained.