AEGIC chief economist Professor Ross Kingwell explored the findings of a benchmarking study that highlighted the benefits of training for farm businesses at a recent GRDC Agribusiness Crop Update in Perth.
Productivity advances require investment in both the human and technical aspects of farm businesses, according to a recent benchmarking study by the Australian Export Grain Innovation Centre (AEGIC).
Project leader and AEGIC chief economist Professor Ross Kingwell presented the findings at the Perth Agribusiness Updates earlier in the year and says the study demonstrates, in particular, the importance of training.
“It makes sense that training can improve the capacity of farm businesses to assess and adopt profitable innovations,” Professor Kingwell says.
The study showed that it was the extent of specific farm enterprise training rather than the level of formal education that most influenced farm productivity.
“Farm enterprise training increases the farm family’s human capacity, which in turn significantly and positively impacts on the adoption of cropping and livestock innovations as well as electronic and other farm management systems.
“Of all variables that affect farm performance, productivity and equity growth, it is the farm manager’s preparedness and ability to use cropping innovations that has the most significant impacts on farm performance.”
Professor Kingwell says farm families’ use of innovations is significantly affected by the training that the farm family has invested in.
He cites, in particular, the increasing importance of time management skills: “Australian farms are often large, multi-enterprise and complex businesses that require advanced skills in this area to be profitable.”
He says successful farms in the study grew more crop per millimetre of rainfall and generated more than double the return on farm equity than financially less-secure farms.
In fact, the amount of seasonal rainfall was less important than the human and technical capacity to make the most of each millimetre: “The most successful businesses actually received almost 60mm less growing-season rainfall, on average, than the less profitable farms.”
The benchmarking study spanned the low-rainfall northern Western Australian wheatbelt through to the higher-rainfall, mixed-farming region further south.
“We had access to a unique set of production and financial data from 270 WA broadacre farm businesses for the years 2002 to 2011.”
The aim of the study was to determine the relationships between productivity and profitability. “We wanted to unravel what was driving farm business success.”
Complementing the production and financial information was socio-managerial and training data.
The datasets on training, human capital, innovation use and farm productivity and performance were modelled to examine the nature and strength of causal links.
“Even though all the farm businesses used a farm business consultant it was the nature and size of the farm family’s human capacity, including their involvement in training, that additionally helped drive the success of these businesses.”
Professor Ross Kingwell,
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