Friday, April 28, 2017

How farmer attitudes affect farm profitability

A fascinating study explores the association between farmers' attributes and profitability.

PhD candidate Niall O'Leary at the University of Reading has found that a large proportion of the variation in farm profitability can be predicted by the attributes of a farm's manager. Two studies of dairy farmers in Great Britain were carried out and almost 40% of the variation in farm profitability could be explained by five variables in one study and by three variables in the other.

The major predictors of farm profitability identified fall under the following five categories.

  • Detail Conscious behaviour - farmers are generally not Detail Conscious but high scorers are much more profitable. A high scorer 'focuses on detail, likes being methodical, organised and systematic'. A low scorer is 'unlikely to become preoccupied with detail, less organised and systematic, dislikes tasks involving detail'.
  • Leadership behaviour described as 'Inspiring and guiding individuals and group. Leading by example and arousing enthusiasm for a shared vision' is strongly associated with profitability.
  • Those who 'lose their cool' when things go wrong and also those who are generally relaxed or laid back are less profitable. A motivated and proactive person who can handle problems is likely to be much more profitable than either a laid back, relaxed person or an overly anxious person prone to frustration.
  • Attitudes and beliefs, in particular how entrepreneurial / profit orientated farmers view themselves are associated positively with profitability.
  • 'Growth Mindset', those who have a fixed view of their own and staffs abilities are much less profitable. Education and training provision are tangible indicators of a Growth Mindset.

The effect of Detail Conscious is significant with 24% of variation in profitability covarying with it. A high scorer 'focuses on detail, likes being methodical, organised and systematic'. A low scorer is 'unlikely to become preoccupied with detail, less organised and systematic, dislikes tasks involving detail'. A one point difference in Detail Conscious on the 1 - 10 scale is associated with 1p per litre or £72 per cow greater profit per year.

Leadership is described as 'Inspiring and guiding individuals and group. Leading by example and arousing enthusiasm for a shared vision.'Relaxed is negatively associated with profitability. A high scorer on the Relaxed measures 'finds it easy to relax, rarely feels tense, generally calm and untroubled' and a low scorer 'tends to feel tense, finds it difficult to relax, can find it hard to unwind after work'.

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