Measurement and effects from the adoption of skill sets by farmers

Jason L Oliver, Purdue University

Abstract

This paper presents the results of statistical analysis on a survey of farmers, predominantly from the Mid-West in late 2007 by Farm Futures Magazine, on management skills. Ordered-probit and descriptive statistics are used to explore the relationships between farm profitability and adoption of skill sets. Due to several recent changes in the farm industry such as decoupled payments and trade liberalization; certain skill sets have become more important for both small and large farms. Most of these farmers are particularly susceptible to change because of the commodity nature of the industry, and failure to adjust could lead to disastrous results. Changes in the agricultural industry are expected to increase over the next twenty years at a rate unprecedented in modern agricultural history. The skill sets which were explored include production management, procurement and selling, financial management, personnel management, strategic planning and relationship management skill sets. Independent skills were categorized into the skill sets used in the analysis after the survey was conducted. The measures of success which were used are growth of gross annual income, return on equity, profit in 2006, increase in net worth, and how successful the farmer felt his/her operation was from a financial perspective. Descriptive and ordered-probit analyses yielded various results of which skill sets had the most affect on farm success. The adoption of skill sets proves to be more important in explaining the farm success in this study. The importance of the skill sets appears to be better explained by farm success rather than the other way around. Various demographics of the individual farm seem to be the most important factor in determining which skill sets are adopted and the farm success.

Degree

M.S.

Advisors

Valentin, Purdue University.

Subject Area

Agricultural economics

COinS