Modelling the origins of managerial ability in agricultural production

Abstract

The efficiency of production from a farm's land, labour and capital is critically dependent on the ability of the farm manager. Yet, while there are studies correlating a wide range of manager-related variables with returns, and, therefore, probably ability, little understanding of the basic determinants of managerial ability exists. Questions such as 'what is the importance of a farmer's family experiences and training in determining the farmer's managerial ability?' need answering. The solution to this, and other, questions will enable determining ways of improving farmers' inherent ability developed both in early, and later, life. In that most decisions on a farm are made intuitively, in contrast to the use of a formal analysis, improving farmers' inherent ability will have a significant payoff. The research reported here uses data from a large stratified random survey of 740 developed farmers (29 per cent had tertiary education, 30 per cent had 4 or more years secondary education) to create a structural equation model of the determinants of managerial ability. The results suggest that a farmer's exposure to experiences is a significant factor in ability, as is the farmer's management style and the family influence on early life experience. © 2009 The Author Journal compilation © 2009 Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Asia Pty Ltd.