Profit is not always king pin

10 October 2007

Profit is not always king pin

Profit is not always the main driver of farmer decision making. Research shows other criteria like risk, sustainability, family and lifestyle can influence stock policy decisions.

Through funding from Meat & Wool New Zealand, AgResearch scientists tested a new spreadsheet tool designed to take farmers through the decision making process. For example, whether to put yearling heifers to the bull.

AgResearch’s, Duncan Smeaton said while the project title was a mouthful - Multi Criteria Decision Making - its goal was to help farmers make the right decisions. The project also set out to identify how farmers made their decisions as this was useful for the people who work with farmers - like researchers and farm consultants.

“We wanted to see why farmers wouldn’t adopt a new system, even if it was supposed to make them more money.

“Yearling heifer mating is an example where sound research shows it is profitable, but only around 50% of breeding cow herds have heifers that are bred as yearlings.”

Eight farmers in the Beef Focus Farm programme were taken through the Multi-Criteria Decision Making process. Three of the farmers were considering breeding cow policies and four were considering beef finishing policies.

A mentor group for each of the farmers helped them identify the policy options. Ten or so options were chosen and then farmers were asked to weigh up what criteria was important to them, e.g. profit, effect on family, flexibility, risk associated with the policy. They also had to weight the relative importance of the criteria. For example, a farmer might decide that profit is five times more important to him than the impacts of the policy on family life.

Meat & Wool New Zealand Research and Development Portfolio Manager, Andy Bray said the results were revealing.

The most profitable option was not the preferred option when all criteria were considered, in nearly half the cases.

“While profit was often the single most important component of decision making, as the research team expected, it was not dominant enough to always control the outcomes.”

For all eight case studies profit and profit-related issues made up less than half of the contribution to the performance of the top ranked system. In two cases it contributed less than 20% of the total.

“People advising farmers are missing the point if they focus on profit alone in trying to encourage farmer uptake of new technologies,“ Dr Bray said.

The farmers involved thought the process was useful as it helped them think through the decision and question the importance of different factors. It made decisions more transparent to others. They also thought it helped more with major decisions - not routine daily decisions.

Meat & Wool New Zealand has produced an R&D Brief presenting the results. It is available from Meat & Wool New Zealand website www.meatandwoolnz.com or free phone 0800 696 328.

ENDS

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