Dr Barker says work done by Scarlatti has demonstrated vocational skill training for farm staff would return $2 or $3 for every dollar invested, while management training yielded between 10 and 20 times that.
"Taking an average-sized farm as an example, profitability can vary by up to $200,000 - and most of that difference is down to the skills of management running that farm. It's not just soil and rainfall, but the people.
"Many factors determine profitability, but training is a very large part of it," he said.
Dr Barker says it takes a combination of three things to make a good manager:
- Experience
- Innate ability (work ethic, values, cognitive ability, teamwork)
- And training
"Anybody can be a better manager with more training. Even for experienced managers that already have lots of skills, the prize is so huge that the returns to training are vast compared to the investment.
"Arguably training is the single most valuable investment one can make. Good management allows you to make good decisions and good investments in other areas. Skilled people make smarter decisions," he said.
DairyNZ strategy and investment leader (People in Business) Dr Mark Paine agrees that reducing the right kinds of costs is important in a downturn.
The strategy and investment leader said that training is critical not only for helping farmers identify what costs to reduce, but also other areas for gain, such as lean management systems, reducing wastage and building effective teams.
"Each one is important to surviving a downturn in good shape," he said.
"But the ability to observe what is happening in the market right now, and to use those observations to anticipate what the impact will be six, nine or 12 months down the track is critical to success - and the ability to do that comes with study and training."
In short, it is increasingly important that dairy farms in New Zealand recognise the value of people with the skills to plan appropriately for the risk and volatility that the business and industry is confronting.
"A lot of people are good at adopting farm technologies, but it takes skills training to properly utilise those technologies and innovations and ensure they perform to their best for your business."
Dr Paine said studies that DairyNZ had commissioned tracked economic performance across farms - in particular skill sets - and the single most important thing that separated the top-performing farms from the others was the ability to benchmark.
"Top-performing businesses are regularly setting targets based on factors such as previous years' performance, and comparing with others in the district and comparing by physical and financial parameters.
"For example, total pasture grown, total pasture utilisation and keeping farm expenses under $3.50/kg/ milksolids."
Top performing farms have very clear goals and highly engaged farm teams. They capture the full benefit from their excellent pasture management practices by getting a tight match between feed supply and feed demand using the right stocking rates and having a comprehensive knowledge of cost effective sources of feed.
These managers have an ability to adapt quickly to events, such as droughts, that change the costs or the supply of feed.
This adaptability is based on good business practices such as regularly monitoring pastures, the cost of supplements, seasonal planning and good staff management.
"Top managers have fewer surprises. They are well informed about policies and regulations impacting on their business - those that are having the greatest impact now and knowing what's coming - and what they need to do to accommodate that over coming years, for example use of nitrogen and water management practices," Dr Paine says.
"Training is probably the single most important investment a farm business can make in a downturn, or at any time really."
