Transforming new practice to new profit

My inbox is telling me it is that time of year again…agricultural show season.  In Saskatchewan, where I work, summer is a good time for producers to become aware of new products, technologies, and ideas that are gaining prominence in agriculture.  Within the past month, producers have had the opportunity to attend the Crop Production Show in Regina, the Western Beef Development Centre’s summer field day, and in a few weeks Ag in Motion will be held just outside of Saskatoon.  Through these events, input suppliers and manufacturers can increase awareness of new tools that farmers can use in their operations.

While the technology and ideas presented at these shows are often fantastic, the entire adoption process has evolved.  Gone are the days of hybrid seed corn when a farmer could simply change the variety that they are planting and still reap a large portion of the benefits of the technology.  With the growth of app-based management tools, becoming a subscriber is just the entry fee; simply owning or subscribing to the technology will yield little benefits.  More likely the benefits will be negative as there are costs to subscribe but few if any returns unless the manager is able to assimilate and exploit the technology for gain.  For profit maximizing firms, this outcome often leads firms to postpone the adoption decision until they can work out how to make the sum of the discounted cash flows of the investment positive.

Recently, I and a colleague at the University of Saskatchewan published a paper on the factors affecting technology adoption in Western Canada.  Using a survey of farmers in Alberta, Saskatchewan, and Manitoba, we found that adoption of new agricultural practices was a function of the firm’s network with others in their community, the life cycle of the farm (is it growing or winding down), and the manager’s ability to become aware of, make sense of, and make use of the technology in question.  The last point is one worthy of greater exploration as that is where there may be untapped potential for future productivity gains in commercial agriculture.  This is especially true as the technologies that come online and currently in development are increasingly interconnected and therefore increasingly complex.  In order to take full advantage of these new technologies, managers may have to begin cultivating their social capital.  Just as financial and human capital enable managers to invest in new ideas and understand new processes, social capital may enable firms to more fully exploit complex systems that are unrelated anything that has been used on the farm previously.  The reason may be that firms with greater social capital may be better positioned to look for the right connections within their networks to help them solve whatever the issue is the manager is facing.

This brings me to an important unresolved question: how many bushels/dollars/hours are we leaving on the table because the technologies we have purchased are not being used to their full potential? What makes those producers who are able to fully exploit new technologies different from those who adopt, but only garner some (but not all) of the benefits?  If you have thoughts on this, please feel free to comment below.

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Author: ericmicheels

Assistant Professor, University of Saskatchewan

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