Academic journal article Rural Society

The Role of Human and Social Capital in Dairy Farming

Academic journal article Rural Society

The Role of Human and Social Capital in Dairy Farming

Article excerpt

Introduction

Dairy farmers encounter a host of problems every day, from fertility issues in the herd, to health or milk quality issues. The Norwegian Dairy Association (Tine) closely monitors milk quality and the price of the milk depends on quality. Norwegian dairy farmers participate in a programme to monitor their economic performance, with Tine keeping a database of biological and financial data that indicates substantial differences exist among farmers. The present research accessed Tine's databases to surpass biological data to see what may explain differences between farmers' agricultural performance. In particular, findings from prior studies of human and social capital were used to further explore the effects of knowledge on dairy farmers' productivity and practices to examine how distributed knowledge could assist farmers to solve problems and maintain high quality performance (Greve, Benassi, & Sti, 2010). One hundred farmers were randomly selected from all over Norway and 90 in-depth interviews were conducted during farm visits. Dairy farmers were chosen for this research because they work on similar problems using similar technologies. Variation in productivity, therefore, will likely result from farmers' ability to solve problems and/or monitor production.

Literature on human and social capital, based on theories of communities of practice (Wenger, 1998) and learning (Kilpatrick, Bell, & Falk, 1999; Weick, 1979, 1995), was reviewed to develop hypotheses to test the effects of human capital and the use of social networks. Using a database on biological and economic data from the farms, we tested three main hypotheses: (1) the direct effects of education reflecting human capital; (2) the direct effects of social capital or the use of contacts for advice; and (3) the interaction effects of human and social capital. Findings showed human and social capital generally, and having an agricultural education specifically, were important to improved farming performance. However, farmers with insufficient education in certain problem areas performed worse if they sought advice from many other farmers.

Literature review and theory

Human capital

Farmers need to solve problems and run business activities without incurring unnecessary costs. Frequently, however, problems large and small occur, requiring problem solving that extends beyond daily routine work. Becker (1964)defines human capital as the knowledge, information, ideas and skills individuals possess. Human capital is an important asset in modern economies, arguably more important than machinery or financial capital. Not only does Becker emphasize the importance of formal education, he also recognizes that much unmeasured learning takes place and individuals need to invest in learning.

Human knowledge and skills represent the cornerstone of a resource-based perspective on strategy (Conner & Prahalad, 1996); knowledge is a basic source of advantage. Researchers use the terms "competence", "skills" and "knowledge", however, without a clear definition of what they actually mean (Winter, 1987). For example, knowledge often embraces explicit as well as tacit knowledge and skills partly overlap with tacit knowledge, through adoption of routines and procedures. The relative impact on productivity and profitability of human capital and interdependencies with technology and standard operating procedures thus remains to some extent unclear. Productivity and profitability are not simple issues for at least two reasons: (1) measurement can be problematic; and (2) what causes productivity or profitability is not always clear (March & Sutton, 1997). To analyse these issues, productivity and profitability must be recognized as having individual, social and technological components. For farming in Norway, organizational components embedded in routines and technology play a minor role, and technology is fairly similar across all farms. …

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