Vegetable growers are able to benefit from increased productivity by focusing their growing operations on producing a single commodity, with efficiencies created by investing in labour that is specialised for a single crop.
This is one of the outcomes from an Economic Discussion Paper produced by vegetable grower body AUSVEG, using data from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), which aims to provide growers with an accessible analysis of complex economic data that can improve on-farm productivity and profitability.
“The results from this economic analysis indicate that those farms that specialise in growing fewer crops, are likely to have much more productive employees,” said AUSVEG Economist Andrew Kruup.
“The Discussion Paper has produced an economic model that quantifies the productivity of labour and infrastructure and equipment, which has been devised to highlight to growers the economic returns that can be gained from specialising their production.”
The analysis presents productivity estimates for the lettuce, carrot, green pea and potato industries.
These results show that the largest returns from crop specialisation occur within the carrot industry, as these farms can benefit from an increase in efficiency by an average of 88 kilograms of production for each additional week of labour.
“One explanation for the enhanced productivity is the fact that employees are able to specialise in completing routine tasks,” said Mr Kruup.
“This is in contrast to other farms that produce multiple crops, where employees may be expected to complete multiple tasks for different crops. The effect of these additional work requirements can create complexities for the employee that can stifle their productivity.”
“Some growers typically like to diversify their crop production by producing many different crops. A benefit from this approach is the ability to diversify away from market price fluctuations. However, this study shows that one potential cost of crop diversification is a significant fall in labour productivity.”
“By presenting and quantifying the costs associated with crop diversification, this Discussion Paper hopes to highlight some additional factors that may not have been considered by growers and can help them operate their businesses more profitably into the future.”