Managing Complexity in Modern Farming

Modern farming in Australia is no longer simple. Farms are large, multi-enterprise businesses underpinned by expensive capital investments, changing production technologies, volatile markets and pervasive regulation. The complexity of modern broadacre farming leads to the question: what is the nature of the relationship between farm business complexity and farm profitability? This study uses bioeconomic farm modelling and employs eight measures of complexity to examine the profitability and complexity of a wide range of broadacre farming systems in Australia. Rank order correlations between farm profitability and each measure of complexity show inconsistent relationships, although the most profitable farming systems are found to be reasonably complex on several criteria. Among the set of highly profitable systems are found some characterised by less complexity. Using the farmer’s annual hours worked as a measure of complexity that affects current farm management, the trade-off between profit and this measure of complexity is found not to be large. A case is outlined where the farmer’s annual hours worked could be reduced by 9 percent for a 3 percent reduction in farm profit. If farmers’ workloads are proving problematic now and in the future, then agricultural R&D, service delivery and policy development will need to focus much more on being highly attractive to time-poor farm managers.complexity, farm modelling, management, profitability, Farm Management,

Revenue volatility faced by Australian wheat farmers

This paper uses variance decomposition modelling to explore how wheat revenue volatility in Australia has changed spatially and temporally. The components of revenue variance are the variances and covariances of wheat prices, the area of wheat harvested and the yield of wheat. The key finding is that the volatility of wheat revenue (detrended) has more than doubled in every main wheat-growing State in Australia over the last 15 years or so Changes in wheat areas are mostly a minor source of revenue variance. The principal cause of volatility is yield changes with price changes increasing slightly in absolute importance when compared to their adjacent previous period. Greater downside yield risk is often the principal cause of the increased yield variance. The implications are that revenue variance, and especially downside revenue risk, has posed major problems for wheat-dominant farm businesses over the last 15 years or so. How Australia’s wheat producers have managed this greater volatility of wheat revenue is likely to have greatly affected the viability of their farm businesses.risk, wheat production, variance decomposition, wheat farming, Agribusiness,

The Carbon Challenge for Mixed Enterprise Farms

As part of its climate change policy the Australian government has introduced a Mandatory Renewable Energy Target (MRET) scheme and is also attempting to introduce a Carbon Pollution Reduction Scheme (CPRS). Using as a case study a main agricultural region of Australia, this paper examines how farming systems in this region may be affected by the medium term policy settings of these two schemes. A bio-economic model of the region’s farming systems is developed and used to assess the schemes’ impacts on the nature and profitability of the farming systems. Results show a range of profit and enterprise impacts across the range of farming systems. Farms as providers of biomass for electricity generation and small users of electricity are liable to benefit from the MRET scheme, with the extent of benefit depending on the price offered for biomass. By contrast, the CPRS is liable to more profoundly affect farming systems, especially if agriculture is included in the scheme. The impacts of the CPRS on agriculture are mostly conditional on: the amount of free permits allocated to agriculture, the value of trees as carbon sinks, the extent of pass-through of CPRS-related costs onto agriculture and emission permit prices. Dependent on these factors, farm profits can increase by up to 20 percent or decrease by over 30 percent, relative to the ‘no CPRS’ or ‘business-as-usual’ case. If agriculture is covered by the CPRS, and emission permits and tree growth rates are sufficiently high then optimal farm plans typically involve a combination of reduced livestock numbers, the planting of permanent stands of trees on marginal farmland and other changes to the enterprise mix on farms that reduce emissions.agriculture, greenhouse gases, economic modelling, sequestration, Agricultural and Food Policy, Crop Production/Industries, Environmental Economics and Policy, Institutional and Behavioral Economics, International Relations/Trade, Land Economics/Use,

Dryland Salinity: Spatial Impacts and Farmers' Options

The salinisation of farmland in Australia is a major natural resource management problem. Over the next 20 years a further 1.1 million hectares of broadacre farmland is predicted to become salt-affected. This paper firstly explores the spatial ramifications of the spread of salinity in Australia's agricultural regions. Some of the nation's most profitable grain growing regions will become seriously affected by salinity over the next 20 years. Secondly this paper outlines the nature, uptake and profitability of various salinity management options available to Australian farmers. These options include preventative and containment measures, such as engineering solutions and adoption of deep-rooted perennials, and other options involving adaptation to more saline environments such as commercial use of saline water and salt tolerant fodder plants. Deep-rooted perennial fodder species appear to offer the best short to medium term prospect for managing salinity in most agricultural zones. However, in many situations perennials may not be profitable at the scale required to have a significant impact on the rate of spread of salinity on farmland, or the rate of increase of saltload in rivers and streams.Farm Management,

Institutional change and plant variety provision in Australia

Crop Production/Industries,

Seasonal labour is the most profitable use of labour in broadacre crop dominant farms

Labour scarcity and affordability have encouraged many farmers in Western Australia to focus more on cropping than sheep production. Many farmers are opting to run low input livestock systems. This paper examines labour demand for sheep and cropping during the production year, combined with various scenarios of labour availability and cost. The implications for farm profitability and enterprise selection are examined using the bio-economic farming systems model MIDAS (Model of an Integrated Dryland Agricultural System). Labour requirements for sheep are far greater than those for cropping. Additionally the labour requirements for sheep are high in all production periods whilst the seasonal nature of cropping means more time is required only at certain times of the year, particularly at seeding and harvest. This means that the most profitable labour option is employing casual labour during periods of peak demand for cropping. The lesser relative profitability of the sheep enterprise makes employing a permanent worker the least profitable labour option. By contrast, employing casual labour during busy periods for cropping is more profitable but it is also associated with only small areas of perennial pastures being sown which has environmental implications. The logistics of employing labour at only certain times of the year compared to employing a full time worker means that farmers need to pay more per week to employ these workers or do the extra work themselves.agriculture, labour, farm modelling, cropping, sheep,

Low Emission Farming Systems: A whole-farm analysis of the potential impacts of greenhouse policy

The Australian government is introducing a Carbon Pollution Reduction Scheme in 2010, as part of its climate change policy. After 2015 agriculture may be covered by this scheme. This paper examines how different broadacre farming systems may be affected by the policy settings of this scheme. Using the bio-economic farming systems model MIDAS (Model of an Integrated Dryland Agricultural System) the impacts of the Carbon Pollution Reduction Scheme on the profitability of different broadacre farming systems in the southwest of Australia are investigated. Results show a range of profit and enterprise impacts across the various farm types. In a scenario where agriculture is not covered by the scheme, reductions in profit range from 7 to 12 percent, attributable to more expensive ‘covered’ inputs such as fuel and fertiliser; and farmers reduce their use of expensive energy inputs such as chemicals and fertilisers. In a covered scenario profits decline by 15 to 25 percent of ‘business-as-usual’ profit and optimal farm plans involve a combination of reduced livestock numbers, the introduction of permanent woody perennial plantations on marginal lands and other changes to the farm enterprise mix to reduce emissions.agriculture, greenhouse gases, economic modelling, abatement,

Climate Change Impacts on Investment in Crop Sowing Machinery

Down-scaled global circulation modelling is combined with wheat growth simulation modelling to generate yield responses to times of sowing under current and projected climatic conditions for several locations in the grainbelt of Western Australia. A model for investment in crop sowing machinery draws on these simulated yield relationships at each location and is used to determine a farmer’s optimal investment in crop sowing work rate capacity under current and projected climate regimes. The key finding is that at most locations the projected change in climate has marked impacts on profit distributions from grain production, yet mostly modest changes in the farmer’s investment in machinery work rate form part of the profit-maximising response to climate change at each location. There is also a divergence in machinery investment response between high versus low rainfall locations, with increases and decreases in work rates respectively being forecast. However, as illustrated for a few locations, the changes in investment in work rate within a broadly similar rainfall region are not uniform; principally due to climate change differently affecting the pattern of yield response to time of sowing at each location.climate change, farm machinery, farm management, machinery investment, Environmental Economics and Policy, Farm Management,

Broadacre farmers adapting to a changing climate

Abstract Data on the financial performance of a diverse set of 249 farm businesses in south-western Australia over the period 2002 to 2011 was collated and analysed.  These 10 years were a period of challenging weather years, underpinned by a warming and drying trend in the region’s climate, frost events and marked price volatility.Based on a range of metrics, almost two-thirds (64%) of the farms in the sample were classed as growing or strong. A less secure group of farms that are at some potential financial risk formed 15% of the farm sample. Over the study period farm profitability, on average, improved, supported by productivity growth, in spite of no underlying improvement in the farmers’ terms of trade.  Productivity improvement allowed most farm businesses, especially crop and mixed enterprise farm businesses, to prosper.  The pathway to their profitability was not so much by investing in new technologies that may have shifted outwards farms’ production possibilities, but rather through better use of existing technologies, including technologies that offered scale economies. Also farmers’ shift into greater dependence on cropping, especially wheat production, was shown to be a sensible and successful adaptation strategy in many regions of south-western Australia, particularly the northern grainbelt.The unique and particular characteristics of each farm business were the main determinant of their business success.  However, a few generalisations apply.  Due to seasonal and market conditions during the study period more farms in the northern parts of the grainbelt in south-western Australia fared better.  Also farmers whose businesses grew strongly over the study period on average displayed superior management capabilities and choices in many areas of farm management.  In addition, these farmers were often more connected to their local community and achieved greater work-life balance.We conclude that as long as broadacre farmers in south-western Australia have on-going access to improved crop varieties and technologies that support the profitable growing of crops, especially wheat; and that they have access to farm management and business education then farmers are likely to be able to adapt to projected climate change.  Provided that a farmer’s terms of trade does not become unduly adverse, and that farmers sensibly manage farm debt, then it seems highly likely that farmers who continue to rely on crop production, mostly wheat-growing, will persist as financially sound businesses in most parts of the study region, even in the face of projected climate change.Please cite this report as:Kingwell, R, Anderton, L, Islam, N, Xayavong, V, Wardell-Johnson, A, Feldman, D, Speijers, J 2013 Broadacre farmers adapting to a changing climate, National Climate Change Adaptation Research Facility, Gold Coast. pp.171.Data on the financial performance of a diverse set of 249 farm businesses in south-western Australia over the period 2002 to 2011 was collated and analysed.  These 10 years were a period of challenging weather years, underpinned by a warming and drying trend in the region’s climate, frost events and marked price volatility.Based on a range of metrics, almost two-thirds (64%) of the farms in the sample were classed as growing or strong. A less secure group of farms that are at some potential financial risk formed 15% of the farm sample. Over the study period farm profitability, on average, improved, supported by productivity growth, in spite of no underlying improvement in the farmers’ terms of trade.  Productivity improvement allowed most farm businesses, especially crop and mixed enterprise farm businesses, to prosper.  The pathway to their profitability was not so much by investing in new technologies that may have shifted outwards farms’ production possibilities, but rather through better use of existing technologies, including technologies that offered scale economies. Also farmers’ shift into greater dependence on cropping, especially wheat production, was shown to be a sensible and successful adaptation strategy in many regions of south-western Australia, particularly the northern grainbelt.The unique and particular characteristics of each farm business were the main determinant of their business success.  However, a few generalisations apply.  Due to seasonal and market conditions during the study period more farms in the northern parts of the grainbelt in south-western Australia fared better.  Also farmers whose businesses grew strongly over the study period on average displayed superior management capabilities and choices in many areas of farm management.  In addition, these farmers were often more connected to their local community and achieved greater work-life balance.We conclude that as long as broadacre farmers in south-western Australia have on-going access to improved crop varieties and technologies that support the profitable growing of crops, especially wheat; and that they have access to farm management and business education then farmers are likely to be able to adapt to projected climate change.  Provided that a farmer’s terms of trade does not become unduly adverse, and that farmers sensibly manage farm debt, then it seems highly likely that farmers who continue to rely on crop production, mostly wheat-growing, will persist as financially sound businesses in most parts of the study region, even in the face of projected climate change

The rationale for taxpayer support for primary industry research and innovation in Western Australia

During the 2000s a common view in government circles was that governments were over-investing in primary industry research and innovation. In agreement with this view, the Western Australian (WA) government lessened its support for primary industry research and innovation over the last decade. The impacts of this reduced support are seen clearly in the Department of Primary Industries and Regional Development (DPIRD). In 2008–09 its agricultural staff count was 1518, yet by the end of 2017–18 this will be under 800, with remaining staff working mostly in regulation, biosecurity and corporate services rather than research. So great has been the erosion of funding and capability in research that the pressing problem is now perceived to be government’s underinvestment in primary industry research and innovation. Government’s current fiscal environment constrains departmental budgets, so the case for government expenditure on primary industry research and innovation needs to be made and soundly argued. This report outlines the case for government expenditure on primary industry research and innovation