In this study a spatial and structural analysis of sheep enterprise gross margins and emissions in Western Australia's agricultural region is conducted. Specifically, self-replacing Merino sheep enterprises are examined in 14 agroecological zones using five years of farm level data (2019-2023). Emissions calculations are based on the Australian Sheep and Beef Greenhouse Accounting Framework. Results reveal significant variability in gross margins and emissions across agroecological zones and across farm performance groupings. During the study period sheep enterprises in the high rainfall and medium rainfall southern zones displayed higher gross margins ($243-295 per winter-grazed hectare) than enterprises in the northern and low rainfall zones ($106-148 per winter-grazed hectare), although significant temporal variation was evident due to volatility in climatic conditions and commodity prices. Total emissions per annum ranged from 462 kg CO2-e per winter-grazed hectare in low rainfall regions to 1,455 kg CO2-e in high rainfall regions, with the top 25% of farms generating 2,300 kg CO2-e per winter-grazed hectare. Emissions per kilogram of liveweight sold ranged from 5.6-6.6 kg CO2-e per kg of liveweight for meat whilst for wool, emissions were 20.1-23.4 kg CO2-e per kg of greasy wool, decreasing from northern to southern zones. Survey results reveal a greater potential for emissions reduction on farms in the high rainfall region. Each dollar of forgone gross margin on these farms generates more emission reductions than is possible for farms in other rainfall regions. However, the practical concern for all farms is that there is currently no strong commercial penalty or reward for altering emissions from sheep production. The current gross margins for sheep production, especially in the high rainfall region, signal that maintained or greater intensification of sheep production is worthwhile, even though emissions per hectare or emissions per kilogram of sheep or wool may increase.
Climate projections for southern Australia indicate an increased likelihood of years of consecutive droughts. How resilient are farm businesses and their farming systems to recover from episodic drought? This study assesses the farm economic and financial impacts of consecutive droughts in southwest Australia. Bioeconomic simulation modelling of farm businesses with different farming systems at three locations is used to examine the long-term financial consequences of consecutive droughts. Various key factors affecting those consequences are examined. Farm location, farming system and starting equity are found to be the main determinants of how quickly a farm business can financially recover from the impact of consecutive droughts. Initial low equity greatly reduces the likelihood or speed of recovery from consecutive droughts, especially in low rainfall locations where crop dominant farming systems are commonplace. Projected future climate is shown to affect farms differently, based on the farm's location and farming system. Farms in high rainfall locations are projected to benefit from future climate change and are more resilient and quicker to recover from consecutive droughts. Changes in sheep or grain prices, during and immediately after consecutive droughts, are shown to only marginally affect a farm's long-term financial performance whereas rates of gain in crop improvement more strongly support the farm's financial recovery.
Agriculture Victoria Research has conducted several traceability pilots with industry partners to address a major impediment to the adoption of digital traceability in agriculture: i.e., the inability of isolated systems to interact and 'talk' with each other. One pilot was a collaboration with Rubens Technologies, who market a hand-held fluorescence-reflectance sensor and analytics for the nondestructive measurement of internal quality in pome and stone fruit. The Rubens pilot demonstrated how traceability functionalities could be retrofitted into the sensor's associated mobile application and application programming interface services. Along with applying unique identifiers to carriers (tags) placed on orchard features and objects (trees, bins), these changes enabled the seamless ingestion of contextual information critical for early supply chain management into the orchard's data ecosystem. Ex ante benefit: cost analysis suggests that practice changes made possible by the adoption of the modified Rubens product are likely to add to an orchardist's wealth. Risks and returns were examined for two decision-making processes for a hypothetical 2-ha block of Royal Gala apples: (1) harvest timing, and (2) post-harvest storage. Extra costs were weighed up against ongoing annual benefits. For both decisions, benefits included labour savings from a more streamlined testing and data collection process. Considering only the labour savings, the combined net present value (NPV) estimated over 5 years with a 7 per cent p.a. real discount rate was $1,479/block. For the second decision, a higher crop value was also possible by increasing the sample size on which the storage decision was based. In this case, estimation of benefits required the use of Monte Carlo simulation technology, and the combined NPV rose to an average of $16,697/block. This figure masks a modest 25 per cent probability that benefits would exceed the costs. Annualised, the NPV with the larger sample size averaged $2,039/ha p.a., which exceeds the gross margin estimated from recent industry data of $1,942/ha. This seemingly large net benefit is equivalent to a modest 3 percentage point increase in Class 1 pack-out from the industry average to the industry maximum of 79 per cent. These comparisons confirm the importance of growers minimising downside marketing/price risk by targeting fruit quality at harvest and at the earliest stages of the supply chain.
The nitrogen (N) fertilizer used to help grow fully irrigated cotton in Australia adds, through several pathways, nitrous oxide (N2O) to the stock of nitrous oxide in the atmosphere and increases the global externality cost of the warming climate. The focus of this analysis is on the extra social benefits and the extra private costs and negative externality costs of using different quantities of N on land in NSW and QLD to grow cotton over a year, and over the coming 15 years, as compared with not growing cotton on that land and replacing the activity with another economic activity. Starting at the farm, a welfare economics framework including the concepts of response of crop yield to N fertiliser, private costs, externality costs, marginality, with-without counterfactuals, opportunity costs, crop rotations, discounting, probabilities, consumer surplus, producer surplus and net social benefit are used to estimate the size of the social benefits and costs of N used to grow irrigated cotton. In the case analysed, with an illustrative counterfactual, the externality cost of direct N2O emissions from growing cotton after counting for the counterfactual was $102/ha yielding a Benefit to Cost (B:C) ratio of 7.2:1. The net social benefit on the industry over 15 years at a 5 per cent real discount rate per annum in net present value terms was $5.6 billion with an annuity of $541 million. In the case analysed and with the probabilities assumed for the values that the key uncertain variables could take, with only direct N2O emissions counted as the negative externality of the N used, there would be a 90 per cent probability that the B:C ratio of N used to grow cotton was between 5.4:1 and 9.6:1. There would be 55 per cent chance the B: C ratio would be more than 7:1. There would be zero chance the B:C ratio would be under 4:1. A significant finding about the negative externality of the N2O emissions from the N applied to cotton was that $80 of the $116/ha externality cost from the N2O emissions came from the marginal 50 kg of N/ha that was used. If the response function is relatively flat around the typical level of N/ha that is used in a typical year, then the marginal units of N applied would be adding little extra cotton yield relative to the extra externality cost attributable to the N2O emissions. In this situation, there would be scope for small reductions in N/ha used to grow extra cotton to bring large reductions in the externality cost of the N2O emissions from N used to grow cotton.
Farm management occurs against a backdrop of weather-year variation. In Australian mixed enterprise farming systems, how important is it for farm optimisation models to capture this variation and the management tactics matched to that variation? This study compares two whole farm optimisation models of an Australian mixed enterprise farming system. One model represents weather-year variation and the short-term tactical management responses tailored to the unfolding weather-year conditions. The other model is a traditional deterministic steady state model that employs the key assumption that every year is an expected weather-year. Both models require the farm manager to select a profit-maximising suite of enterprises and activities relevant to either the expected weather-year or the suite of weather-years that typify weather-year variation where the farm is located. Comparison of the models' results reveals key differences in farm strategy, farm tactics and farm profit. The model that includes tactics aligned to the weather-year variation reveals that tactical decision-making increases expected farm profit by about 18 per cent.
Using household capital analysis, this study investigated the farm income, other monetary benefits and household wealth effects from participating in a tree farming project in the Markham Valley of Morobe Province, Papua New Guinea. The study employed both qualitative and quantitative research methods. From the total sampling population of 370 landowners and tree farmers, 10 per cent were selected to represent the participants in the project. Farm income and profitability gradually increased over the time involved in the project for contract work, annual land lease payment and intercropping practices. Farm income was influenced by the farm size and the number of years in the farming business. A rural household wealth analysis revealed that the highest ranked short-term recurrent need was clothing, followed by school fees. The main medium term recurrent needs were family events and cultural obligations, while the main long term recurrent need was better housing in order to improve living standards and wellbeing. The study also found that while tree farmers earn more income, they lack household income management abilities. The study recommended capacity building through training and education programs that improve farmers' knowledge of farm income management.
Extended wet winters present a challenge for grazing management for some farm businesses. Extended wet winters can cause waterlogging of pastures and when such pastures are grazed, soils and pastures are damaged. This research analysed, for two representative dairy farm businesses in south-eastern Australia with 100 hectares affected by a wet winter: (i) the cost of doing nothing differently to grazing management to manage pastures; (ii) the cost of actively managing wet pasture through ' on-off ' grazing if the case study farm had a stand-off area; and (iii) the maximum amount of capital that could be invested in a stand-off area for wet pasture grazing management, if the farmer wants to earn a 10 per cent annual return. To do this analysis both biophysical modelling and economic analysis was used. It was found that, if the representative dairy farm businesses did nothing differently to grazing management during an extended wet winter, this could result in extra costs between $9,000 to $50,000 depending on the likelihood of a wet winter. However, if the representative farmer had a stand-off area and practised on-off grazing then the annual cost of this grazing strategy could be between $300 to $2,600. The maximum amount the representative farm business could invest in a stand-off area to earn a 10 per cent annual return, and be no worse off than doing nothing differently to manage wet pastures, was found to be from $50,000 to $250,000, depending on the frequency of the extreme wet weather. If the capital cost of the stand-off area was less than this amount, then the representative farmer would be better off investing in a stand-off area and using on-off grazing rather than doing nothing differently. A key conclusion from this analysis is that the representative farmer may be better able to manage the risk of a wet winter through active grazing management because the annual costs of an unchanged grazing management regime during a wet winter are more volatile than the costs of actively managing an extended wet winter. Lastly, a cost framework has been developed that other farm businesses could use to consider the costs of different wet winter pasture grazing management strategies for their businesses.
Consumers of fresh pork have long been aware of the risk of their pork purchases not meeting eating expectations due to unpleasant taste or smell or other unsatisfactory quality characteristics such as a lack of tenderness. Boar taint, or the risk of it, is one of the most important factors identified in surveys of consumers of pork as being responsible for having a poor eating experience. Immuno-castration (IC) of entire male pigs is one method of reducing boar taint in pork. Currently about 60 per cent of male pork produced in Australia is immune-castrated. The question asked here is whether it would be profitable for the industry if the remaining male slaughter pigs were immuno-castrated as well. The additional costs associated with IC include the costs of the vaccine, extra labour costs, and additional costs arising from abscesses at the injection site causing increased product downgrades and stoppages of the slaughter line for cleaning. A major benefit of IC for the pig industry is a reduction in consumers of pork enduring poor experiences from unpleasant taste or smell when they eat pork. Over time, reducing the occurrence, and the risk of occurrence, of having a less than satisfactory experience when consuming pork has the potential benefit of the industry avoiding losing customers, and even increasing demand for pork, above what it would be with the continuation of the current proportion of boar-tainted pork in the total national supply of pork. Over the next ten years, if national consumption of pork increases at the same trend of the past decade, the benefits from avoided annual losses of demand or from increases in demand by just 0.5 per cent of total annual national consumption of pork would cover the cost of the remainder of the industry adopting IC. This conclusion applies if IC was adopted fully and immediately and the cost was the lower of the range of possible cost estimates at $0.10/kg carcass weight. More realistically, if producers adopted IC more slowly and adoption of IC took five years, and the cost of using IC was $0.10/kg carcass weight, then avoiding or preventing a loss of 1.5 per cent in annual sales would mean the total benefits exceed the total costs of achieving this outcome. Such relatively small gains in sales or avoided losses of sales seem eminently achievable. The conclusion of the BCA is that an increased use of immuno-castration in Australia's pig production system that reduces the prevalence and the risk of boar taint would have a high likelihood of delivering a net benefit to participants in the industry.
In 2011, the New Zealand dairy industry developed a forage cultivar selection decision support tool called the DairyNZ Forage Value Index (FVI). Since then, there has been considerable interest shown in development of a FVI-type cultivar evaluation system for the New Zealand sheep and beef industry. The New Zealand Pastoral Industry Forage Strategy for example recommended actions to develop a FVI for the sheep and beef industry and to have closer collaboration between the sheep and beef industry, the dairy industry and the New Zealand Plant Breeding and Research Association. This is unsurprising since the dairy industry estimated the value of the benefits of the DairyNZ FVI as approximately $NZ160 million each year. The present study provides a cost benefit analysis of a forage cultivar selection decision support tool (DST) across the New Zealand sheep and beef industry. The analysis was performed using a nitrogen fertiliser/barley replacement cost method to estimate the value of forage dry matter. The value of sheep and beef farmers choosing 5 star rated cultivars of perennial ryegrass compared to 3 or 1 star rated cultivars was extrapolated to the eight Beef + Lamb NZ Farm Classes and to the whole sheep and beef industry. Multiple scenarios were examined to assess the net present value and modified internal rate of return of investment in the DST. These scenarios reflected differences in assumed rates of adoption over a 10-year period and differences in implementation costs. The modified internal rate of return over a 10-year period was estimated to range between 27 and 62 per cent depending on whether an annual cost of the DST was assumed to be $NZ0.5 million or $NZ1 million under the adoption scenarios considered. The NPV ranged between $NZ6 million and $NZ45 million. This highlights the potential value of improved farmer selection of ryegrass cultivars through a cultivar selection DST in a sheep and beef context in New Zealand.
Changes in seasonal and market conditions and the cost-price squeeze have implications for the profit and risk of a farm business. Farming a range of activities is a common approach for reducing exposure to risk, whilst still making reasonable profits. Such diversification spreads yield and price risk across several activities. The effectiveness of diversification in reducing risk and maintaining satisfactory profit depends on the correlations between yields and prices of the various activities, complementarities between enterprises, and the ability of the farmer to manage the various systems. Alternatively, specialisation by producing one commodity well has the potential to generate higher profits than the diversified system, but also has higher exposure to price risk. A case study farm running prime lamb, Merino fine wool and cropping in south-west Victoria, was analysed to compare choices about diversification and specialisation in the farm system, and to examine the impact on profit and risk. The biophysical, economic, financial, wealth and risk dimensions of the business were simulated to examine how six different farm systems were likely to perform under volatile seasonal, price and cost conditions over a seven-year planning period. The study focused on changes to the farm business that would increase profits from producing either one or a combination of different commodities - prime lamb, fine wool, beef and cereal crops - and evaluating the profit and the risk of making these changes. The six changes analysed were: (C1) increase soil fertility and develop all pastures to improve the base farm; (C2) all prime lamb; (C3) prime lamb and beef breeding cow and calf; (C4) prime lamb and cropping; (C5) lambing later and finishing all lambs in a feedlot; and (C6) lambing later and finishing all lambs on forage crops. Options that involved diversification of livestock enterprises, such as farming multiple sheep enterprises, or sheep and beef cattle, were sound approaches for managing risk, whilst achieving reasonable net profits and returns on capital ($254,000, 6.1 per cent and $275,000, 6.5 per cent, respectively). If higher profits are sought, then specialisation and focusing on a single enterprise, such as prime lamb, appeared the best option ($320,000, 7.2 per cent), but there was greater variation associated with the average profit over a run of years. For this analysis, farming a prime lamb enterprise based on pasture supply to finish the majority of lambs was generally more favourable than lambing later to maximise reproduction performance and finishing lambs in a feedlot ($294,000, 6.8 per cent) or forage crop system ($276,000, 6.5 per cent). Cereal cropping ($196,000, 5.2 per cent) was not a profitable option for this farm business when compared with prime lamb production. Finally, analysis of the factors contributing to variability of profit indicated that the price, particularly of lamb, was the substantial contributor to overall risk.
In the high-rainfall zone of south-eastern Australia, yields of broadacre crops are constrained by physical and chemical characteristics of the sub-soil. Scientific research is being conducted into ameliorating these physical and chemical sub-soil constraints by using organic amendments that have high levels of nitrogen. This paper is about the results of economic research into the net benefits and risk of ameliorating sub-soil constraints by applying sub-soil amendments such as chicken manure to cropland in the high rainfall zone. The key economic question for a grower is whether the extra benefits of ameliorating sub-soil constraints and increasing the yields of crops are greater than the extra costs of doing so, considering risk. The aim of this research was to determine the effects of yield and price risks over a run of years on the profitability of making such soil amendment investments. Investment costs and annual activity gross margins for a crop rotation were used to estimate the economic performance (NPV, IRR and BCR). Risk analysis was used to assess the effect of price and yield variability on the mean and variance of outcomes. It was found that an investment in sub-soil amelioration which lasted for five years was more profitable than conventional cropping, at an average annual required rate of return of 6 per cent p.a. real, before tax. The size of the expected extra yield benefits above the yields of conventional cropping, and the longevity of the effects of the amendment and yield benefits, are the most important factors for a crop farmer to consider when assessing the option of investing in sub-soil amelioration to grow better crops in the high rainfall zone.
The research reported here was carried out to evaluate the impact of a tree farming project between PNG Biomass and the customary landowners of the Markham Valley in Morobe Province, Papua New Guinea. The research employed a mixed research design that includes both qualitative and quantitative data collection and analysis methods. The primary data were processed using MS Excel, MS Word, Statistical Package for Social Sciences and Nvivo Qualitative Data Analysis software. The research examined the farm management processes, land dealings and farm impacts. The study found that appropriate legal procedures were not followed by PNG Biomass for both the land dealing process and farm management practices. The evaluation of land dealings shows that land acquisition, land use agreement, compensation and legality processes need attention due to a lack of legal interpretation and representation in the land dealing process. Further analysis of farm input use indicates that the use of agro-chemicals and approaches to land conservation are a priority and need attention for sustainable tree farming practices and management. On the basis of our findings we recommend the use of a holistic approach towards project development with legal compliance to the relevant laws and regulation to safeguard the business operation.
Farm businesses producing fruit for the fresh fruit market require significant amounts of labour, especially for harvesting. In other agricultural industries, like cropping, the reliance on labour has reduced because machines have replaced labour. At the moment, machines do not replace labour for horticultural businesses supplying the fresh fruit market, consequently the labour cost is significant. However, machines, like a mobile platform, may improve the efficiency of labour or reduce the need for particular skills. Mobile platforms are not new and have been a consideration for fruit growers since the 1970s, but rising costs of labour has increased interest in investing in them. Research in the United States, Europe and South Africa into the benefits of mobile platforms has found, in some cases, that using a platform can improve productivity and occupational health and safety, but the findings are inconclusive. The aim of this investigation was to identify the labour needs for Australian growers supplying apples to the fresh fruit market and to investigate and form a view about the role a mobile platform has against other tools that can be used by growers to assist labour. This study has found that the `best' combination of equipment, machinery and labour to use to assist in the main production tasks of horticultural businesses depends on the many and varied characteristics of the business, the segment of the market the farmer sells into, the operator and the skills and cost of labour.
Autonomous tractor technology is increasingly viewed as a key factor in changing the paradigm of conventional agriculture, allowing a shift away from ever-increasing crop machinery sizes to swarms of smaller agricultural robots (agbots). The predicted benefits of agbots include improved productivity relating to key inputs such as labour, energy, and chemicals, as well as yield improvements from improved crop and fallow management and reduced compaction. To understand the economic potential of agbots in Australian cotton production, this analysis applied discounted cash flow analysis to compare changes in income and costs associated with investment in an agbot spraying system. The results showed that switching to agbot spraying is economically feasible compared to two conventional spray platforms in a representative cotton farming enterprise. Compared to a self-propelled sprayer, agbot spraying returned an average annual NPV of $95,750 (at a 5 per cent real discount rate) and a MIRR of 16 per cent, while compared to a threepoint linkage tractor sprayer, agbot spraying returned an average annual NPV of $178,603 and a MIRR of 13 per cent. Differences in the NPV and MIRR rules were due to variations in the cashflow patterns. For both scenarios, the largest benefit component was increased crop income from yield gain, followed by avoided machinery capital costs, and reduced chemical costs. Sensitivity testing revealed that, for the self-propelled sprayer scenario, the yield change and farm size variables were both individually significant to the results as they both had the capacity to reduce the NPV below $0 at their maximum range. In the tractor sprayer scenario, the yield gain was the only significant variable, reducing the NPV to $0. With the increasing commercial availability of agbots and the widely predicted benefits, it is timely to understand the economic potential for agbot adoption in the Australian cotton industry. From the results we infer that agbot sprayer technology can be a viable economic technology for adoption in a cotton farming system if yield gains can be generated. The economic viability will also be influenced by a number of factors that will differ between farming operations, and as with any decision, farmers should closely review agbots in their own operational context before investment.
National environmental objectives have led to the development of government policies that create incentives for businesses to invest in renewable energy. These policies, increasingly affordable renewable energy and storage technology have aligned to deliver both economic benefits to farmers and co-benefits to the environment in on- and off-grid scenarios. This analysis aims to determine the economic feasibility of renewable and innovative energy systems to assist in reducing grid electricity cost for irrigation pumps and small industrial applications. Using a case study approach, optimal engineering and economic assessment are applied on a farm characterised by energy consumption in three different scales and usage patterns; sporadic large seasonal use, uniform industrial use and small-scale industrial use. The case study farm's electricity demand and pricing agreements were assessed and entered into the Hybrid Optimisation of Multiple Energy Resources design software to analyse a range of hypothetical microgrid installations. A major aspect of the study is the connectivity between Government incentives, tariff uncertainty and the electricity retailers' rules regarding feed-in-tariffs and network connection criteria. While the challenge of aligning seasonal demand with renewable energy supply remains, the cost competitiveness of solar energy proves a realistic supplementary source for grid-connected agricultural loads where year-round utilisation rates are high. Of each of the case study sites evaluated in this paper, the highest returning economic and environmental business case occurred where the modelled micro-grid included photovoltaic (PV) and remained eligible for a Feed-in-tariff - enabling revenue creation out-of-season. Those larger PV systems exceeding the export limit of 30kW still showed a lower cost of energy than the grid, however, where a diesel genset was included to avoid peak tariffs, carbon emission abatement was negligible. Designing optimal engineering solutions to reduce on-farm energy costs is heavily dependent on awareness of current carbon and energy policy incentives, as well as the changing landscape of connection rules and feed-in-tariffs.
Current pricing signals for lamb are encouraging the supply of lambs at heavier weights. However, for Australian producers who lotfeed lambs, the decision to target the heavier end of the market specification is not clear cut. Variables such as growth rate, feed costs and store lamb purchase price, as well as sale price, all have an influence on the profit margin of feeding lambs to a range of carcase weights. Using a deterministic model and a partial-factorial experimental design, a series of sensitivity analyses were conducted to assess these relationships. The results showed that in certain conditions, targeting a heavy lamb specification was an economically sensible decision. When sale prices were at least ten per cent higher than the average it was a profitable thing to do. When sale prices were average or low, if at least one other cost variable was low, it was similarly a sensible decision. With volatile pricing across all variables and potentially tightening market specifications, the results of this analysis will play an important role in helping lamb producers determine whether it is worthwhile targeting a heavier weight.
Drought is an inevitable and recurring characteristic of the farm business. Farm business subsidies are both inefficient and an ineffective welfare support. The Farm Household Allowance is a better welfare support policy, but the current design raises issues of implementation and of equity across others in need. Long term support of provision of information and assistance in better decision making are worthwhile policy options for responding to drought and other uncertainties.
There is little sound information about the impact of cow genetic selection programs on whole farm profit. In this paper aggregate industry data about dairy herds are analysed to identify trends in dairy herd genetic, production and reproductive performance. The genetic distribution within herds that would result over time from a long-term genetic selection program is simulated, and a representative whole-farm bioeconomic model is used to explore the impact of genetic change in a dairy herd on the profit of a representative case farm. Analysis of an industry herd recording database revealed an average annual rate of increase in the Balanced Production Index (BPI) of 7 units for the herd (2.9 and 10.1 for the bottom and top BPI quartiles) and 10.8 units for artificial insemination sires used within herds. Modelling these trends for herds, with an age-cohort range average of 43 units of BPI and 20 per cent cohort attrition rates, shows that the natural range between bottom and top BPI quartiles expands gradually but remains between 75–100 units in most herds across 50 years of selection. This finding of persistence in the distribution of genetic merit around the herd mean indicates that the common application of comparing performance of BPI quartiles within herds provides almost no insight into impacts of genetic selection on farm profit. Bioeconomic modelling revealed that the genetic gain of a herd achieving an annual rate of increase in herd BPI of around 10 units per year contributed an average of around $2,500 extra to farm profit per annum for a 250-cow herd representative farm. Applying more widely the findings and insights from modelling genetic gain in a representative pasture-based dairy farm suggests it is likely that that, on many, or even most, dairy farms, the gains in profit from cow genetic selection is likely to be modest in light of other investment opportunities and is thus not something to be focussed on to the effective exclusion of other more profitable resource uses. ‘Ignore the principle of equi-marginal returns to all inputs at your peril’ is sage farm management economics advice to those who believe that all animal farmers need do is to improve the genetic potential of their animals. Good advice to dairy farmers would be to: (i) have realistic expectations about the role of genetic gain in their business; (ii) evaluate returns from investment in herd genetics; and (iii) compare expected returns from investments into all limiting factors present on the farm.
A discounted net cash flow (NCF) model incorporating Monte Carlo simulation was developed to quantify the net benefits and risks of growing the new red-blushed pear cultivar `ANP-0131' (Deliza (R)) on a representative orchard block in Victoria's Goulburn Valley. Results were compared to those for retaining a traditional low-density ( 343 trees/ha) planting of `Packham's Triumph'. `ANP-0131' was grafted to Quince A rootstock and trained on Open Tatura trellis at densities of 1,481, 2,222 or 4,444 trees/ha; these are three of the training system x rootstocks x tree spacing combinations currently being investigated at Agriculture Victoria's experimental orchard in Tatura. The trees in the experimental orchard are currently in their fifth year of a potential life-span of 30 years and have been fruiting for the last three years. Hence, the analysis is prospective and based on crucial assumptions concerning pack-outs, prices and yields. From 10,000 simulations it was found that growers could invest in the new `ANP-0131' pear system with confidence. Subject to the law of diminishing returns, the most profitable planting was 2,222 trees/ha, for which the mean Net Present Value (NPV) was $258,471/ha evaluated over 30 years using a discount rate of 4.5% real. The Modified Internal Rate of Return (MIRR) was 10.9 per cent, beating the real nine per cent return on Australian equities. The payback period ranged from 7 to 11 years from best to worst case scenarios. The relative advantage of the new planting over the existing planting of `Packham's Triumph' was clear; the mean annuity of the NPV for the new planting was $15,835/ha p.a., the NCF for the existing planting was a modest $4,595/ha p.a. and there was a 20 per cent chance that it would lose money in any one year.
Dairying is an important component of Pakistan’s mixed crop-livestock farming systems. The national economy engages some 8.8 million small-scale producer households. The country produces more milk than any other except for the United States and India. Yet little is known about small-scale producer microeconomics to inform policy development for improving their welfare. In this paper we aim to identify the whole farm profitability of small agricultural households, with a specific focus on milk production. We compare two contrasting agro-ecological regions within Pakistan’s Punjab (irrigated Okara and rain-fed Bhakkar) using results for a single 2008-09 fiscal year of production for 212 farms. Net farm profits, taking long-run opportunity costs of labour and capital into account, showed only 10 per cent of these farms to be profitable in either district, though short-run profits, accounting for cash costs only, showed positive whole farm gross margins for 90 per cent and 80 per cent of farms in Okara and Bhakkar, respectively. The returns on assets (at 2.78 per cent and 0.53 per cent for the two districts) was lower than the national average return on savings (9 per cent). For dairy enterprises, total costs were higher than incomes; so many farms (70 per cent and 60 per cent, respectively) were assessed as making losses. Given the low opportunity costs of feeds (often crop residues) and of labour (6.2 per cent unemployment) and the high rate of inflation (11.8 per cent), returns on factors of production including labour and capital, may not be lower than international standards. There is a need, however, to raise the dairy industry’s overall productivity to make dairying viable; and to identify an optimal land and livestock combination that is profitable and commercially viable.
