Future Farm Industries Cooperative Research Centre: profitable perennials - Bob Farquharson


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Future Farm Industries Cooperative Research Centre: profitable perennials - Bob Farquharson

  1. 1. 1
  2. 2. Future Farm Industries Cooperative Research Centre: Profitable Perennials R R Farquharson, A Abadi, C Lewis, J McGrath, and K Goss
  3. 3. Objectives of this talk 1. Outline the FFI CRC objectives  Headline farming systems  Impacts of the CRC  An economic evaluation 1. Some issues in adoption of one technology  New pastures in southern Australia  Risks and returns in a variable climate
  4. 4. 4 1. FFI CRC objectives Develop ‘Profitable Perennials’ to .. Change the nature of farming Create new industries Inform the management of catchments .. in southern Australia Context Typical (historical) climate variability Potential future climate change Activities R&D, Education and Training
  5. 5. 5 Headline farming systemsEverGraze – pasture & livestock systems for HRZ Enrich – fodder shrubs in mixed farming systems EverCrop – perennials in crop-dominated systems New Woody Crop Industries – woody perennials integrated in mixed farms Saltland Systems – production from saltland in mixed farming systems Environment – perennials & their environmental footprint in dryland agricultural landscapes
  6. 6. 6 How? Conducts farming systems-based R&D With numerous partners Purpose - develop Profitable PerennialsTM Increase productivity of existing industries Develop new regional industries through investment in woody crop production on farm Reduce the risk of natural resource degradation, including dryland salinity Improve conservation of biodiversity & water resources Impacts expressed as changes in key headline farming systems Direct monetary benefits & additional non-monetary benefits
  7. 7. 7 Types of benefits Monetary benefits Costs and impacts Discounted cash flow (5%) Adoption pattern Environment Adoption of INFFER Improvement in NRM investment and policy Non-monetary impacts Water use, biodiversity, weed risks Science capability & capacity building Risk analysis
  8. 8. 8 Monetary impacts Indicator Unit Analysis Program impact life span Year 2007-21 2007-30 Land impacted Mha 2.07 5.90 Net benefits (Most likely scenario) $M 808 2,510 Net benefits (Conservative scenario) $M 513 1,460
  9. 9. 9 Adoption pattern
  10. 10. 10 2. Adoption of pastures Perennial pastures Western Victoria HRZ DCF analysis – time and risk dimensions Representative whole-farm analysis • Including Livestock carrying capacity, extra return on capital invested, finance implications, partial development budget approach, includes climatic risk Generate information for farmers/extension re adoption Climate variability & pasture investment
  11. 11. 11 Representative farm Enterprise Lambing/calving Area (ha) Product Sheep 800 - SR Merino September 560 Wool - Mer x White Suffolk July 240 Prime lambs Beef - Angus April 200 Steers & cull heifers
  12. 12. 12 Comparisons Base Case Rye grass/sub clover with capeweed at Hamilton EverGraze Triple SARDI7 Lucerne, Avalon rye, Quantum Tall Fescue EverGraze Ryegrass Fitzroy rye, Avalon rye, Banquet rye Pasture growth and quality included Gross Margins, importance of supplementary feed costs NPV & IRR
  13. 13. 13 Cumulative NCF
  14. 14. 14 Risk-return analysis Mean-variance efficiency (Hardaker) Importance of stocking rate
  15. 15. 15 Conclusions Potential economic (& non-economic) impacts of FFI CRC activities are substantial for southern Australian dryland livestock- cropping systems An ex ante analysis based on projected benefits For one pasture technology, we investigated Cash flow, investment & risk-return trade-offs for farm-level adoption Links - climatic risk, profitability & adoption
  16. 16. 16 Acknowledgements