Dairy Directions: a decade of whole farm analysis of dairy systems

Making farm decisions is difficult, especially making decisions about selling and pricing wheat in deregulated supply chains. This study, conducted prior to export deregulation, sought to identify which factors were important to northern New South Wales (NSW) wheat growers when they were making decisions about wheat selling and price risk, under production and market uncertainty. Key questions were about how they make these decisions and the implications, particularly for larger-sized farmers, merchants, end-users, bankers, advisors and trainers. The research aim was to test the behaviour of users and non-users of five selling methods and six pricing-hedging strategies against eighteen management and seventeen risk attitude-adoption questions. The findings from this research will assist understanding of farmer decision-making. Information about growers’ decision processes on wheat selling and pricing will be helpful to supply chain intermediaries and service personnel in improving the targeting and alignment of growers. More research is required on the cross-usage of different selling-pricing methods, the interdependence between discretionary costs of production and selling-pricing decisions, how speculative storage compares with on-farm rental storage of pre-sold product that integrates the farmer with the supply chain, and how speculative storage affects cash flow and debt repayment. Volume 20, Paper 2, (pp. 11-38) The Aggregate Economic Benefits to the Australian Beef Industry from the Adoption of Meat Standards Australia: updated to 2010/11 + Garry Griffith and John Thompson Meat and Livestock Australia and the Cooperative Research Centre for Cattle and Meat Quality funded a major R&D program in the mid 1990s to investigate the relationships between observable beef and cattle characteristics, cooking methods and consumer appreciation of beef palatability. Out of this R&D program grew the Meat Standards Australia (MSA) voluntary meat grading system which was aimed primarily at providing an accurate prediction of beef eating quality for the domestic market. The MSA system commenced operations in 1999/2000. The gross benefits associated with using the MSA system were quantified by using data on the number of carcases graded and certified, a survey of retailers and wholesalers based on prices for MSA graded beef (3 star or better) versus ungraded beef, and market reports of prices paid for MSA quality cattle versus non-MSA quality cattle. Over the period 2004/05 to 2010/11, beef consumers across Australia were prepared to pay on average $0.30/kg extra for MSA branded beef on a carcass weight equivalent basis to guarantee tenderness. This beef is primarily sold through independent butcher shops, although one of the major supermarket chains has now started selling MSA branded beef. The retailers kept about $0.06/kg and paid their wholesale suppliers the remaining $0.24/kg to source MSA compliant cattle and MSA graded carcasses. About $0.13/kg was passed back to cattle producers on average. The cumulative retail-level economic benefit of the MSA system to 2010/11 is estimated to be around $523 million, with a current annual benefit of around $77 million over the past three years. After accounting for all the costs of development and implementation, net benefits are at least $200 million. Volume 20, Paper 2 (pp.39-58) Dairy Directions: A decade of whole farm analysis of dairy systems B. Malcolm, C.K.M. Ho, D.P. Armstrong, P.T. Doyle, K.A. Tarrant, J.W. Heard, C.M. Leddin, W.J. Wales Dairy farm systems are complex and diverse. A decade ago, a dairy research and development project, Dairy Directions, was developed. In this program, the whole farm approach of farm management economics was used to investigate questions about options dairy farmers had to maintain and improve profitability, to achieve their goals. Commencing in one region of Victoria, with an initial focus on farm decisions, the scope of the work evolved to identifying gaps in scientific knowledge, contributing information to public policy formation, and expanded to other regions. A steering committee of farmers, related industry representatives, scientists and farm economists proved the key to success in this research process. In this paper, the whole farm economics approach to farm systems research is described and explained; in particular the role of using information about response functions, risk, time and case studies in answering questions about alternative farm futures. The application and results of the whole farm approach to a range of research questions about dairy farming in Victoria is presented. As well as confirming the known, findings have also identified unrecognized dimensions, and challenged theory.