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Changed Payment System for Wheat Grades: Consequences for Farming Systems in the Central West of NSW

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  • Patton, Dean A.
  • Brennan, John P.
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    Abstract

    The new AWB Ltd payment system for wheat grades has changed the incentives for farmers to grow and market wheat varieties in Australia. Based around standard quality characteristics, the payment system provides incremental premiums and discounts for deviations in protein and screenings around this standard. The aim of this paper is to compare the optimal crop-pasture rotation using the previous cliff-face pricing structure with the new premiums and discounts pricing structure. The optimal rotations are analysed by applying a linear programming model of farming systems in the Central West of NSW (PRISM Condobolin). To assess the robustness of our results, optimal rotations are also compared for a range of cereal and oilseed prices. It was found that the new pricing structure favours increased cereal production by reducing the relative economic importance of beneficial rotation crops, particularly canola. This is an important finding, given the need to develop and promote more ecologically sustainable farming systems that are not dominated by cereal production.

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    File URL: http://purl.umn.edu/132537
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    Bibliographic Info

    Article provided by University of Melbourne, Melbourne School of Land and Environment in its journal Australasian Agribusiness Review.

    Volume (Year): 11 (2003)
    Issue (Month): ()
    Pages:

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    Handle: RePEc:ags:auagre:132537

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    Web page: http://www.agrifood.info/review/

    Related research

    Keywords: AWB Ltd payment system; wheat grades; wheat varieties; standard quality characteristics; crop-pasture rotation; cliff-face pricing structure; linear programming model; PRISM Condobolin; Central West NSW; ecologically sustainable farming; canola; Agribusiness; Consumer/Household Economics; Crop Production/Industries; Demand and Price Analysis; Farm Management; Land Economics/Use; Production Economics; Research and Development/Tech Change/Emerging Technologies; Research Methods/ Statistical Methods; Teaching/Communication/Extension/Profession; ISSN 1442-6951;

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Patton, Dean A. & Mullen, John D., 2001. "Farming Systems in the Central West of NSW: An Economic Analysis," Research Reports 27998, New South Wales Department of Primary Industries Research Economists.
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