A financial analysis of the effect of the mix of crop and sheep enterprises on the risk profile of dryland farms in south-eastern Australia â€“ Part 1
This study presents a method of simulating longer-term cash flows that reflect the cumulative effects of variation in seasons, prices, enterprise sequences and mixes and other management decisions. It can be used to develop full risk profiles on a whole-farm or individual-component enterprise basis for most dryland farms in southern Australia, at gross margin, profit or cash flow levels. This analysis concentrates on the cash flow implications of these various scenarios because cash flow is the indicator which includes all costs, and therefore demonstrates affordability and the long-term viability of the farm business entity. This study shows that the role of sheep in the mixed farming enterprise in south-eastern Australia is to reduce the exposure of the business to the relatively high cash flow variability associated with dryland cropping. In all districts studied, sheep have a cost of production about half that of cropping, and crop margins are more sensitive to rainfall variability. Sheep therefore reduce the risk of loss when compared with continuous cropping.
References listed on IDEAS
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.:
- Janssen, Sander & van Ittersum, Martin K., 2007. "Assessing farm innovations and responses to policies: A review of bio-economic farm models," Agricultural Systems, Elsevier, vol. 94(3), pages 622-636, June.
- Keating, B. A. & McCown, R. L., 2001. "Advances in farming systems analysis and intervention," Agricultural Systems, Elsevier, vol. 70(2-3), pages 555-579.
- David J. Pannell, 2006. "Flat Earth Economics: The Far-reaching Consequences of Flat Payoff Functions in Economic Decision Making," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(4), pages 553-566.
- Donnelly, J. R. & Freer, M. & Salmon, L. & Moore, A. D. & Simpson, R. J. & Dove, H. & Bolger, T. P., 2002. "Evolution of the GRAZPLAN decision support tools and adoption by the grazing industry in temperate Australia," Agricultural Systems, Elsevier, vol. 74(1), pages 115-139, October.
- Lien, Gudbrand, 2003. "Assisting whole-farm decision-making through stochastic budgeting," Agricultural Systems, Elsevier, vol. 76(2), pages 399-413, May.
When requesting a correction, please mention this item's handle: RePEc:ags:afbmau:121467. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.