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The relative profitability of dairy, sheep, beef and grain farm enterprises in southeast Australia under selected rainfall and price scenarios

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  • Browne, Natalie
  • Kingwell, Ross
  • Behrendt, Ralph
  • Eckard, Richard

Abstract

Dryland farming and its profitability is directly affected by the amount and timing of rainfall that influence and consequently impacts on pasture and crop yields. Yet rainfall is not the sole determinant of farm enterprise profitability; prices of farm inputs and commodities produced also affect farm profits. This study draws on farm commodity prices and input prices from the past 9years to form correlated price and cost datasets that are then used in examining the profitability of a range of farm enterprises in south eastern Australia under low, average and high rainfall scenarios. Fourteen representative farm enterprises were examined that included the production of Merino fine wool, prime lamb, beef cattle, milk, wheat and canola. The spread of profitability of these farm enterprises against the backdrop of price variability and rainfall scenarios was compared. The results show that profitability of the enterprises studied is currently affected more by changes in rainfall than by commodity prices and that dairy enterprises are the most profitable on a $/ha basis but that the profitability of wheat, steer and prime lamb enterprises are least affected by low rainfall scenarios. The self-replacing cow–calf beef systems, canola and dairy enterprises are the most vulnerable to reduced rainfall and may benefit by reducing profit risk through changes such as expanding the enterprise or diversifying across other types of enterprises. Farm diversification involving combinations of enterprises with negatively correlated profits will enable the variance in farm profits to be reduced. Such actions could form part of farms’ adaptation strategies to climate and price variability.

Suggested Citation

  • Browne, Natalie & Kingwell, Ross & Behrendt, Ralph & Eckard, Richard, 2013. "The relative profitability of dairy, sheep, beef and grain farm enterprises in southeast Australia under selected rainfall and price scenarios," Agricultural Systems, Elsevier, vol. 117(C), pages 35-44.
    • Handle: RePEc:eee:agisys:v:117:y:2013:i:c:p:35-44
    DOI: 10.1016/j.agsy.2013.01.002
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    2. Irisarri, J.G.N. & Oesterheld, M., 2020. "Temporal variation of stocking rate and primary production in the face of drought and land use change," Agricultural Systems, Elsevier, vol. 178(C).
    3. Fang, Peixun & Belton, Ben & Zhang, Xiaobo & Ei Win, Hnin, 2021. "Impacts of COVID-19 on Myanmar's chicken and egg sector, with implications for the sustainable development goals," Agricultural Systems, Elsevier, vol. 190(C).
    4. Nasca, J.A. & Feldkamp, C.R. & Arroquy, J.I. & Colombatto, D., 2015. "Efficiency and stability in subtropical beef cattle grazing systems in the northwest of Argentina," Agricultural Systems, Elsevier, vol. 133(C), pages 85-96.
    5. Tocker, Jonathon & Malcolm, B. & Heard, J. & Ho, C. & Behrendt, R., 2022. "Profitable Sheep Farming in South-west Victoria: Specialisation or Diversification Under Volatile Prices, Costs and Climate," AFBM Journal, Australasian Farm Business Management Network, vol. 19(1), April.
    6. Abigail Gbemisola Adeyonu & John Chiwuzulum Odozi, 2022. "What are the Drivers of Profitability of Broiler Farms in the North-central and South-west Geo-political Zones of Nigeria?," SAGE Open, , vol. 12(1), pages 21582440211, January.
    7. Natalie Doran-Browne & Richard Eckard & Ralph Behrendt & Ross Kingwell, 2015. "Nutrient density as a metric for comparing greenhouse gas emissions from food production," Climatic Change, Springer, vol. 129(1), pages 73-87, March.
    8. Ahodo, Kwadjo & Freckleton, Robert P. & Oglethorpe, David, 2015. "Investigation of factors affecting arable farming profit, crop complexity and risk under the single farm payment policy," 89th Annual Conference, April 13-15, 2015, Warwick University, Coventry, UK 204231, Agricultural Economics Society.

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