Study links profitability with knowledge seeking

Key points

  • A national study has reinforced the need for growers to use quality, independent information if their businesses are to remain profitable
  • Study lead Dr James Fisher of Désirée Futures says critically evaluating information and knowing how best to apply the most profitable options relies on growers having strong information networks
  • Economic analyses done for the study indicate currently available options can improve net farm income
  • Maps of growers and their information networks show numerous points at which information flows through a single person or people, known as ‘nodes’ or ‘gateways’
  • Increased interconnectedness is needed to remove the reliance on ‘nodes’ or ‘gateways’ and broaden information flow through the industry

A new study shows future farming profitability will depend on how farm decision-makers continue to adapt and take up new ideas from quality information networks

Independent researchers analysing the capacity of the grains sector to adapt to challenging business conditions have issued a positive report card.

Image of Dr James Fisher

Dr James Fisher: researching pathways to farm profitability against an increasingly uncertain climate.

PHOTO: Evan Collis

Research leader Dr James Fisher, an agricultural systems scientist with Désirée Futures, says a new GRDC-supported study shows most Australian grain growers are well placed to maintain viability, although his research also suggested some modest changes businesses can make to ensure this (Table 1).

The Western Australian researcher worked with PRT Consulting’s Dr Peter Tozer, Future iQ Partners’ David and Celine Beurle, and Grain Growers’ Michael Pengilley to complete the three-year study, which involved interviewing 85 farmers from nine grower groups.

A primary aim was to gauge the industry’s capacity to maintain profit under the challenge of reduced grain production, a predicted outcome of future climatic conditions.

To do this, the researchers asked growers what had encouraged them to change their farming system in the past and what factors had limited their capacity to adapt.

They discovered maintaining viability in the face of economic and climatic challenges was the main driver of change. Other drivers included technology, labour, lifestyle preferences, weeds, herbicide resistance, a decline in spring rain, and farm succession.

Growers surveyed said economic factors (the cost of finance, inputs, interest and capital, and low commodity prices) were the biggest constraints to change, followed by seasonal variability. Also listed were labour, weeds, the inability to access quality information, soil constraints and the manager’s attitude to change.

Nonetheless, based on past performance, the researchers remain optimistic about the capacity of the grains industry to thrive going forward.

“In the past decade, faced with one of the most extreme climatic periods on record, farmers not only survived and remained productive, but achieved yields that would not have been thought possible under the same seasonal conditions 20 to 30 years earlier,” Dr Fisher says.

“Farmers have remained productive by adapting their systems on the strength of solid research and a large amount of ingenuity borne out of trial and error.”

District Original system
Best performing option
Table 1 The economically best-performing option for each district analysed.
New South Wales central (Tottenham)


Mixed farming
Increase crop area by 20 per cent
Reduce number of ewes by 20 per cent
100 per cent cropping
Increase fallow by 10 per cent to increase yield by 10 per cent
New South Wales southern (Lockhart)


Mixed farming
Increase crop area by 10 per cent
Reduce number of ewes by 10 per cent
100 per cent cropping
Increase fallow by 10 per cent to increase wheat yield by 5 per cent
South Australia south-east
(Wolseley)
Mixed Adopt precision agriculture to reduce variable costs by 10 per cent, increase fixed costs by $10,000, and increase capital cost by $25,000
South Australia Yorke Peninsula
(Kadina)
Hybrid Improve machinery scale and efficiency to increase yield by 10 per cent
Western Australia south-east
(Salmon Gums)
Southern Adopt precision agriculture to reduce variable costs by 5 per cent, increase fixed costs by $20,000 and increase capital costs by $100,000
Northern Double sheep numbers
Increase cropping percentage by 10 per cent
Western Australia south (Lake Grace)
Hybrid Increase fallow by 10 per cent to increase wheat yield by 10 per cent
Western Australia north-east (Mukinbudin)
Mixed farming
Reduce wheat area by 400ha, replace with canola
100 per cent cropping
 Put 1000 sheep on agistment for 30 weeks at $1/head/week
Opportunist cropping
Fallow land: increases yield by 2.5 per cent

 SOURCE: Dr James, Desiree Futures & Dr Peter Tozer, PRT Consulting

Economic analysis

An economic analysis done for the study compared the growers’ systems against ‘climate scenarios’ to test the resilience of businesses in the face of lower mean yields and higher seasonal variability.

The researchers developed farming systems models for each grower group based on information supplied by the participating growers. The models showed lower yields and more seasonal variability would reduce the farms’ net income by 69 to 90 per cent.

However, profitability remained level or close to original levels with the implementation of options that the growers had considered or are considering. For example, changing the mix of cropping and livestock, the proportion of fallow or implementing precision agriculture.

“The study has increased our confidence that growers will be able to maintain profitability under climatic risks and challenges,” Dr Fisher says. “However, more variability in net farm income and return on assets is likely.”

Quality information

An important finding of the research was that future profitability is likely to depend on how well growers can source, evaluate and adopt quality information. In a first for the grains industry, the research team mapped the capacity of the industry to support growers in adapting to business challenges.

The maps produced showed the network connections among individual members of grower groups and between grower groups and advisers. A concern is that some grower groups are working in isolation. State-based clusters are another feature.

“Members of government agencies are connected to advisers and consultants, but less connected to grower groups,” Dr Fisher says. “Government agencies are central to information networks when it comes to supplying information on seasonal forecasts, farm diversification and farm technology.”

According to Dr Fisher, the study suggests there are opportunities for improved connections between grower groups to encourage uptake of ‘best practice’ and innovation.

Another area for improvement is the provision of farm finance information.

Although financial information is often considered private, or proprietary or business-specific, Dr Fisher says the benefits of growers sharing this information has been demonstrated elsewhere in the world.

One way improved networking could be facilitated may be by collating the regional experiences of adaptation and analysing the options using information from collaborating growers, he says.

He notes that by identifying areas of commonality, growers can derive direct benefit by comparing their experiences with those of others from other regions, while still benefiting from local and tailored analyses.

“Although Australian farming regions have different climatic and production systems, the drivers of adaptation and the suite of mitigation options are similar,” Dr Fisher says.

“Local validation is essential, but much can be gained from looking over the virtual fence to learn from the experiences of others.”

Ideas suggested to increase inter-connectedness included using social media to point to detailed, long-lasting and independent information saved on websites with associated discussion boards.

The study indicated improved links between grower groups might be facilitated by formal meetings, conferences, field days or participation in online groups or discussions dedicated to sharing information on specific topics.

More information:

Dr James Fisher,
08 9641 1651,
james@desireefutures.net.au

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