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Foracompleteguidetocottonmanagement,seetheAustralianCottonProductionManual2018.

Agrossmarginrepresentsthedifferencebetweengrossincomeandthevariablecostsofproducingacrop.Grossmarginbudgetsdonottakeintoaccountrisk,overheadcosts(includingpermanentlabour)anddonotcalculatefarmprofit.Industrybudgetshouldbeusedonlyasaguide.Theyaredesignedtogiveanindicationofoperationsandcostsrequiredtogrowacottoncrop.Agrowershouldaltercreatetheirownbudgetstotake intoaccount individual fieldmanagementplans,movements in cropand input pricesand changes inseasonal conditions. In all instances, operations should be tailored to the requirements of individualpaddocks.Followingisanexplanationofsometermsandanoutlineoftheassumptionsusedthecreationofthe2018-19cottonindustrygrossmarginbudgets.

BALE:The industryterm 'perbale', is inreferencetoaginned 'lint'baleof227kg.Newpickingtechnologypicksthecottonandpacksitintoroundmoduleson-farm,whichisthentransportedtothegin.

Bt:A licence fee ispaid toMonsanto for cotton seed thatusesBollgard® technology (Bt). The technologylicence fee forBollgard3® stackedwithRoundupReady Flex® for 2018-19 is $390per greenhectare (GSTexclusive).ThefullyirrigatedbudgetsuseMonsantoCottonChoicesTMOption1,whichprovidesadiscounton the technology licence fees for up-front payment. The semi-irrigated budget uses option 2, whichincludestheoptionof'LateCropRemoval',$420pergreenhectare.Forcropsexpectedtoyieldlessthan4bales/hatheEndPointRoyaltyisthemostcosteffectiveoption.ThedrylandbudgetusesMonsantoCottonChoicesTMOption3,anendpoint royaltyof$52.50/baleexGST.Seehttp://cottonchoices.com.au to findtheoptionthatbestsuitsyourcroppingsituation.

CARTAGE: Assumptions made for module cartage are: property distance from the gin 50km, road traincarting12roundmodulespertrip,4.25lintbalesperroundmodule.

CHEMICALS:Alwaysreadchemicallabelsandfollowdirections,asitisyourlegalresponsibilitytodoso.UseofaparticularbrandnameoractiveingredientdoesNOTimplyarecommendation.

CROPDESTRUCTION/PUPAEDESTRUCTION:Tofurthermitigateresistancefollowthespecificguidelinesinyourlicenceagreement.

DEFOLIANT:Good conditions are required to get the best performance. The choice of defoliant and rateuseddependsonthemoisturestatusoftheplantandseasonalconditions.Selfpropelledgroundrigisusedinthisexampleduetoimprovedcanopypenetration,howevertherecanbetrade-offswithdamagetothecrop.

FERTILISER REQUIREMENTS: All fertiliser strategies should include comprehensive soil testing prior tosowing.RefertorecommendedsoiltestingproceduresintheAustralianCottonProductionManual,2018.

HERBICIDES: Thecornerstoneofweedmanagementandmanagingherbicide resistance risks is controllingsurvivorsandpreventingnewweedseedsfromenteringtheseedbank.Toreducethelikelihoodofherbicideresistance,rotateherbicidegroupsandweedmanagementtechniques.ChippingorspotspraycanbeusedtocontrolanysurvivingweedsaspartofarobustIntegratedWeedManagement(IWM)plan.Aimtoplant

2018-19AustraliancottonindustrygrossmarginNotes&assumptions

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intocleanfields.SeetheHerbicideResistanceManagementStrategy(foundintheCottonPestManagementGuide)andMonsanto'sRoundupReadyFlexCottonWeedManagementGuide.

INTEGRATEDPESTMANAGMENT:Insecticidesandspraytimingsuggestedinthisbudgetareexamplesonlyand strategies will vary with individual circumstances. Individual paddocks need careful monitoring todetermine pest and beneficial insect populations.Use recommended thresholds for all pests. Avoid usingbroad spectrum sprays and continuously using chemicals from the same group. Follow the InsecticideResistanceManagement Strategy (found in the Cotton PestManagement Guide) to protect the value ofinsecticidetechnologiesforthefuture.Conservingandutilisingbeneficialinsectsisakeyaspectoflong-termeffectivepestmanagement.

LABOUR: Labour costs an estimated $250-$300/ha. Labour is assumed to be an overhead cost and notincludedinthisbudget.

LEVIES: The Research Levy ($2.25/bale) is a compulsory levy that is invoiced by the ginning organisationfollowingginning.TheCottonResearchDevelopmentCorporation(CRDC)usesfundscollectedthroughthislevytofinancevitalindustryresearch.TheCottonAustraliaLevy($1.65/bale)isavoluntarylevy,whichfundsthepeak industrybodyCottonAustraliathatprovidesavaluablepolicy/advocacyrole, farmersupportandpromotestheAustraliancottonindustry.

MACHINERY: The cost of each farming pass reflects variable costs only (fuel, repairs and maintenance),labouranddepreciationareconsideredoverheadcosts,soarenotincludedinthisbudget.

PRICES:

InputPrices

Chemical& fertiliserpricing informationwas collected across all cotton growing regions and averaged togiveanindicationofproductpricing.

Cottonseedpriceperkgwillvarywiththetimeoforderingandseedtreatmentschosen.Pricequotedinthebudgetsisforapreseasonorderof746B3F.

OutputPrices

Lint$564/baleisthe12monthaveragepublishedcottonlintpricebyNamoiCottonCo-operative,basegradecotton.

Seed The cotton seed price is given indicatively as a per balevalue.$90/baleforseed(priortoginningcostsbeingsubtracted)is the equivalent of $357/t, assuming an average of 250kg ofcottonseedperbaleoflint.

ROTATION:Whilstcottoncanbegrowninvariousrotations,thisbudget assumes a two-year rotation of cotton- wheat- longfallow.

ROW CONFIGURATION: Fully irrigated furrow and overhead isassumingsolidplanton1mbeds.Semi-irrigatedassumesdoubleskipanddrylandconsidersvariedplantingconfigurations.Seetheimagetotherighttounderstandtheseoptions.

YIELD:Actualyieldsareacomplexresultofagronomicandenvironmental factorsandasa resultwillvarybetweenpaddocks,farmsandregions.

Figure1:Imagesource'Gettingthemostoutofskiprowirrigatedcotton',CSD2009

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FullyIrrigated:Ayieldof12bales/haisachievableconsideringthelongfallow,'bestpractice'operationsandthefive-yearaverageyieldforthevariety746B3FinCottonSeedDistributors(CSD)commercialtrialresults.

Semiirrigated:Theyieldof7balesperhaassumes200mmplantavailablewatercontent(PAWC)atplantingandappliedirrigationwaterof3.5ML

Dryland: The yield differentials between the various row configurations are entirely weather and regiondependant.Wehaveusedtheyieldmatrix (basedonOzcottmodellingoftheDarlingDownsRegion) frompage18oftheAustralianCottonProductionManual2018.

REFUGE: Each grower is required to grow a refuge crop as part of preventative insect-resistancemanagement.RefugerequirementshavebeenreducedwiththeintroductionofBollgard3®cotton,howeverremainanintegratedpartofgrowingthetechnologytoprotectitslongevity.Withthisinmind,refugecropcosts have been included as part of the gross margin budget. For the purposes of the irrigated budgetexamples,wehaveusedirrigatedpigeonpeasat2.5%oftheBtcottonarea.Unsprayedconventionalcottonat5%oftheBtareaisusedforthedrylandbudget.PleaserefertotheMonsanto’sResistanceManagementPlanformoreinformationonrefugecropsandminimumrequirements.

REFUGE REMOVAL:Pigeon peas should only be harvested or slashed after the Bollgard3® crop has beenremoved.

Disclaimer

CottonInfo&AgEconacceptnoresponsibilityfortheaccuracyorcompletenessofanymaterialcontainedinthispublication.Additionally,CottonInfo&AgEcondisclaimallliabilitytoanypersoninrespectofanything,andoftheconsequencesofanything,doneoromittedtobedonebyanysuchpersoninreliance,whetherwholly or partly, on any information contained in this publication.Material included in this publication ismadeavailableontheunderstandingthatCottonInfo&AgEconarenotprovidingprofessionaladvice.Ifyouintend to rely on any information provided in this publication, you should obtain your own appropriateprofessionaladvice.