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Future Farm Industries Cooperative Research Centre: Profitable

Perennials

R R Farquharson, A Abadi, C Lewis, J McGrath, and K Goss

Objectives of this talk

1. Outline the FFI CRC objectives Headline farming systems Impacts of the CRC

An economic evaluation

2. Some issues in adoption of one technology New pastures in southern Australia Risks and returns in a variable climate

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1. FFI CRC objectivesDevelop ‘Profitable Perennials’ to ..

Change the nature of farming

Create new industries

Inform the management of catchments

.. in southern Australia

ContextTypical (historical) climate variability

Potential future climate change

ActivitiesR&D, Education and Training

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Headline farming systemsEverGraze – pasture & livestock systems for HRZ

Enrich – fodder shrubs in mixed farming systems

EverCrop – perennials in crop-dominated systems

New Woody Crop Industries – woody perennials integrated in mixed farms

Saltland Systems – production from saltland in mixed farming systems

Environment – perennials & their environmental footprint in dryland agricultural landscapes

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How?Conducts farming systems-based R&D

With numerous partners

Purpose - develop Profitable PerennialsTM Increase productivity of existing industries

Develop new regional industries through investment in woody crop production on farm

Reduce the risk of natural resource degradation, including dryland salinity

Improve conservation of biodiversity & water resources

Impacts expressed as changes in key headline farming systems

Direct monetary benefits & additional non-monetary benefits

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Types of benefitsMonetary benefits

Costs and impacts

Discounted cash flow (5%)

Adoption pattern

Environment

Adoption of INFFER

Improvement in NRM investment and policy

Non-monetary impacts

Water use, biodiversity, weed risks

Science capability & capacity building

Risk analysis

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Monetary impacts

Indicator Unit Analysis

Program impact life span Year 2007-21 2007-30

Land impacted Mha 2.07 5.90

Net benefits (Most likely scenario)

$M 808 2,510

Net benefits (Conservative scenario)

$M 513 1,460

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Adoption pattern

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2. Adoption of pasturesPerennial pastures Western Victoria HRZ

DCF analysis – time and risk dimensions

Representative whole-farm analysis• Including

Livestock carrying capacity, extra return on capital invested, finance implications, partial development budget approach, includes climatic risk

Generate information for farmers/extension re adoption

Climate variability & pasture investment

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Representative farm

Enterprise Lambing/calving Area (ha) ProductSheep 800

- SR Merino September 560 Wool

- Mer x White Suffolk

July 240 Prime lambs

Beef

- Angus April 200 Steers & cull heifers

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ComparisonsBase Case

Rye grass/sub clover with capeweed at Hamilton

EverGraze Triple

SARDI7 Lucerne, Avalon rye, Quantum Tall Fescue

EverGraze Ryegrass

Fitzroy rye, Avalon rye, Banquet rye

Pasture growth and quality included

Gross Margins, importance of supplementary feed costs

NPV & IRR

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Cumulative NCF

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Risk-return analysisMean-variance efficiency (Hardaker)

Importance of stocking rate

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ConclusionsPotential economic (& non-economic) impacts of FFI CRC activities are substantial for southern Australian dryland livestock-cropping systems

An ex ante analysis based on projected benefits

For one pasture technology, we investigated

Cash flow, investment & risk-return trade-offs for farm-level adoption

Links - climatic risk, profitability & adoption

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Acknowledgements