Economic case study of ABCD cane management practices in the Burdekin Delta region.

A case study was undertaken to determine the economic impact of a change in management class as detailed in the A, B, C and D management class framework. This document focuses on the implications of changing from D to C, C to B and B to A class management in the Burdekin Delta region and if the change is worthwhile from an economic perspective. This report provides a guide to the economic impact that may be expected when undertaking a particular change in farming practices and will ultimately lead to more informed decisions being made by key industry stakeholders. It is recognised that these management classes have certain limitations and in many cases the grouping of practices may not be reflective of the real situation. The economic case study is based on the A, B, C and D management class framework for water quality improvement developed in 2007/2008 for the Burdekin natural resource management region. The framework for the Burdekin is currently being updated to clarify some issues and incorporate new knowledge since the earlier version of the framework. However, this updated version is not yet complete and so the Paddock to Reef project has used the most current available version of the framework for the modelling and economics. As part of the project specification, sugarcane crop production data for the Burdekin Delta region was provided by the APSIM model. The information obtained from the APSIM crop modelling programme included sugarcane yields and legume grain yield (legume grain yield only applies to A class management practice). Because of the complexity involved in the economic calculations, a combination of the FEAT, PiRisk and a custom made spreadsheet was used for the economic analysis. Figures calculated in the FEAT program were transferred to the custom made spreadsheet to develop a discounted cash flow analysis. The marginal cash flow differences for each farming system were simulated over a 5-year and 10-year planning horizon to determine the Net Present Value of changing across different management practices. PiRisk was used to test uncertain parameters in the economic analysis and the potential risk associated with a change in value.

Fallow management Calculating the profitability of different fallow management options

The method used to manage a fallow can influence your overall farm profitability. The benefits of a well managed fallow include improved soil health, reduced weed control costs, a reduction in the number of machinery operations and an increase in sugarcane productivity. Growers generally have two main options for managing their fallow; 1) bare fallow or 2) rotational crop. A bare fallow predominantly involves the use of tillage or herbicides to keep the block free of weeds and volunteer cane. Growing a rotational crop generally uses legumes like soybeans or cowpeas because of their soil health and nitrogen benefits. This paper looks into some of these methods and the flow on effects on farm profitability. Fallow management should never be viewed in isolation, as it is an integral part of the cane farming system. In this analysis we will investigate the effect of fallow management and farming system practices on the whole of farm profitability. There are many factors to consider when looking at different fallow management options. These include the type of farming system practices used and the suitability of a legume crop to a particular situation. Legume crops may not be suited to all situations, therefore it is recommended to consult with your local agronomist for more specific advice. One method of examining the options is to work through an example. In this case we will look at four options that are based on some common fallow management and farming system practices used in the Herbert region.

A case study on the use of legume crop rotations in sugarcane

Growing legume fallow crops has proven to be an important factor in reducing the yield decline effect in sugarcane production. Legumes can also provide a direct economic benefit to sugarcane farmers by providing a source of nitrogen. Further, in some instances, income can flow from the sale, of grain or seed. The following case study provides an insight into the changes made by Russell Young, a sugarcane farmer situated in the Rita Island area of the Burdekin district. The case study focuses on the economics of the old farming system versus a new farming system. The old farming system is based on the conventional farming practices previously used by the Young family in 2002 compared to the 2006 farming system which involves a reduction in tillage practices and use of a Soybean rotational crop for seed production. A whole-of-farm was used to assess the impact of the new farming system on farm profitability. A whole-of-farm economic analysis looks at the impact of a change in farming practice across the whole business, rather than focusing on one single component. This case study is specific to an individual grower’s situation and is not representative of all situations. When evaluating a farming system change, it is important to have a detailed plan.

Economic case study of ABCD cane management practices in the Tully region

A case study was undertaken to determine the economic impact of a change in management class as detailed in the A, B, C and D management class framework. This document focuses on the implications of changing from D to C, C to B and B to A class management in the Tully region and if the change is worthwhile from an economic perspective. This report provides a guide to the economic impact that may be expected when undertaking a particular change in farming practices and will ultimately lead to more informed decisions being made by key industry stakeholders. It is recognised that these management classes have certain limitations and in many cases the grouping of practices may not be reflective of the real situation. The economic case study is based on the A, B, C and D management class framework for water quality improvement developed in 2007/2008 by the wet tropics natural resource management region. The framework for wet tropics is currently being updated to clarify some issues and incorporate new knowledge since the earlier version of the framework. However, this updated version is not yet complete and so the Paddock to Reef project has used the most current available version of the framework for the modelling and economics. As part of the project specification, sugarcane crop production data for the Tully region was provided by the APSIM model. Because of the complexity involved in the economic calculations, a combination of the FEAT, PiRisk and a custom made spreadsheet was used for the economic analysis. Figures calculated in the FEAT program were transferred to the custom made spreadsheet to develop a discounted cash flow analysis. The marginal cash flow differences for each farming system were simulated over a 5-year and 10-year planning horizon to determine the Net Present Value of changing across different management practices. PiRisk was used to test uncertain parameters in the economic analysis and the potential risk associated with a change in value.

Implementation costs of Agricultural Management Practices for Water Quality Improvement in the Great Barrier Reef Catchments. CSIRO: Water for Healthy Country National Research Flagship

Executive summary. In this report we analyse implementation costs and benefits for agricultural management practices, grouped into farming systems. In order to do so, we compare plot scale gross margins for the dominant agricultural production systems (sugarcane, grazing and banana cultivation) in the NRM regions Wet Tropics, Burdekin Dry Tropics and Mackay Whitsundays. Furthermore, where available, we present investment requirements for changing to improved farming systems. It must be noted that transaction costs are not captured within this project. For sugarcane, this economic analysis shows that there are expected benefits to sugarcane growers in the different regions through transitions to C and B class farming systems. Further transition to A-class farming systems can come at a cost, depending on the capital investment required and the length of the investment period. Obviously, the costs and benefits will vary for each individual grower and will depend on their starting point and individual property scenario therefore each circumstance needs to be carefully considered before making a change in management practice. In grazing, overall, reducing stocking rates comes at a cost (reduced benefits). However, when operating at low utilisation rates in wetter country, lowering stocking rates can potentially come at a benefit. With win-win potential, extension is preferred to assist farmer in changing management practices to improve their land condition. When reducing stocking rates comes at a cost, incentives may be applicable to support change among farmers. For banana cultivation, the results indicate that the transition to C and B class management practices is a worthwhile proposition from an economic perspective. For a change from B to A class farming systems however, it is not worthwhile from a financial perspective. This is largely due to the large capital investment associated with the change in irrigation system and negative impact in whole of farm gross margin. Overall, benefits will vary for each individual grower depending on their starting point and their individual property scenario. The results presented in this report are one possible set of figures to show the changes in profitability of a grower operating in different management classes. The results in this report are not prescriptive of every landholder. Landholders will have different costs and benefits from transitioning to improved practices, even if similar operations are practiced, hence it is recommended that landholders that are willing to change management undertake their own research and analysis into the expected costs and benefits for their own soil types and property circumstances.

A case study on the economics of overhead irrigation in the lower Burdekin

Converting from an existing irrigation system is often seen as high risk by the land owner. The significant financial investment and the long period over which the investment runs is also complicated by the uncertainty associated with long term input costs (such as energy), crop production, and the continually evolving natural resource management rules and policy. Irrigation plays a pivotal part in the Burdekin sugarcane farming system. At present the use of furrow irrigation is by far the most common form due to the ease of use, relatively low operating cost and well established infrastructure currently in place. The Mulgrave Area Farmer Integrated Action (MAFIA) grower group, located near Clare in the lower Burdekin region, identified the need to learn about sustainable farming systems with a focus on the environment, social and economic implications. In early 2007, Hesp Faming established a site to investigate the use of overhead irrigation as an alternative to furrow irrigation and its integration with new farming system practices, including Green Cane Trash Blanketing (GCTB). Although significant environmental and social benefits exist, the preliminary investment analysis indicates that the Overhead Low Pressure (OHLP) irrigation system is not adding financial value to the Hesp Farming business. A combination of high capital costs and other offsetting factors resulted in the benefits not being fully realised. A different outcome is achieved if Hesp Farming is able to realise value on the water saved, with both OHLP irrigation systems displaying a positive NPV. This case study provides a framework to further investigate the economics of OHLP irrigation in sugarcane and it is anticipated that with additional data a more definitive outcome will be developed in the future.

Growing organic prawns - in inland saline waters

This report details the results of research into organic production of prawns in Australia. This has involved activities and experiments over two years at several sites and using a multidisciplinary approach. This includes farm trials at an inland demonstration prawn farm which solely utilises saline bore water, sample collection from two commercial prawn farms in coastal regions of south-eastern Queensland, replicated feed trials at one of DPI&F’s aquaculture research stations, specified feed manufacture at the laboratories of University of Queensland, and packaging and product storage trials and food analyses at two of DPI&F’s food technology laboratories. This work was designed to investigate and assist in the possible adoption of organic procedures by the Australian prawn farming industry. The import from Asia of cheaply produced prawns has forced all Australian prawn farmers to review their marketing procedures. Additionally investors are becoming increasingly concerned at the prospects for the expansion of this industry in Australia. Since the competition of seafood products in the marketplace is increasing on a global basis, alternate products are being investigated by those wishing to maintain and/or grow their market share. The premium paid for organic food products would hopefully provide an economic incentive for farmers to convert to organic production systems, with an added advantage that the standards that apply have beneficial implications also for the social and environmental practices of industry.

Mikania micrantha Kunth (Asteraceae) (Mile-a-Minute): Its Distribution and Physical and Socioeconomic Impacts in Papua New Guinea

Mikania micrantha or mile-a-minute is regarded as a major invasive weed in Papua New Guinea (PNG) and is now the target of a biological control program. As part of the program, distribution and physical and socioeconomic impacts of M. micrantha were studied to obtain baseline data and to assist with field release of biological control agents. Through public awareness campaigns and dedicated surveys, M. micrantha has been reported in all 15 lowland provinces. It is particularly widespread in East New Britain, as well as in West New Britain and New Ireland. A CLIMEX model suggests that M. micrantha has the potential to continue to spread throughout all lowland areas in PNG. The weed was found in a wide range of land uses, impacting on plantations and food gardens and smothering papaya, young cocoa, banana, taro, young oil palms, and ornamental plants. In socioeconomic surveys, M. micrantha was found to have severe impacts on crop production and income generated through reduced yields and high weeding costs, particularly in subsistence mixed cropping systems. About 89% of all respondents had M. micrantha on their land, and 71% of respondents had to weed monthly. Approximately 96% of respondents in subsistence mixed cropping systems used only physical means of control compared with 68% of respondents in other farming systems. About 45% of all respondents estimated that M. micrantha causes yield losses in excess of 30%. These studies suggest that there would be substantial benefits to landholders if biological control of M. micrantha were to be successful.

Driving better vegetable irrigation through profitable practice change

The availability and quality of irrigation water has become an issue limiting productivity in many Australian vegetable regions. Production is also under competitive pressure from supply chain forces. Producers look to new technologies, including changing irrigation infrastructure, exploring new water sources, and more complex irrigation management, to survive these stresses. Often there is little objective information investigating which improvements could improve outcomes for vegetable producers, and external communities (e.g. meeting NRM targets). This has led to investment in inappropriate technologies, and costly repetition of errors, as business independently discover the worth of technologies by personal experience. In our project, we investigated technology improvements for vegetable irrigation. Through engagement with industry and other researchers, we identified technologies most applicable to growers, particularly those that addressed priority issues. We developed analytical tools for ‘what if’ scenario testing of technologies. We conducted nine detailed experiments in the Lockyer Valley and Riverina vegetable growing districts, as well as case studies on grower properties in southern Queensland. We investigated root zone monitoring tools (FullStop™ wetting front detectors and Soil Solution Extraction Tubes - SSET), drip system layout, fertigation equipment, and altering planting arrangements. Our project team developed and validated models for broccoli, sweet corn, green beans and lettuce, and spreadsheets for evaluating economic risks associated with new technologies. We presented project outcomes at over 100 extension events, including irrigation showcases, conferences, field days, farm walks and workshops. The FullStops™ were excellent for monitoring root zone conditions (EC, nitrate levels), and managing irrigation with poor quality water. They were easier to interpret than the SSET. The SSET were simpler to install, but required wet soil to be reliable. SSET were an option for monitoring deeper soil zones, unsuitable for FullStop™ installations. Because these root zone tools require expertise, and are labour intensive, we recommend they be used to address specific problems, or as a periodic auditing strategy, not for routine monitoring. In our research, we routinely found high residual N in horticultural soils, with subsequently little crop yield response to additional nitrogen fertiliser. With improved irrigation efficiency (and less leaching), it may be timely to re-examine nitrogen budgets and recommendations for vegetable crops. Where the drip irrigation tube was located close to the crop row (i.e. within 5-8 cm), management of irrigation was easier. It improved nitrogen uptake, water use efficiency, and reduced the risk of poor crop performance through moisture stress, particularly in the early crop establishment phases. Close proximity of the drip tube to the crop row gives the producer more options for managing salty water, and more flexibility in taking risks with forecast rain. In many vegetable crops, proximate drip systems may not be cost-effective. The next best alternative is to push crop rows closer to the drip tube (leading to an asymmetric row structure). The vegetable crop models are good at predicting crop phenology (development stages, time to harvest), input use (water, fertiliser), environmental impacts (nutrient, salt movement) and total yields. The two immediate applications for the models are understanding/predicting/manipulating harvest dates and nitrogen movements in vegetable cropping systems. From the economic tools, the major influences on accumulated profit are price and yield. In doing ‘what if’ analyses, it is very important to be as accurate as possible in ascertaining what the assumed yield and price ranges are. In most vegetable production systems, lowering the required inputs (e.g. irrigation requirement, fertiliser requirement) is unlikely to have a major influence on accumulated profit. However, if a resource is constraining (e.g. available irrigation water), it is usually most profitable to maximise return per unit of that resource.

Relocation of Intensive Agriculture to Northern Australia: The Case of the Rice Industry

Development of new agricultural industries in northern Australia is seen as a way to provide food security in the face of reduced water availability in existing regions in the south. This report aims to identify some of the possible economic consequences of developing a rice industry in the Burdekin region, while there is a reduction of output in the Riverina. Annual rice production in the Riverina peaked at 1.7 M tonnes, but the long-term outlook, given climate change impacts on that region and government water buy-backs, is more likely to be less than 800,000 tonnes. Growers are highly efficient water users by international standards, but the ability to offset an anticipated reduction in water availability through further efficiency gains is limited. In recent years growers in the Riverina have diversified their farms to a greater extent and secondary production systems include beef, sheep and wheat. Production in north Queensland is in its infancy, but a potentially suitable farming system has been developed by including rice within the sugarcane system without competition and in fact contributing to the production of sugar by increasing yields and controlling weeds. The economic outcomes are estimated a large scale, dynamic, computable general equilibrium (CGE) model of the world economy (Tasman Global), scaled down to regional level. CGE models mimic the workings of the economy through a system of interdependent behavioural and accounting equations which are linked to an input-output database. When an economic shock or change is applied to a model, each of the markets adjusts according to the set of behavioural parameters which are underpinned by economic theory. In this study the model is driven by reducing production in the Riverina in accordance with relationships found between water availability and the production of rice and replacement by other crops and by increasing ride production in the Burdekin. Three scenarios were considered: • Scenario 1: Rice is grown using the fallow period between the last ratoon crop of sugarcane and the new planting. In this scenario there is no competition between rice and sugarcane • Scenario 2: Rice displaces sugarcane production • Scenario 3: Rice is grown on additional land and does not compete with sugarcane. Two time periods were used, 2030 and 2070, which are the conventional time points to consider climate change impacts. Under scenario 1, real economic output declines in the Riverina by $45 million in 2030 and by $139 million in 2070. This is only partially offset by the increased real economic output in the Burdekin of $35 million and $131 million respectively.

Characterization of north-eastern Australian environments using APSIM for increasing rainfed maize production

Recurring water stresses are a major risk factor for rainfed maize cropping across the highly diverse agro-ecological environments of Queensland (Qld) and northern New South Wales (NNSW). Enhanced understanding of such agro-ecological diversity is necessary to more consistently sample target production environments for testing and targeting release of improved germplasm, and to improve the efficiency of the maize pre-breeding and breeding programs of Qld and New South Wales. Here, we used the Agricultural Production Systems Simulator (APSIM) – a well validated maize crop model to characterize the key distinctive water stress patterns and risk to production across the main maize growing regions of Qld and NNSW located between 15.8° and 31.5°S, and 144.5° and 151.8°E. APSIM was configured to simulate daily water supply demand ratios (SDRs) around anthesis as an indicator of the degree of water stress, and the final grain yield. Simulations were performed using daily climatic records during the period between 1890 and 2010 for 32 sites-soils in the target production regions. The runs were made assuming adequate nitrogen supply for mid-season maize hybrid Pioneer 3153. Hierarchical complete linkage analyses of the simulated yield resulted in five major clusters showing distinct probability distribution of the expected yields and geographic patterns. The drought stress patterns and their frequencies using SDRs were quantified using multivariate statistical methods. The identified stress patterns included no stress, mid-season (flowering) stress, and three terminal stresses differing in terms of severity. The combined frequency of flowering and terminal stresses was highest (82.9%), mainly in sites-soils combinations in the west of Qld and NNSW. Yield variability across the different sites-soils was significantly related to the variability in frequencies of water stresses. Frequencies of water stresses within each yield cluster tended to be similar, but different across clusters. Sites-soils falling within each yield cluster therefore could be treated as distinct maize production environments for testing and targeting newly developed maize cultivars and hybrids for adaptation to water stress patterns most common to those environments.