Adoption of environmental assurance in pastoral industry supply chains - Market failure and beyond

This paper describes adoption rates of environmental assurance within meat and wool supply chains, and discusses this in terms of market interest and demand for certified 'environmentally friendly' products, based on phone surveys and personal interviews with pastoral producers, meat and wool processors, wholesalers and retailers, and domestic consumers. Members of meat and wool supply chains, particularly pastoral producers, are both aware of and interested in implementing various forms of environmental assurance, but significant costs combined with few private benefits have resulted in low adoption rates. The main reason for the lack of benefits is that the end user (the consumer) does not value environmental assurance and is not willing to pay for it. For this reason, global food and fibre supply chains, which compete to supply consumers with safe and quality food at the lowest price, resist public pressure to implement environmental assurance. This market failure is further exacerbated by highly variable environmental and social production standards required of primary producers in different countries, and the disparate levels of government support provided to them. Given that it is the Australian general public and not markets that demand environmental benefits from agriculture, the Australian government has a mandate to use public funds to counter this market failure. A national farm environmental policy should utilise a range of financial incentives to reward farmers for delivering general public good environmental outcomes, with these specified and verified through a national environmental assurance scheme.

Stakeholder expectations for environmental assurance in agriculture: Lessons from the pastoral industry

This paper outlines the expectations of a wide range of stakeholders for environmental assurance in the pastoral industries and agriculture generally. Stakeholders consulted were domestic consumers, rangeland graziers, members of environmental groups, companies within meat and wool supply chains, and agricultural industry, environmental and consumer groups. Most stakeholders were in favour of the application of environmental assurance to agriculture, although supply chains and consumers had less enthusiasm for this than environmental and consumer groups. General public good benefits were more important to environmental and consumer groups, while private benefits were more important to consumers and supply chains. The 'ideal' form of environmental assurance appears to be a management system that provides for continuous improvement in environmental, quality and food safety outcomes, combined with elements of ISO 14024 eco-labelling such as life-cycle assessment, environmental performance criteria, third-party certification, labelling and multi-stakeholder involvement. However, market failure prevents this from being implemented and will continue to do so for the foreseeable future. In the short term, members of supply chains (the people that must implement and fund environmental assurance) want this to be kept simple and low cost, to be built into their existing industry standards and to add value to their businesses. As a starting point, several agricultural industry organisations favour the use of a basic management system, combining continuous improvement, risk assessment and industry best management practice programs, which can be built on over time to meet regulator, market and community expectations.

Validating economic and environmental sustainability of a short-term summer forage legume in dryland wheat cropping systems in south-west Queensland.

The present study set out to test the hypothesis through field and simulation studies that the incorporation of short-term summer legumes, particularly annual legume lablab (Lablab purpureus cv. Highworth), in a fallow-wheat cropping system will improve the overall economic and environmental benefits in south-west Queensland. Replicated, large plot experiments were established at five commercial properties by using their machineries, and two smaller plot experiments were established at two intensively researched sites (Roma and St George). A detailed study on various other biennial and perennial summer forage legumes in rotation with wheat and influenced by phosphorus (P) supply (10 and 40 kg P/ha) was also carried out at the two research sites. The other legumes were lucerne (Medicago sativa), butterfly pea (Clitoria ternatea) and burgundy bean (Macroptilium bracteatum). After legumes, spring wheat (Triticum aestivum) was sown into the legume stubble. The annual lablab produced the highest forage yield, whereas germination, establishment and production of other biennial and perennial legumes were poor, particularly in the red soil at St George. At the commercial sites, only lablab-wheat rotations were experimented, with an increased supply of P in subsurface soil (20 kg P/ha). The lablab grown at the commercial sites yielded between 3 and 6 t/ha forage yield over 2-3 month periods, whereas the following wheat crop with no applied fertiliser yielded between 0.5 to 2.5 t/ha. The wheat following lablab yielded 30% less, on average, than the wheat in a fallow plot, and the profitability of wheat following lablab was slightly higher than that of the wheat following fallow because of greater costs associated with fallow management. The profitability of the lablab-wheat phase was determined after accounting for the input costs and additional costs associated with the management of fallow and in-crop herbicide applications for a fallow-wheat system. The economic and environmental benefits of forage lablab and wheat cropping were also assessed through simulations over a long-term climatic pattern by using economic (PreCAPS) and biophysical (Agricultural Production Systems Simulation, APSIM) decision support models. Analysis of the long-term rainfall pattern (70% in summer and 30% in winter) and simulation studies indicated that ~50% time a wheat crop would not be planted or would fail to produce a profitable crop (grain yield less than 1 t/ha) because of less and unreliable rainfall in winter. Whereas forage lablab in summer would produce a profitable crop, with a forage yield of more than 3 t/ha, ~90% times. Only 14 wheat crops (of 26 growing seasons, i.e. 54%) were profitable, compared with 22 forage lablab (of 25 seasons, i.e. 90%). An opportunistic double-cropping of lablab in summer and wheat in winter is also viable and profitable in 50% of the years. Simulation studies also indicated that an opportunistic lablab-wheat cropping can reduce the potential runoff+drainage by more than 40% in the Roma region, leading to improved economic and environmental benefits.

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.

Rangeland profitability in the northern Gulf region of Queensland: understanding beef business complexity and the subsequent impact on land resource management and environmental outcomes

The farm-gate value of extensive beef production from the northern Gulf region of Queensland, Australia, is ~$150 million annually. Poor profitability and declining equity are common issues for most beef businesses in the region. The beef industry relies primarily on native pasture systems and studies continue to report a decline in the condition and productivity of important land types in the region. Governments and Natural Resource Management groups are investing significant resources to restore landscape health and productivity. Fundamental community expectations also include broader environmental outcomes such as reducing beef industry greenhouse gas emissions. Whole-of-business analysis results are presented from 18 extensive beef businesses (producers) to highlight the complex social and economic drivers of management decisions that impact on the natural resource and environment. Business analysis activities also focussed on improving enterprise performance. Profitability, herd performance and greenhouse emission benchmarks are documented and discussed.