Identifying risk-efficient strategies using stochastic frontier analysis and simulation: An application to irrigated cropping in Australia

In irrigated cropping, as with any other industry, profit and risk are inter-dependent. An increase in profit would normally coincide with an increase in risk, and this means that risk can be traded for profit. It is desirable to manage a farm so that it achieves the maximum possible profit for the desired level of risk. This paper identifies risk-efficient cropping strategies that allocate land and water between crop enterprises for a case study of an irrigated farm in Southern Queensland, Australia. This is achieved by applying stochastic frontier analysis to the output of a simulation experiment. The simulation experiment involved changes to the levels of business risk by systematically varying the crop sowing rules in a bioeconomic model of the case study farm. This model utilises the multi-field capability of the process based Agricultural Production System Simulator (APSIM) and is parameterised using data collected from interviews with a collaborating farmer. We found sowing rules that increased the farm area sown to cotton caused the greatest increase in risk-efficiency. Increasing maize area also improved risk-efficiency but to a lesser extent than cotton. Sowing rules that increased the areas sown to wheat reduced the risk-efficiency of the farm business. Sowing rules were identified that had the potential to improve the expected farm profit by ca. $50,000 Annually, without significantly increasing risk. The concept of the shadow price of risk is discussed and an expression is derived from the estimated frontier equation that quantifies the trade-off between profit and risk.

Influence of Measured Characteristics on Price Received for Merino Wool from the Traprock Area of Southern Queensland

In this study of a commercial wool clip sold in the years 1991/92-1996/97, the effect of wool characteristics, (staple length, staple strength, fibre diameter, position of break, vegetable matter, hauteur, yield and coefficient of variation of staple length) on price was explored together with their effect on the ratio of price received per lot to the average weekly price (1994/95 basis) for clean wool of the same fibre diameter. Fibre diameter and where the point of break occurred had the most effect on price. As hauteur, staple length and yield increased, so did the price ratio but it decreased as the percentage of vegetable matter and the coefficient of variation of the staple length increased. The ratio of proceeds if all wool had been sold at average weekly market price, to proceeds if all wool had been 21µm or less, indicated little financial advantage over the six-year period as most sale lots were under 22µm. To raise the proceeds of sale above the proceeds estimated using average market price for each lot, the analyses suggested that hauteur, staple length and its coefficient of variation, could be considered, in addition to fibre diameter, when sourcing wethers for purchase. Animal production for a consuming world : proceedings of 9th Congress of the Asian-Australasian Association of Animal Production Societies [AAAP] and 23rd Biennial Conference of the Australian Society of Animal Production [ASAP] and 17th Annual Symposium of the University of Sydney, Dairy Research Foundation, [DRF]. 2-7 July 2000, Sydney, Australia.

Risk management strategies using seasonal climate forecasting in irrigated cotton production: a tale of stochastic dominance.

Decision-making in agriculture is carried out in an uncertain environment with farmers often seeking information to reduce risk. As a result of the extreme variability of rainfall and stream-flows in north-eastern Australia, water supplies for irrigated agriculture are a limiting factor and a source of risk. The present study examined the use of seasonal climate forecasting (SCF) when calculating planting areas for irrigated cotton in the northern Murray Darling Basin. Results show that minimising risk by adjusting plant areas in response to SCF can lead to significant gains in gross margin returns. However, how farmers respond to SCF is dependent on several other factors including irrigators’ attitude towards risk.

Ecological risk assessment of the East Coast Otter Trawl Fishery in the Great Barrier Reef Marine Park: Data report

An ecological risk assessment of the East Coast Otter Trawl Fishery in the Great Barrier Reef Region was undertaken in 2010 and 2011. It assessed the risks posed by this fishery to achieving fishery-related and broader ecological objectives of both the Queensland and Australian governments, including risks to the values and integrity of the Great Barrier Reef World Heritage Area. The risks assessed included direct and indirect effects on the species caught in the fishery as well as on the structure and functioning of the ecosystem. This ecosystem-based approach included an assessment of the impacts on harvested species, by-catch, species of conservation concern, marine habitats, species assemblages and ecosystem processes. The assessment took into account current management arrangements and fishing practices at the time of the assessment. The main findings of the assessment were: Current risk levels from trawling activities are generally low. Some risks from trawling remain. Risks from trawling have reduced in the Great Barrier Reef Region. Trawl fishing effort is a key driver of ecological risk. Zoning has been important in reducing risks. Reducing identified unacceptable risks requires a range of management responses. The commercial fishing industry is supportive and being proactive. Further reductions in trawl by-catch, high compliance with rules and accurate information from ongoing risk monitoring are important. Trawl fishing is just one of the sources of risk to the Great Barrier Reef.

Quantitative methods to measure pigmentation variation in farmed Giant Tiger Prawns, Penaeus monodon, and the effects of different harvest methods on cooked colour

Cooked prawn colour is known to be a driver of market price and a visual indicator of product quality for the consumer. Although there is a general understanding that colour variation exists in farmed prawns, there has been no attempt to quantify this variation or identify where this variation is most prevalent. The objectives of this study were threefold: firstly to compare three different quantitative methods to measure prawn colour or pigmentation, two different colorimeters and colour quantification from digital images. Secondly, to quantify the amount of pigmentation variation that exists in farmed prawns within ponds, across ponds and across farms. Lastly, to assess the effects of ice storage or freeze-thawing of raw product prior to cooking. Each method was able to detect quantitative differences in prawn colour, although conversion of image based quantification of prawn colour from RGB to Lab was unreliable. Considerable colour variation was observed between prawns from different ponds and different farms, and this variation potentially affects product value. Different post-harvest methods prior to cooking were also shown to have a profound detrimental effect on prawn colour. Both long periods of ice storage and freeze thawing of raw product were detrimental to prawn colour. However, ice storage immediately after cooking was shown to be beneficial to prawn colour. Results demonstrated that darker prawn colour was preserved by holding harvested prawns alive in chilled seawater, limiting the time between harvesting and cooking, and avoiding long periods of ice storage or freeze thawing of uncooked product.