Managing complexity in modern farming*

Modern farming in Australia is no longer simple. Farms are large, multi‐enterprise businesses underpinned by expensive capital investments, changing production technologies, volatile markets and social challenges. The complexity of modern broadacre farming leads to the question: what is the nature of the relationship between farm business complexity and farm profitability? This study uses bioeconomic farm modelling and employs eight measures of complexity to examine the profitability and complexity of a wide range of broadacre farming systems in Australia. Rank order correlations between farm profitability and each measure of complexity show inconsistent relationships, although the most profitable farming systems are found to be reasonably complex on several criteria. Among the set of highly profitable systems are found some characterised by less complexity. A commonly acknowledged feature of farm business complexity is the annual workload of the farmer, yet the trade‐off between farm profit and this workload is found not to be large. A case is outlined where the farmer’s annual hours worked could be reduced by 9 per cent for a 3 per cent reduction in farm profit. If farmers’ workloads are proving problematic now, and in the future, then agricultural R&D, service delivery and policy development will need to focus more on being highly attractive to increasingly time‐poor farm managers.     

An economic analysis of sheep flock structures for mixed enterprise Australian farm businesses

A strategic question facing many mixed enterprise broadacre farm businesses in Australia is, ‘What sheep flock size and structure is most profitable to complement the farm’s cropping enterprises?' This study answers this question for a typical large mixed enterprise farm business in a key production region of Australia. Whole‐farm bioeconomic modelling, combined with broad‐ranging sensitivity analysis, is used to examine the profitability of different sheep flock structures and sizes. We find the most profitable flock structure is to run Merino ewes and turn off finished Merino or first‐cross lambs. The profitable selection of these flocks is robust to commodity price variation but does require the farmer to give more attention to sheep management. The correct choice of flock structure greatly adds to farm profit. A farm based on cropping and a self‐replacing Merino flock using surplus ewes for first‐cross, meat lamb production earns 33 per cent more profit than a similar farm that runs a traditional self‐replacing Merino flock that emphasises wool production. Of far less importance than flock structure, as a source of additional profit, is to increase flock size or adjust cropping intensity.     

The Impact of Cereal Prices and Policy on Crop Rotations and Supply Response

The impact of cereal prices on rotational decisions and farm‐level and industry cereal supply is considered. It is argued that with the voluntary 50 per cent set‐aside option for cereal producers, there is a large financial incentive to adopt a 50 per cent set‐aside cropping plan as cereal prices fall below an individual producer's ‘indifference’price. For a typical 210‐hectare UK combinable crop farm, adopting a 50 per cent set‐aside cropping plan is optimal when the price of cereals is below £62/tonne (98.50/tonne). If widely adopted, 50 per cent set‐aside will lead to a substantial fall in the supply of cereals and would lead the industry supply curve for cereals to move leftward and become more elastic over a certain price range. The level of reduced cereal supply will be greater than would be predicted from an estimate of industry level supply response that ignored rotational and farm‐level financial incentives.     

Climate change reduces the mitigation obtainable from sequestration in an Australian farming system

Agricultural research on climate change generally follows two themes: (i) impact and adaptation or (ii) mitigation and emissions. Despite both being simultaneously relevant to future agricultural systems, the two are usually studied separately. By contrast, this study jointly compares the potential impacts of climate change and the effects of mitigation policy on farming systems in the central region of Western Australia’s grainbelt, using the results of several biophysical models integrated into a whole‐farm bioeconomic model. In particular, we focus on the potential for interactions between climate impacts and mitigation activities. Results suggest that, in the study area, farm profitability is much more sensitive to changes in climate than to a mitigation policy involving a carbon price on agricultural emissions. Climate change reduces the profitability of agricultural production and, as a result, reduces the opportunity cost of reforesting land for carbon sequestration. Nonetheless, the financial attractiveness of reforestation does not necessarily improve because climate change also reduces tree growth and, therefore, the income from sequestration. Consequently, at least for the study area, climate change has the potential to reduce the amount of abatement obtainable from sequestration – a result potentially relevant to the debate about the desirability of sequestration as a mitigation option.     

Cost‐effective strategies to mitigate multiple pollutants in an agricultural catchment in North Central Victoria,Australia

Strategies to reduce phosphorus and sediment yields are identified for two Australian catchments using a nonlinear optimisation model. This provides novel insight into the cost‐effective management of dual pollutants of water courses in Australia. A strong degree of complementarity between the two pollutants is highlighted, given the adsorption of phosphorus to sediment that augments the value of gully and streambank management for mitigation. However, the relationship between the two pollutants is asymmetric. A 30 per cent reduction in phosphorus yield achieves a 75 per cent reduction in sediment yield in one catchment, while a 30 per cent reduction in sediment yield achieves only a 12 per cent reduction in phosphorus yield. Sediment abatement costs are low given the efficiency of gully and streambank management. A 30 per cent phosphorus reduction lowers profit by 3–7 per cent, while a 30 per cent sediment reduction lowers profit by around 1 per cent. Land‐use optimisation requires spatial heterogeneity in land‐use and gully/streambank management responses. Overall, this research demonstrates the need to determine whether one pollutant is more important than another, while recognising the potential that mitigation practices possess for the reduction of multiple emissions during their evaluation.     

Factors and scenarios affecting a farmer’s grain harvest logistics

This paper explores how changes in Australia’s grain industry supply chains are likely to impact on the nature and profitability of an Australian farmer’s grain harvest logistics. A simulation model is used to show how receival site rationalisation, cheaper on‐farm storage, larger trucks, higher‐yielding crops and new harvest technologies, separately and in combination, affect the nature and profitability of a farmer’s grain harvest logistics. Applying the model to a typical Australian grain farm shows that many of these changes unambiguously advantage the farm business, and often, the combination of these changes increases a farmer’s harvest profits by at least 10 per cent. For many farmers, the task of efficiently designing and managing harvest logistics will be an increasingly difficult yet important series of choices due to the range of storage options, grain pathways, crop portfolios and market opportunities that are arising. A farmer’s decisions about cost‐effective on‐farm storage and transport, and their judicious use, will be a key contributor to additional profit in future years.     

Reducing Indonesia’s deforestation‐based greenhouse gas emissions*

Indonesia has set the target that by the year 2020 its emissions of greenhouse gases will be reduced by 26 per cent relative to business‐as‐usual conditions. This article analyses the effectiveness of a subsidy to the use of land in forestry as a means of achieving this goal. The analysis uses a general equilibrium model of the Indonesian economy characterised by explicit treatment of land use, disaggregated by industry and by region. The results of the analysis indicate that the subsidy cost of permanently reducing carbon emissions by 26 per cent is a little over US$1 per metric tonne of carbon emissions abated. This cost needs to be compared with that of alternative instruments and with the price of carbon that might be agreed under the proposed Reducing Emissions through Deforestation and Land Degradation (REDD) scheme, to be administered through the World Bank and the United Nations.     

40年生马尾松人工林经济效益分析研究

根据国有顺昌埔上林场40年生马尾松人工林林分解析资料和当地的各项技术经济指标 ,分析了40年生马尾松人工林主林木在各龄级的动态收益。采用了土地期望价、净现值、指率等经济指标对其收益进行了分析 ,为合理确定马尾松的采伐时间及营林措施提供了依据。     

Logs or permits? Forestry land use decisions in an emissions trading scheme

Negative carbon emissions options are required to meet long-term climate goals in many countries. One way to incentivise these options is by paying farmers for carbon sequestered by forests through an emissions trading scheme (ETS). New Zealand has a comprehensive ETS, which includes incentives for farmers to plant permanent exotic forests. This research uses an economy-wide model, a forestry model and land use change functions to measure the expected proportion of farmers with trees at harvesting age that will change land use from production to permanent forests in New Zealand from 2014 to 2050. We also estimate the impacts on carbon sequestration, the carbon price, gross emissions, GDP and welfare. When there is forestry land use change, the results indicate that the responsiveness of land owners to the carbon price has a measured impact on carbon sequestration. For example, under the fastest land use change scenario, carbon sequestration reaches 29.93 Mt CO₂e by 2050 compared to 23.41 Mt CO₂e in the no land use change scenario (a 28% increase). Even under the slowest land use change scenario, carbon sequestration is 25.89 Mt CO₂e by 2050 (an 11% increase compared with no land use change). This is because, if foresters decide not to switch to permanent forests in 1 year, carbon prices and ultimately incentives to convert to permanent forests will be higher in future years.     

What carbon farming activities are farmers likely to adopt? A best–worst scaling survey

Transferring carbon from the atmosphere into terrestrial sinks through carbon sequestration practices (so-called ‘carbon farming’) has been proposed as an important component in Australia’s efforts to mitigate greenhouse gas emissions. We use a Best–worst scaling survey to determine which carbon sequestration practices farmers would be most and least likely to adopt, and what factors were most important in any potential adoption decision. The survey was distributed to dryland cropping and mixed crop-livestock farmers in Western Australia. Farmers ranked improved soil quality and reduced soil erosion as the most important potential co-benefits of carbon farming. Factors discouraging farmers from participating in carbon farming contracts were policy and carbon price uncertainty and the uncertain impact of carbon farming practices on productivity and profitability. Farmers had strong preferences for stubble retention and no-till cropping practices as carbon farming strategies. The practices that farmers preferred least were applying biochar and planting trees. Farm and farmer characteristics, including (lack of) awareness of carbon farming policies and opinions about climate change, influence the potential willingness to adopt different carbon farming practices. Given recent policy uncertainty and farmer preferences revealed in this study, it is important to communicate potential co-benefits (rather than opportunities to earn compensation or carbon credits) to increase farmers’ engagement in carbon sequestration activities.     

基于成本利润率的碳汇交易价格研究——以浙江省杉木林经营为例

本研究以浙江省中等立地水平的杉木林经营为例,从森林碳汇供给的视角,采用成本利润法来测算碳汇的供给成本,避免了造林成本法不区分林地的条件和类型缺陷。研究表明:碳汇供给的价格与林地的规模呈负相关,与预期的成本利润率呈正相关。在碳汇价格为18元/吨CO2e的价格水平下,经济理性的参与森林碳汇交易的最小经营规模为1 000.4 hm2。降低交易成本已经成为影响森林碳汇交易实现的关键。     

Evaluating the benefits from transport infrastructure in agriculture: a hedonic analysis of farmland prices

Access to transport infrastructure generates a range of benefits to the agriculture sector; many of which are difficult to measure directly. In this study, we use hedonic regression analysis of farm‐level data to examine the contribution of transport infrastructure to the value of farmland traded between 2009 and 2011 through its impact on farm productivity. We show that a one per cent reduction in the cost of transportation between farms and ports leads to a 0.33 per cent increase in land prices, and there is no significant difference between rail and road transportation at the aggregate level. Moreover, the benefits generated by particular types of infrastructure services vary between industries and with farm size, suggesting there are multiple channels through which public infrastructure influences agricultural production. Our findings help to inform future investment decisions in Australia and in other countries by providing new evidence regarding the benefits of existing transport infrastructure.     

Economic vulnerability and regional implications of a low carbon emissions future

Climate change, as well as associated mitigation efforts, will substantially disrupt some economies. Seemingly inevitable market and policy changes will push economies to transition away from reliance on industries with higher carbon emissions and bring transient economic impacts, especially in regions that are currently heavily reliant on such industries. This situation is not unusual in a global context. To underpin better‐informed decisions that enable a smoother economic transition to a low‐emissions future, we developed a ‘latent economic vulnerability to emissions reduction’ (LEVER) index, which maps and explores regions that are more likely to be economically impacted from climate change mitigation. Thus, this paper provides an analysis and discussion of the potential regional implications of a future low‐emissions economy, with the analysis contextualised for the state of Queensland, Australia. Given this case study, the economic impacts and future of coal‐fired power stations, coal mining and renewable energy are discussed.  The LEVER index weighs the risk of high carbon economic exposure against the variability in carbon economic resilience from employment in low‐emission sectors across local economies. We find that between 3 and 6 per cent of Queensland regions are assessed as having a very high latent economic vulnerability to increased decarbonisation of industrial activities. To promote a smoother transition, these regions will require targeted investments and strategies to enable their transition towards lower carbon‐intensive systems, while maximising economic and social outcomes.     

Allocating provincial CO2 quotas for the Chinese national carbon program

In order to improve the efficiency of climate change initiatives China launched its national carbon market in December 2017. Initial CO2 quota allocations are a matter of significant concern. How should we allocate CO₂ emissions reduction responsibilities among Chinese provinces, assuming that provinces will not or cannot trade these responsibilities among themselves? In this paper, we allocate CO₂ quota from the perspective of cost minimisation. First, we estimate the national CO₂ marginal abatement cost (MAC) function and deduce the interprovincial MAC functions. Second, we build an allocation model with nonlinear programming for cost minimisation. Finally, we obtain the allocation results under the emissions reduction target by 2030. The results are as follows. (i) The national MAC was 134.3 Yuan/t (at the constant price of 1978) in 2011, with an overall upward trend from 1990 to 2011. (ii) The interprovincial MACs differ significantly and decline gradually from east to west. Hebei has the largest emissions reduction quota, and Shandong has the largest emissions quota by 2030. (iii) Compared with other criteria of per capita, gross domestic product (GDP), grandfathering and carbon intensity, the proposed approach is the most cost‐effective in achieving the reduction target, with cost savings of 37.7, 34.5, 47.9 and 33.87 per cent, respectively.     

How would global trade liberalization affect rural and regional incomes in Australia?

Agricultural protection in rich countries, which had depressed Australian farm incomes via its impact on Australia’s terms of trade, has diminished over the past two decades. So too has agricultural export taxation in poor countries, which has had the opposite impact on those terms of trade. Meanwhile, however, import protection for developing country farmers has been steadily growing. To what extent are Australian farmers and rural regions still adversely affected by farm and non‐farm price‐ and trade‐distortive policies abroad? This paper draws on new estimates of the current extent of those domestic and foreign distortions: first, to model their net impact on Australia’s terms of trade (using the World Bank’s Linkage model of the global economy); and second, to model the effects of that terms of trade impact on output and real incomes in rural versus urban and other regions and households within Australia as of 2004 (using Monash’s multi‐regional TERM model of the Australian economy).     

THE COST OF DIFFERENTIAL GENDER ROLES IN AFRICAN AGRICULTURE: A CASE STUDY OF SMALLHOLDER BANANA-COFFEE FARMS IN THE KAGERA REGION,TANZANIA

In 1982/83, due to either economic pressure or profit motivation, 30 per cent of the men in a random sample of 200 smallholder banana-coffee farms in the Kagera region of Tanzania had adopted a more liberalised division of labour, and engaged in operations and horticultural farm enterprises that traditionally are the responsibility of women. A linear programming model is used to estimate the impact of gender roles on farm incomes and resource productivity among the sample. The results suggest that by liberalising sex roles, cash incomes could increase by up to 10 per cent while the productivity of labour and capital would improve by 15 per cent and 44 per cent respectively. In view of the economic benefits to be reaped, it is recommended that, within the framework of economic adjustment, African governments should launch campaigns to enhance this process because gender roles impair efficiency.     

福建省生态公益林碳汇经济效益影响因子研究

根据对福建省6个样本县进行样地调查及其农户访谈式问卷调查的资料,首先应用因子分析法对影响福建省生态公益林碳汇效益的主要因子进行分析,然后将碳汇效益与主要因子进行逐步多元回归分析。结果表明:坡度、林龄、树种、蓄积量、碳汇量、重置成本、降水量、碳汇价格是影响福建省生态公益林碳汇效益的主要因子;碳汇价格、蓄积量和重置成本对福建省生态公益林碳汇效益影响显著;碳汇价格、蓄积量与碳汇效益呈正相关,重置成本与碳汇效益呈负相关。     

Poverty analysis using small area estimation: an application to conservation agriculture in Uganda

This article demonstrates the utility of small area estimation of poverty (SAEp) methods for researchers wishing to conduct a detailed welfare analysis as part of a larger survey of a small geographic area. This study applies SAEp methods as part of an impact assessment of a conservation agriculture production system in Eastern Uganda. Using SAEp, we estimate Foster–Greer–Thorbecke rural poverty indices, estimate the effects of per‐acre farm profit increases to poor households on the indices, and compare the findings to estimates of net returns from a field‐level evaluation of conservation agriculture for maize farmers. Results suggest that increasing the farm profits of the bottom 30% of households by $1.60 per‐acre per‐season would reduce rural poverty incidence by 1 percentage point. Available data on the net returns to conservation agriculture indicate that even these modest increases are achievable for few adopting households.     

Traditional farm expansion versus joint venture remote partnerships

Traditionally, farms expand by buying out a neighbour. But might remote partnerships be a better way of expanding a farm business given projected climate change and price volatility? This question is addressed using farm business financial modelling. Representative farms at 27 locations in Western Australia are constructed to enable comparison of the value of buying out a neighbour versus expansion using geographically distant joint venture (JV) partners. The farm models consider economies of size, bulk purchase price discounts, the variability and correlation of returns associated with farm expansion, and impacts of climate change. Random selection of a remote partner generates little improvement in wealth; on average only 2.3 and 1.6 per cent, respectively, under current and projected future climate across all locations. However, there is large variation in wealth appreciation opportunities for each location and between locations. Preferred partnerships are a function of each farm's characteristics. Locations highly preferred as JV partners under current climate are similarly preferred partners under projected future climate. The main sources of additional wealth come from economies of size advantages, risk‐spreading benefits of combining geographically separated farms and bulk discounts. Farmers seeking business expansion will often benefit greatly from careful selection of a remote partner.     

征收碳税真能减少碳排放?——基于VAR模型的石油价格对碳排放影响的实证检验

当前,无论是从国内供给侧改革,保持国民经济持续稳定增长的角度,还是从遵从国际社会道义,承担起大国应有的担当出发,我国都面临的巨大的减排压力,在国内企业减排自觉性不强,碳排放权交易收效不明的情况下,征收碳税再次被推上议事日程。选取1970—2009年国际石油价格、全球碳排放总量及我国碳排放总量的相关数据,利用VAR模型分析国际石油价格对全球及我国碳排放总量的影响,认为将单次价格变化的政策,如征收碳税,作为控制碳排放的手段措施,在短期内收效明显,并且市场化程度越高,短期效果越明显,但政策作用期也更短;长期内,不管是市场化程度高的地区还是市场化较低的区域,单次石油价格变化对碳排放量都影响甚小。