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The financial performance of 240 farms in a drought-affected agricultural region of Australia is analysed. The decadal study period included some years of widespread drought, as well as years with only subregional droughts or no drought. Some droughts created larger adverse financial impacts than others. Mostly, the more droughts farms experienced, the worse was their financial performance relative to farms within the same quantile of farm performance. Despite the incidence of drought, by the end of the decade, almost all the farm businesses were wealthier from increasing their farm size and becoming more crop dominant. Unexpectedly, consecutive years of drought had a significant positive effect on the operating profit per hectare and retained profit per hectare of farms in a majority of their respective quantiles. Many farms that experienced consecutive drought were forced to make structural changes, shifting away from livestock production towards additional cropping. These structural changes boosted farm performance over the decade. The incidence of drought affected some measures of farm performance differently whilst others were affected similarly. Understanding these metrics of farm performance and the structural changes underway in an agricultural region helps form a more complete view of drought impacts. [ABSTRACT FROM AUTHOR]

Reliable estimates of elasticities are fundamental requirement to accurate economic forecasting and valid analyses of the impacts of changes in government policies or international events. The aim of this paper is thus, to estimate production response for broadacre farms in Western Australia by using a normalized quadratic profit function for the period 1977/78 to 2005/06. The result reflects the imposition of curvature restrictions for a normalized profit function, and estimated elasticities are found to be less elastic in the short run. The results from this exercise can be used in a number of ways, depending on the policy objective in mind, such as simulation for forecasting agricultural production. [ABSTRACT FROM AUTHOR]

This paper draws on a decadal dataset of 250 farms in south-western Australia. These farms, when categorised according to their type of farming system and business strategy, faced different trends in their terms of trade. Profitability measures of these farms for the period 2002/3 to 2011/12 were compared. Most farms, other than some highly crop dominant ones, applied a strategy of maintaining or increasing their cropping intensity and farm size over the decade. The strategy of a greater commitment to cropping was supported by cropping technologies and beneficial change in agronomic practices. Increased cropping was universally profitable among all types of farming systems, providing a statistically significant increase in operating surpluses. By contrast, irrespective of their underpinning farming system, farms which did not strategically increase their intensity of cropping generated statistically significant less returns to their business equity. By maintaining rather than increasing their cropping intensity these businesses failed to capture the operating surplus upside available from increased cropping. Overall, the results show that management of farming systems is not solely about tactics and flexibility. Strategic management can additionally influence the nature and profitability of farming systems. • Business strategies applied to different Australian farming systems are assessed. • The strategy of increased cropping is consistently significantly profitable. • Managing farming systems is not solely about tactics and flexibility. • A beneficial strategy can greatly add to farm business wealth and profit. [ABSTRACT FROM AUTHOR]