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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.

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.

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.

The wine industry in Western Australia, like its counterparts in some other wine-making regions across the globe, faces some interesting investment choices regarding the relative merits of expenditure on promotion or production and whether export or domestic markets should be the focus for sales growth. This paper uses value-chain modelling to examine the economic consequences of investment scenarios involving promotion and the enhancement of the productivity of premium wine grape production. A value-chain model is constructed that considers grape growers, wineries, wholesalers, retailers and exporters. The model is applied to estimate the economic ramifications of three different investment scenarios. The main findings are that promotion activity in overseas markets that stimulates premium wine grape production in Western Australia, generates the greatest economic gains for the Western Australian wine industry. By contrast, if investment solely occurs in production research that boosts the productivity of premium wine grape production, then it generates the smallest economic gains relative to other investment options that include promotion.

Australian crop and livestock farmers face uncertain climate change and variability and a challenge for adaptation decisions. These decisions can be (1) adjustments to practices and technologies, (2) changes to production systems, or (3) transformation of industries, for example, by relocation to new geographical areas. Adjustments to existing practices are easy to make, relative to changes to production systems or transformations at the industry level. Transformations require new investments and infrastructure and can leave assets stranded. These transformations can be partially or wholly irreversible and hysteresis effects can make switching difficult and mistakes costly to reverse. Real Options offers a framework to structure thinking and analysis of these difficult choices. This paper generalises and extends the principles of real options to capture the expected time until transformative thresholds are crossed. An application to South Australian wheat dominant agriculture is explored.

Western Australia (WA) supplies around three-quarters of Australia’s exports of live sheep. The number of sheep exported live from WA has ranged from 4.5 million to 2.4 million with the trend in numbers exported being downwards. The future of this export trade appears to be increasingly vulnerable and uncertain, primarily because of the influence of animal welfare lobbyists. This paper uses scenario analysis to assess the impact on WA’s sheep supply chain of the termination of the live sheep export trade. The supply chain comprises three subsectors: farm production, processing/wholesale and retailing/export. The impacts of the trade termination on each of these sub-sectors are reported. These impacts are strongly linked to how producers respond to termination of the trade. If producers choose to exit the industry or reduce their sheep production in response to the likely lower prices that would follow a reduction in the live export trade, then the abattoirs eventually will suffer through reduced throughput and their support industries will have reduced demand for their services. Meat processors will benefit initially through access to sheep that previously would have been exported live, but these processors may not necessarily benefit in the longer term if the sheep population declines. Further, markets that currently accept live sheep may not necessarily accept the equivalent volume of chilled and frozen sheep meat and may not pay equivalent prices to those currently paid for live sheep. There are cultural, religious and economic preferences for live sheep in some Middle East markets so a simple substitution of chilled and frozen sheep meat for live sheep is not possible in some major markets.

Modelling complex systems such as multiple-use reservoirs can be challenging. A legitimate question for scientists and modellers is how best to model their management under uncertain rainfall. This paper studies whether it is worth using a stochastic model that requires more effort than a much simpler deterministic model. Both models are applied to the management of a multiple-use reservoir in southern Vietnam. Although no single modelling approach is universally superior, this study indicates that the desirable modelling approach is stochastic if reservoir capacity and water use demands have a high enough impact on the optimal timing of reservoir water use.

Dryland farming is commonplace in Australia so the profitability of dryland farms often depends on the amount and timing of rainfall. With drier weather conditions featuring in climate change projections for southern Australia, it is important to understand the relationships between rainfall, commodity prices and farm profitability. Using correlated farm commodity and input prices from the past nine years, farm profitability was calculated for a range of farm types in southwest Victoria under low, average and high rainfall scenarios. Fourteen representative farms were examined that included production of Merino fine wool, prime lamb, beef cattle, milk, wheat and canola. This paper compares and contrasts the spread of profitability of these farms against the backdrop of price variability and rainfall scenarios. Inferences about the resilience to climate and price volatility of the different farm types are made. The type of metric used to describe profitability is shown to importantly affect the nature of inferences to be drawn through the comparison of farms.

Tedera (Bituminaria bituminosa C.H.Stirt var. albomarginata) is a drought tolerant perennial legume originating in the Canary Islands. This study evaluates the potential role and value of tedera in dryland mixed crop and sheep production systems in southern Australia. Regional variants of the bio-economic model MIDAS are used to assess tedera in farming systems at two locations. The analysis considers the quantity and quality of feed produced by tedera, the ability of other forages to complement or substitute for tedera and its impact on meat versus wool-producing sheep flocks. The results indicate that tedera offers the potential to increase farm profits by up to 26% and be grown on ~28% of a low rainfall mixed enterprise farm. On a high rainfall mixed enterprise farm tedera may boost profit by up to 58% and be grown on ~75% of the farm. The increase in profit is attributable to savings in supplementary feed and higher stocking rates.

This paper examines broadacre farm performance in south-western Australia. This region has experienced pronounced climate variability and volatile commodity prices over the last decade or so. Relationships between productivity and profitability are explored using panel data from 50 farms in the study region. The data are analysed using non-parametric methods. Components of farm productivity and profitability are measured over the period 1998 to 2008. Economies of scale and scope are shown often to be positive contributors to productivity and profitability. However, the main finding is that technical change, much more so than technical efficiency, has supplied over 68 percent of the improvement in total factor productivity for farms in the different climatic zones of the region from 1998 to 2008. In addition, growth in total factor productivity is the main contributor to farm profitability. By implication, technical change, often accompanied by scale and mix efficiencies, is the main driver of farm profitability. These findings indicate a vital role for innovation and R,D&E to deliver technologies and practices that bolster farm profitability, as well as a continuing role for scale and scope economies. The products and knowledge that come from innovation and R,D&E are the springboard for technical change. Through technical change and scale and scope efficiencies farmers in this study have achieved higher profits.

Policy makers in Vietnam face difficult choices when deciding reservoir water management strategies between irrigation and fisheries. In this paper, an economic optimization model for water management is developed to facilitate policy makers' decision making. The model includes the response of rice and fish yields to key factors including reservoir water levels, the timing and quantity of water release, and climatic conditions. The model accounts for variation in rainfall patterns, irrigation requirements, and the demand for low water levels during the fish harvest season. The model is applied to the Daton reservoir in the south of Vietnam to maximize profits in each of three production scenarios where the reservoir's water is used for: (1) only producing rice, (2) only producing fish, and (3) producing rice and fish. Key findings are: (1) for rice production, adequate water should be released to meet rice water requirement and residual water should be stored as a source of water in the case of low rainfall; (2) for fish production, maximum water should be released prior to the fish harvest; (3) for rice and fish production, although water should be released prior to fish harvest, sufficient residual water must remain to satisfy the water requirements of rice in its remaining stages of growth. The model could be applied to other multiple-use resources such as forests, river basins, and land.

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 pervasive regulation. 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. Using the farmer’s annual hours worked as a measure of complexity that affects current farm management, the trade-off between profit and this measure of complexity is found not to be large. A case is outlined where the farmer’s annual hours worked could be reduced by 9 percent for a 3 percent 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 much more on being highly attractive to time-poor farm managers.

This paper uses variance decomposition modelling to explore how wheat revenue volatility in Australia has changed spatially and temporally. The components of revenue variance are the variances and covariances of wheat prices, the area of wheat harvested and the yield of wheat. The key finding is that the volatility of wheat revenue (detrended) has more than doubled in every main wheat-growing State in Australia over the last 15 years or so Changes in wheat areas are mostly a minor source of revenue variance. The principal cause of volatility is yield changes with price changes increasing slightly in absolute importance when compared to their adjacent previous period. Greater downside yield risk is often the principal cause of the increased yield variance. The implications are that revenue variance, and especially downside revenue risk, has posed major problems for wheat-dominant farm businesses over the last 15 years or so. How Australia’s wheat producers have managed this greater volatility of wheat revenue is likely to have greatly affected the viability of their farm businesses.

Conflicts of interest between irrigation and aquaculture in water use from reservoirs in Vietnam can be resolved when trade-offs in the economic value of water can be quantified over time. Determining these trade-offs can be used as a benchmark for making decisions about managing reservoirs tending to develop rural areas in Vietnam. To solve this problem, a stochastic dynamic programming model was constructed. This model maximizes the expected net present values generated by both agriculture and aquaculture by finding the optimal release paths throughout a year, under conditions of uncertain rainfall. The model was constructed using two main components. First, a dated water production function is used to evaluate responses of crop yields for different levels of applied irrigation. Second, a bio-economic model for reservoir fisheries is employed to estimate fish yields at different levels of water during a harvest season. Using this model, we present a case study of reservoir water management in Vietnam.

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 pervasive regulation. 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. Using the farmer’s annual hours worked as a measure of complexity that affects current farm management, the trade-off between profit and this measure of complexity is found not to be large. A case is outlined where the farmer’s annual hours worked could be reduced by 9 percent for a 3 percent 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 much more on being highly attractive to time-poor farm managers.

As part of its climate change policy the Australian government has introduced a Mandatory Renewable Energy Target (MRET) scheme and is also attempting to introduce a Carbon Pollution Reduction Scheme (CPRS). Using as a case study a main agricultural region of Australia, this paper examines how farming systems in this region may be affected by the medium term policy settings of these two schemes. A bio-economic model of the region’s farming systems is developed and used to assess the schemes’ impacts on the nature and profitability of the farming systems. Results show a range of profit and enterprise impacts across the range of farming systems. Farms as providers of biomass for electricity generation and small users of electricity are liable to benefit from the MRET scheme, with the extent of benefit depending on the price offered for biomass. By contrast, the CPRS is liable to more profoundly affect farming systems, especially if agriculture is included in the scheme. The impacts of the CPRS on agriculture are mostly conditional on: the amount of free permits allocated to agriculture, the value of trees as carbon sinks, the extent of pass-through of CPRS-related costs onto agriculture and emission permit prices. Dependent on these factors, farm profits can increase by up to 20 percent or decrease by over 30 percent, relative to the ‘no CPRS’ or ‘business-as-usual’ case. If agriculture is covered by the CPRS, and emission permits and tree growth rates are sufficiently high then optimal farm plans typically involve a combination of reduced livestock numbers, the planting of permanent stands of trees on marginal farmland and other changes to the enterprise mix on farms that reduce emissions.

If agriculture is included in an Australian emissions trading scheme then it may face from 2015 at the earliest, a price for its greenhouse gas emissions; and thereby have incentives to offset and lessen its emissions. Yet because there is currently little understanding of the spatial pattern of emissions in agricultural regions of Australia, the extent of the challenge the sector faces in reducing its emissions is not fully recognised. To improve our understanding, this study uses the National Greenhouse Accounts methodology to estimate the spatial and temporal patterns of agricultural emissions since 1990 in the key agricultural region in Australia’s southwest. This region generates almost 40 percent of the nation’s winter crop production and supports over a quarter of the nation’s sheep. The quantity and trajectory of emissions from each shire in this region are reported, thereby identifying where emission problems may be worsening or easing. The composition and causes of changes in emissions are discussed. This study also generates spatial estimates of sequestration costs by drawing on land and forestry cost and tree growth data. Many relatively low cost sites for carbon sequestration, based on permanent reforestation, are identified with the implication that agriculture may be able to cost-effectively offset its emissions, as well as some of those from other sectors. However, an implication of this study’s findings is that in some shires eventually there may be strong land use competition between farming and forestry.

Labour scarcity and affordability have encouraged many farmers in Western Australia to focus more on cropping than sheep production. Many farmers are opting to run low input livestock systems. This paper examines labour demand for sheep and cropping during the production year, combined with various scenarios of labour availability and cost. The implications for farm profitability and enterprise selection are examined using the bio-economic farming systems model MIDAS (Model of an Integrated Dryland Agricultural System). Labour requirements for sheep are far greater than those for cropping. Additionally the labour requirements for sheep are high in all production periods whilst the seasonal nature of cropping means more time is required only at certain times of the year, particularly at seeding and harvest. This means that the most profitable labour option is employing casual labour during periods of peak demand for cropping. The lesser relative profitability of the sheep enterprise makes employing a permanent worker the least profitable labour option. By contrast, employing casual labour during busy periods for cropping is more profitable but it is also associated with only small areas of perennial pastures being sown which has environmental implications. The logistics of employing labour at only certain times of the year compared to employing a full time worker means that farmers need to pay more per week to employ these workers or do the extra work themselves.

A model of investment in crop sowing machinery is applied to wheat production under current and projected climatic conditions at several locations in south-western Australia. The model includes yield responses to time of sowing at each location given current and projected climatic conditions. These yield relationships are based on wheat growth simulation modelling that in turn draws on data from a down-scaled global circulation model. Wheat price distributions and cost of production data at each location, in combination with the time of sowing yield relationships are used to determine a farmer’s optimal investment in crop sowing work rate under each climate regime. The key finding is that the impacts of climate change on profit distributions are often marked, yet mostly modest changes in investment in work rate form part of the profit-maximising response to climate change. The investment response at high versus low rainfall locations mostly involves increases and decreases in work rates, respectively. However, changes to investment in work rate within a broadly similar rainfall region are not always uniform. The impacts of climate change on investments in work rate at a particular location are shown to require knowledge of several factors, especially how climate change alters the pattern of yield response to the time of sowing at that location.

The Australian government is introducing a Carbon Pollution Reduction Scheme in 2010, as part of its climate change policy. After 2015 agriculture may be covered by this scheme. This paper examines how different broadacre farming systems may be affected by the policy settings of this scheme. Using the bio-economic farming systems model MIDAS (Model of an Integrated Dryland Agricultural System) the impacts of the Carbon Pollution Reduction Scheme on the profitability of different broadacre farming systems in the southwest of Australia are investigated. Results show a range of profit and enterprise impacts across the various farm types. In a scenario where agriculture is not covered by the scheme, reductions in profit range from 7 to 12 percent, attributable to more expensive ‘covered’ inputs such as fuel and fertiliser; and farmers reduce their use of expensive energy inputs such as chemicals and fertilisers. In a covered scenario profits decline by 15 to 25 percent of ‘business-as-usual’ profit and optimal farm plans involve a combination of reduced livestock numbers, the introduction of permanent woody perennial plantations on marginal lands and other changes to the farm enterprise mix to reduce emissions.

Down-scaled global circulation modelling is combined with wheat growth simulation modelling to generate yield responses to times of sowing under current and projected climatic conditions for several locations in the grainbelt of Western Australia. A model for investment in crop sowing machinery draws on these simulated yield relationships at each location and is used to determine a farmer’s optimal investment in crop sowing work rate capacity under current and projected climate regimes. The key finding is that at most locations the projected change in climate has marked impacts on profit distributions from grain production, yet mostly modest changes in the farmer’s investment in machinery work rate form part of the profit-maximising response to climate change at each location. There is also a divergence in machinery investment response between high versus low rainfall locations, with increases and decreases in work rates respectively being forecast. However, as illustrated for a few locations, the changes in investment in work rate within a broadly similar rainfall region are not uniform; principally due to climate change differently affecting the pattern of yield response to time of sowing at each location.

Ethanol production is increasingly commonplace in many grain producing regions. This paper uses the grain producing region of Western Australia as a case study to illustrate how the location and size of an ethanol plant affects its grain accumulation costs. Specifically, this study examines how price variability of various wheat grades, combined with spatial and temporal variability in production of those grades affects the costs of grain accumulation for ethanol production. These costs are the main component of a plant's operating costs so lessening these costs can offer a comparative advantage for a plant owner. Logistics models' based on mathematical programming were constructed to depict a range of plant sizes and locations for ethanol production. The key findings from analysis of the models' output are that, in some cases, large cost savings in grain accumulation costs are possible through locating ethanol plants at a sub-set of southern locations in the Albany, Kwinana and Esperance grain receival zones of Western Australia. The southern inland site of Newdegate, in particular, offers the greatest potential savings in costs of grain accumulation, displaying the lowest certainty equivalent of these costs when compared to all other locations. At all locations, small to medium-sized plants offer advantages of lower and less variable costs of grain accumulation.

The possible impacts of projected climate change on Australian agriculture are outlined. The characteristics of climate change that underpin the creation of economic impacts for agriculture are also described and discussed. Climate change is shown to generate spatially and temporally diverse impacts, with many regions likely to experience increased downside risk in agricultural production. Some regions, such as south-west Australia, are projected to be particularly at risk of adverse outcomes associated with climate change. The likely gradual unfolding of climate change, however, may provide farmers in many regions and industries with sufficient time to utilise or develop adaptation strategies. Many of these strategies are likely to be based on farmers’ current responses to climate variability. Investment in R&D and innovation are likely to be important ingredients in facilitating farmers’ adaptation to climate change. Farmers are likely to face additional costs of capital adjustment due to climate change and investment in long-lived climate-dependent agricultural assets such as irrigation infrastructure, new vineyards and timber plantations will become more problematic. Investing in ecological assets in rural regions, especially where these assets may become stranded by climate change, is also increasingly made problematic.

Impacts on Australian agriculture of projected climate change are likely to be spatially and temporally diverse, with many regions likely to experience increased downside risk in agricultural production. Some regions, such as south-west Australia, are projected to be particularly at risk of adverse outcomes associated with climate change. The rate and extent of warming, along with impacts on rainfall distributions, are key determinants of agricultural impacts and will affect the success of adaptation strategies. The likely gradual unfolding of climate change should provide farmers in many regions and industries with sufficient time to utilise or develop adaptation strategies. Many of these strategies are likely to be based on farmers’ current responses to climate variability. Investments in R&D and innovation could be important ingredients in facilitating farmers’ adaptation to climate change. Farmers are likely to face additional costs of capital adjustment due to climate change. Investment in long-lived climate-dependent agricultural assets such as irrigation infrastructure, vineyards and agroforestry will become more problematic. Investing in ecological assets in rural regions, especially where these assets may become stranded by climate change, also will be increasingly problematic.

Early climate change research has projected declining rainfall patterns and increased periods of drought across southern Western Australia. These changes are likely to have very significant impacts on low rainfall agricultural regions already struggling with the economic demands of dryland salinity management. Potential negative impacts of climate change may include declining farm crop and pasture production, resulting in lower yields, greater yield variability, declining areas of cropping production as well as significant reductions in both farm profitability and the adoption of new practices needed to both adapt to and manage climate change and/or dryland salinisation. This analysis examines the potential impacts of climate change on a low rainfall region in the eastern wheatbelt of Western Australia, including climate change impacts on farm profit and salinity management options., Paper removed at request of authors 08/03/07.

The science, funding and organisation of plant breeding in Australia has changed greatly since the 1980s. This paper explores the institutional change in plant variety provision in Australia. The roles of key economic and political agents are emphasized, along with the impact of changes in biotechnology and intellectual property rights. Their joint interaction has produced a set of complex agribusiness arrangements that underpin the current funding and supply of plant varieties. The pace of institutional change has been rapid and is uncovering a further set of agribusiness issues such as access to enabling biotechnologies, funder capture, contestability in pricing of varieties and access to royalty collection facilities.

In Australia very favourable prices for lamb and mutton since 2001 has encouraged a switch from the Merino to other sheep breeds better suited to meat production, namely the Dohne Merino and South African Meat Merino. To date, little research on the performance and profitability of these meat breeds in Australian farming systems has been carried out. A whole-farm bio-economic model was used to assess the likely profitability of these breeds in a southern coastal region of Western Australia. Sensitivity analysis was undertaken to identify the production characteristics that influence farm profit most, and commodity price risk was modelled endogenously to identify the robustness of profitability for each breed. Results indicate that weaning rate, fleece weight and fibre diameter are important to the profitability of each breed to varying degrees. However, despite important different production characteristics between the breeds, these differences generate no clear economic comparative advantage for any one breed in the broadacre farming system of the region studied. This finding, plus the high changeover costs for breed replacement, means there is little economic merit in disinvesting in one breed to fully switch to another.

Agricultural R&D in many developing countries plays an important economic role. However, to sustain successful agricultural R&D requires adequate, reliable funding and sound management and governance. In many developing countries, generating reliable flows of R&D funds and ensuring their proper management are major challenges. This paper uses a case study in Papua New Guinea to illustrate these problems in agricultural R&D and outlines possible solutions. The main solution of fund diversification and commercial activity by the R&D provider, a practical success in the Papua New Guinea case study, could have wider applicability to other industries and other developing countries. The structural solutions provide more security of funding, lessen impacts of possible corruption and provide commercial incentives for R&D effort.

Few studies of farm technical efficiency consider differences in the physical environments of the farms. This study examines rain-fed broadacre agriculture and shows how neglect of rainfall differences between farms affects measures of farm technical efficiency (TE). Applying data envelopment analysis (DEA) to a sample of broadacre farms, TE measures unconfounded by rainfall variation are generated by specifying rainfall as a non-discretionary production input in an input-orientated DEA model. These unconfounded TE measures are compared to other TE measures generated by a conventional DEA model that does not explicitly include rainfall. The conventional DEA model reports lower levels of technical efficiency suggesting that measurement of TE should, where possible, include environmental effects, such as rainfall. Care is needed in using TE findings for farm management purposes.

Future prosperity of farming businesses depends not only on immediate prospects, but also on the capability to adapt to changing circumstances. In looking to the future, farm managers need to assess where the current farming system is taking them, and whether changing to an alternative farming system might be more profitable. There are various techniques for assessing the profitability of alternative farming systems, but frequently the cost of transition is overlooked. The financial consequences of transition to a new farming system are assessed for two case study farms using a spreadsheet tool (STEP), developed by the authors. The tool assists farm managers in assessing the risk of transition strategies as well as comparing rotations.

This study reports findings from a mail survey of Western Australian broadacre farmers participating in quality assurance (QA) accreditation. A 50 percent response rate generated a sample size of 78 usable replies. The average farm in the survey spent $13,470 gaining QA accreditation, upgrading facilities and implementing the QA system. Most of these costs were set-up costs incurred in the first year of QA training. Almost half of all farmers in the survey considered QA accreditation and implementation to be value for money. A further 39 per cent were unsure of its value. Only 13 per cent of respondents felt it was not a worthwhile investment. Most respondents agreed that there were benefits, apart from price premia, in applying a QA system and 84 per cent of growers viewed QA accreditation as the start of greater regulation of grain production. Even if no price premium was available for QA grain, 39% of respondents indicated they still believed QA to be worthwhile. However, this same group of farmers also indicated that if the premium for QA grain was less than $8.90 per tonne they would begin to question the value of implementing the QA system on their farm. Overall, farmers in the survey suggested an average premium of $12.30 per tonne was required to prevent them questioning the merits of QA. A simple investment model suggested that to exactly offset the cost of QA accreditation and implementation a price premium of $11.70 per tonne was required. This premium was very close the price premium of $12.30 per tonne identified by growers as being required before they would doubt the worth of adopting a QA system.

The salinisation of farmland in Australia is a major natural resource management problem. Over the next 20 years a further 1.1 million hectares of broadacre farmland is predicted to become salt-affected. This paper firstly explores the spatial ramifications of the spread of salinity in Australia's agricultural regions. Some of the nation's most profitable grain growing regions will become seriously affected by salinity over the next 20 years. Secondly this paper outlines the nature, uptake and profitability of various salinity management options available to Australian farmers. These options include preventative and containment measures, such as engineering solutions and adoption of deep-rooted perennials, and other options involving adaptation to more saline environments such as commercial use of saline water and salt tolerant fodder plants. Deep-rooted perennial fodder species appear to offer the best short to medium term prospect for managing salinity in most agricultural zones. However, in many situations perennials may not be profitable at the scale required to have a significant impact on the rate of spread of salinity on farmland, or the rate of increase of saltload in rivers and streams.

Against a backdrop of descriptive snapshots of the years 1975, 2000 and 2025, this paper explores challenges for broadacre farm managers. Issues of particular relevance to Western Australian farm managers are emphasized. Key market, environmental, technical, structural and social challenges and their implications for farm managers are discussed. Established and emerging trends, along with commentaries of a range of futurists, are used to develop forecasts for farm management. The paper concludes by examining the question of change in farm management: How might the farm manager in 2025 be different from one in 2000 and what are the implications for farm management training, farm management advisory services and farm management researchers?