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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.

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 complexity of modern farm management places great demands on the skill, knowledge and capability of farm managers and their families. Keeping abreast of emerging technologies and innovations that can affect each key farm enterprise, and knowing how best to marshal the resources required for profitable farm production, are key tasks of farm management. This study draws on a longitudinal data set of 240 broadacre farmers to compare and analyse their farm performance over a decade. Using structural equation modelling, we examine relationships between the farm family’s involvement in training, their human capital, their use of various innovations and ultimately the linkages of these factors to farm financial and productivity performance. Several statistically significant inter-relationships are found, and some factors are shown to have significant positive links to farm performance. We find that training undertaken by the farm family, the farm family’s human capital and their use of innovations, particularly key cropping innovations, have significant beneficial impacts on farm performance. The farmer’s skills in time and organisational management, their engagement in business planning and the unique environmental characteristics of the farm also significantly and positively influence farm performance.

Since the mid-1970s the south-west of Australia has displayed a warming and drying trend in its climate. Using parametric and non-parametric methods this paper provides a decadal assessment of the profitability, productivity and productivity components of over 250 farms in the region. The farm panel data are detailed descriptions of the physical and financial characteristics of each farm business from 2002/3 to 2011/12, a period of challenging weather-years. This study yields insights about farm characteristics and management strategies that have weakened or strengthened farm viability over the decade. In spite of the climate challenges experienced in the region during that decade, a majority of farm businesses improved their productivity and profitability.

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.

Improving farm productivity is often touted as essential for the future prospects of Australian agriculture, particularly for the export-oriented broadacre farm sector. This paper draws on farm panel data for the period 2002 to 2011. The annual components of productivity of the same group of 223 farms are measured each year for a decade by using a multiplicatively complete Färe-Primont index number and applying DEA methods. Results often show pronounced variability in the annual productivity of these farms. Farms are classed according to the geometric mean of their total factor productivity and the variance of this productivity. The convexity of this relationship suggests that to achieve high growth in productivity in broadacre farming, farm businesses are exposed to greater volatility in productivity. There are only a small proportion of farms that over the decade were able to achieve high, stable growth in productivity. Most farms either experienced high growth and high variability in productivity or low growth and low variability in productivity. The characteristics of farm businesses in both categories are examined to ascertain links between farm characteristics and change in farm productivity. Key findings are that overall most farms experienced growth in their total factor productivity with the principal cause of this growth being greater technical efficiency rather than technical change. Farms that experienced the highest growth in their total factor productivity typically increased their farm size, became more crop dominant, often operated farms in lower rainfall regions, generated more profit and were less exposed to debt and generated more crop yield and more livestock income per millimetre (mm) of growing season rainfall.

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.

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.

Agri-industry stakeholders need to respond to the challenge of meeting the demands for higher quality products at competitive prices under increased competition in volatile markets. Development and application of an appropriate computer-based agri-industry value chain model can provide strategic options to deal with these challenges. This paper presents an overview of the theoretical foundation and the structure of an agri-industry value chain model and demonstrates its application as a tool for benchmarking and scenario analysis of the Western Australian Sheep-meat industry.

Recently there has been a growing debate as to whether the empirical properties of production response derived from the multi-product framework are consistent with the behavioral assumption in the duality theory of production. This issue could in turn affect the reliable estimates of elasticities which are fundamental requirement to accurate economic forecasting and valid analyses of the impacts of changes in government policies or international events. The crux of the debate is particularly related to whether to estimate cost or profit function and which types of functional form should be used, as well as imposing restrictions on profit and cost functions when those properties are not satisfied by the estimation models. After reviewing the literature, we found that the duality theory may not always hold in empirical work. This depends on many factors such as risk, stochastic error or data quality, and selected functional forms. We also found that the normalized quadratic function has more advantage than other functional forms, although all of flexible functional forms often fail to pass the regularity condition in the duality theory. As such, there is a requirement to impose curvature restriction if normalized quadratic function is used and monotonicity condition needs to be checked if the cross price elasticities are more than unity. We examined the above-mentioned issues by estimating production response for broadacre farms in Western Australia. A normalized quadratic profit function is estimated using the ABARE’s quasi-micro farm level data 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

This study uses panel data at suburb level to estimates the elasticity water demands in Perth, Australia from 1995 to 2005. After deriving the consumer’s water demand under a non-linear budget constraint, we estimate the water demand model, which accounts for how water (and other purchased goods) is used to satisfy fundamental desires of the household. We have applied the specification of price that provided the correctly estimated marginal price from the block tariff structure, and employed a maximum likelihood estimation technique to tackle the endogeneity and heteroskedasticity issues. Our estimation of water demand price elasticities are slightly higher (more elastic) than previous study in Perth, but broadly in line with other estimates in the literature.

This study uses panel data at suburb level to estimates the elasticity water demands in Perth, Australia from 1995 to 2005. After deriving the consumer’s water demand under a non-linear budget constraint, we estimate the water demand model, which accounts for how water (and other purchased goods) is used to satisfy fundamental desires of the household. We have applied the specification of price that provided the correctly estimated marginal price from the block tariff structure, and employed a maximum likelihood estimation technique to tackle the endogeneity and heteroskedasticity issues. Our estimation of water demand price elasticities are slightly higher (more elastic) than previous study in Perth, but broadly in line with other estimates in the literature.

This paper re-examines the theoretical aid-growth nexus by expounding on the issues relating to policies designed for aid delivery and the lack of aid recipient's state institutional capability to enforce policy conditionality. Two propositions have been demonstrated to explain why policy conditionality attached to aid might not always promote sustainable economic growth in Least Developed Countries. First, the model has simulated that a stable aid flow contributes to economic growth even when aid is fungible. Second, the model has also simulated that unstable aid inflow impairs the favourable effect of stable aid inflow. It is suggested that the contribution of aid to economic growth depends not only on the ability of aid to increase investment in the recipient country but also the quality of policy conditionality and the state and institutional capability of the recipient country to implement policy conditionality.

This paper examines the sources of total factor productivity growth (TFP) in New Zealand's manufacturing industries over the period 1978-98 and over various sub-periods. Examination of the data adopts two stages using a stochastic frontier approach. The first stage involves the specification and estimation of the stochastic frontier production function and the prediction of technical efficiency effects. The second stage involves the specification of a regression model for the predicted technical efficiency effects. The sources of TFP growth have been decomposed into four components; i.e. technical progress, changes in technical efficiency, scale effects, and change in allocative efficiency. The empirical results show that productivity has been largely due to changes in technical progress, technical efficiency and resource allocation effect. The changes in technical progress and resource allocation have improved in the post-reform period, i.e. 1984-98, while technical efficiency has declined in the post-reform period. With respect to scale effect its contribution to productivity growth is quite small.

This paper examines the link between information and communication technology (ICT) and New Zealand's labour productivity (LP) growth in 29 industries over the period 1988-2003, and over relevant sub-periods. After deriving an ICT intensity index in order to classify industries into 'more ICT intensive' and 'less ICT intensive', we compare LP growth rates for these two industry groupings. Further, we employ dummy variable regression models, including difference-in-difference models, to more formally test the relationship between ICT intensity and LP growth. The results prove to be sensitive to the time period specified. When breaks in the data series are taken into account, there seems to be support for the view that LP growth of more ICT intensive industries has improved over time relative to that of less ICT intensive industries, even though overall LP growth was weak. To put it differently, the restrained New Zealand LP performance apparent from our data seems to have been due mainly to the decline in LP growth of less ICT intensive industries. Our results illustrate that lack of overall productivity growth per se is not necessarily evidence against the beneficial productivity impacts of ICT. Rather, the proper comparison is that between the productivity performance of more ICT intensive versus less ICT intensive industries. However, our results can only be taken as suggestive, given the fact that ICT is but one of the determinants of LP, and given the many inherent measurement problems.