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Land and Environment : Agribusiness Assoc. of Australia

Agribusiness Review - Vol. 9 - 2001

Farmer Returns from New Technologies in the Australian Beef Industry: On-farm Research versus Off-farm Research

Xueyan Zhao - Lecturer, School of Economics, University of Adelaide, Garry Griffith - Principal Research Scientists, NSW Agriculture, Armidale and John Mullen Principal Research Scientists, NSW Agriculture, Orange

Paper 1 , February 6, 2001


The issue of the relative returns to farmers from on-farm research versus off-farm research is examined using a multi-sectoral equilibrium displacement model of the Australian beef industry. Total economic surplus changes and their distributions among various industry groups resulting from 1% cost reductions in various farm sectors (weaner production, cattle backgrounding and grass-finishing) and off-farm sectors (feedlotting, processing, and domestic and export marketing) are estimated. The results are consistent with previous studies in showing that in general, the share of total benefits to farmers is larger from on-farm research than from off-farm research. The exception is the export marketing sector. The net returns from the different cost reduction scenarios depend on the costs of achieving them.

Recent Trends in New Zealand Agricultural Productivity

Rod Forbes, Ministry of Agriculture, Wellington and Robin Johnson, and Consultant, Wellington.
Paper 2, February 6, 2001

This paper discusses trends in New Zealand agricultural productivity at the farm level since 1972. Total input and factor input measures of productivity are derived and discussed. The method is based on Tornqvist (1936) index numbers which weight changes in the output and input mix as an average between base year weights and current year weights. Comparisons are made with base year weighting systems (Laspeyre Index Numbers) that are derived from Statistics New Zealand (SNZ) data sets available at the time of analysis. However, from September 2000 quarter, SNZ have adopted a chain link system for their national accounts.
It is clear that resources will move out of an industry if relative returns to those resources are not maintained. In agriculture, this involves the inputs that producers buy from elsewhere, the land and capital used for productive purposes, and the producer's (and family's) own labour.

An Economic Evaluation of Interstate Quarantine Protocols for Mangoes Entering Western Australia

David Cook
Ph.D. student - University of Western Australia

Paper 3, March 7 2001

With appropriate strategies in place the risk posed to domestic production systems from exotic pests and diseases is reduced. This often means importers of agricultural commodities are effectively taxed, with negative effects on consumer welfare. Hence, analysis of quarantine policy decisions involves a comparison of expected production gains against social welfare loss. Given the large variety of agricultural industries and the virtually endless list of exotic pests posing a risk to domestic industries, there is a continuum of cases of this nature. In some instances the effects of quarantine policies will be felt mainly by producers, while in others it may be consumers, or a blend of the two. In the case of the mango industry in WA, both producers and consumers are affected. A quantitative assessment of the benefits and costs of Agriculture Western Australia's import clearance activities governing mango importation is provided here in which the break-even pest damage avoided through quarantine is emphasised, rather than the expected level of damage should pests enter.

Herbicide Resistance and the Decision to Conserve the Herbicide Resource: Review and Framework

Rick S. Llewellynab, Robert K. Lindnera, David J. Pannella & Stephen B. Powlesb
aAgricultural & Resource Economics, Western Australian Herbicide Resistance Initiative,
bFaculty of Agriculture, University of Western Australia
Paper 4, March 23, 2001


The demonstrated ability of major cropping weeds to evolve resistance to most major herbicides threatens the sustainability of herbicide-dependent weed management systems. In Australia, the rapidly increasing herbicide resistance problem now presents a need to reassess herbicide use as a resource management problem. Although resistance to some herbicides is already widespread, most grain growers have several herbicide options still available to control weed infestations in crops. These growers are being encouraged to adopt practices that place less reliance on herbicides to delay, if not prevent, the emergence of further herbicide resistance. It is argued that this requires a form of resource conservation decision, the resource being herbicide susceptibility. To maximise the net present value of returns, growers need to select the optimal use of herbicide susceptibility and the more costly alternative practices over time. This paper integrates concepts of resource economics and the literature on the adoption of innovations to contribute to a framework for weed management decisions where herbicide resistance is developing. Implications for achieving rapid and high level adoption of integrated weed management practices by growers are discussed, given the requirement for perceived profitability in a complex adoption context where high uncertainty is present.

Private Sector Business Opportunities in National Parks

Jeff Bennett
Professor of Environmental Management, Australian National University, Canberra ACT.
Paper 5, April 16, 2001
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Australia's publicly owned and managed National Parks estate has been largely quarantined from the micro-economic reforms that have been instituted across most other sectors of the economy. The public good, natural monopoly and equity arguments that are used to justify a continued dominance by the public sector in the production and provision of Park benefits are not watertight. Opening up the Parks sector to private sector competition would afford efficiency improvements for the economy as well as a range of private sector business opportunities, frequently in rural and regional Australia.

Single Desk Selling by the NSW Grains Board: Public Benefit or Public Cost?

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R.J. Farquharson, Senior Economist, NSW Agriculture, Tamworth, NSW and G.R. Griffith, Principal Research Scientist, NSW Agriculture, Armidale, NSW.
Paper 6, June 5th 2001


In this paper we report an economic analysis of the activities of the NSW Grains Board over the period 1992 - 1998. This work was undertaken in conjunction with a NSW State Government review of the legislation that grants powers of vesting and single desk selling to the Board, powers that can be considered as restrictions to competition. A net public benefit test was used as the basis for the review. Economic trade theory, institutional arrangements and econometric analysis were used to conceptualise conditions necessary and sufficient for price discrimination to be present, and then estimates were made of the dimensions of the social benefits and costs associated with the price discrimination behaviour. The main results were that for sales of malting barley the Board's activities were found to deliver a net benefit to producers, but domestic prices were higher resulting in a net overall social cost. No net benefit to producers was found for feed barley or canola...............
A Public Accounts Committee of the NSW Parliament subsequently reported on the collapse of the Board and identified a number of reasons, including a conflict between the Board structure and incentives, industry change and a high-growth strategy pursued in later years.

Profitability of the Australian Beef Industry: A Break-even Analysis

Chinna A Kannapiran,
Acting Director / Senior Economist, Economics Branch, THS, NT Government / P.O.Box : 40160 Casuarina NT 0811 Darwin Australia, Tel 61-08-89992540 Fax: 61-08-89451863
Paper 7, August 7th, 2001


Profitability of the specialist beef production in the Australian Beef Industry is undertaken using a break-even model. The results reveal that during the financial years 1991-1996, the specialist beef producers were operating above the break-even level in the states of South Australia and to some extent in Queensland. They were operating marginally below the profitable break-even level in the states of New South Wales and Tasmania. In all other states and Northern Territory, they were facing losses and financial crisis. However during the financial years 1993-1998, the beef producers in Queensland, South Australia, Northern Territory and Western Australia were able to cross the break-even level. Beef producers in all other states continue to face financial crisis. In all the states and Northern Territory beef producers were not able to fully recover the imputed value of their family labour. The producers were underpaid entrepreneurs and the industry is apparently surviving by trading on capital and or other off-farm income. Increase in production and cost control measures are possible options to improve the profitability. Although the findings provide a view of financial profitability of the specialist beef production in general, the situation may be different in specific cases. The study also reveals the usefulness of the break-even model in management decision support.

How to increase organic food sales: Results from research based on market segmentation and product attributes

David Pearson
Lecturer in Marketing, School of Marketing and Management, University of New England, Armidale, NSW 2351 Australia. Tel (612) 6773 3222 Fax (612) 6773 3914
Paper 8, September 13, 2001


This paper presents results from research on organic food buyers. The empirical research is based on food buyer's knowledge, market segmentation and the attributes of organic fresh fruits and vegetables.
Almost all food buyers have an accurate knowledge of what organic means in relation to food. The market segmentation leads to two opportunities to increase sales of organic fresh fruits and vegetables. First, promotion that is aimed at increasing sales to existing organic buyers should emphasise the fact that this product is seen as being more healthy and of a higher quality. Second, promotion that is aimed at selling organic fresh fruits and vegetables to buyers who currently purchase conventional products has to consider two issues: the inconvenience of many organic food outlets and the higher price of many organic foods. In situations where organic food is available at convenient outlets, 20% is the maximum price premium at which a significant number of buyers will still consider purchasing it.
Hence, the results from this research suggest that increasing organic food sales may best be achieved by promoting its positive health and quality aspects and making it available in convenient retail outlets at a maximum price premium of no more than 20%.

New Generation Co-operatives for agricultural marketing and processing in Australia: Principles, practicalities and a case study

Brad Plunketta and Ross Kingwellb
a Western Australian Department of Agriculture & graduate student University of Missouri
b Western Australian Department of Agriculture & University of Western Australia
Paper 9, November 28, 2001

Agro-industrialisation and a reduced role for statutory marketing pose new challenges for the farm sector. Possible responses include transformation of co-operatives or creation of new co-operative structures. This paper outlines weaknesses in traditional marketing and processing co-operatives. However, principles embodied in new generation co-operatives are shown to potentially overcome those weaknesses. An Australian case study, Tatura Milk Industries Ltd, is described to illustrate the practicalities of incorporation of these principles in co-operatives in Australia. Issues surrounding new generation co-operatives in an Australian context are discussed. The paper concludes by suggesting a limited initial role for new generation co-operatives in Australia.

Selection of Externality Management Instruments in Marine Fisheries using Decision Support Software

Ken Hughey*, Geoff Kerr*, Ross Cullen+, Ali Memon
* Environmental Management and Design Division, PO Box 84, Lincoln University, New Zealand
Commerce Division, , PO Box 84, Lincoln University, New Zealand.
Ph. 64 3 325 3807. Fax. 64 3 325 3847. Email
Paper 10, December 10, 2001


New Zealand marine fishing activities create many types of environmental externalities, which by law must be internalised. Selection of best internalisation instruments can be aided by following a hierarchical decision process, which first screens the universe of instruments against implementation criteria to establish the feasible set. Instruments in the feasible set can be evaluated against a range of environmental, Treaty of Waitangi, economic, socio-cultural and management criteria. This approach to selection can be formalised in decision support software to provide a useful tool for fisheries management agencies.

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