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Land and Environment : Agribusiness Assoc. of Australia

Australasian Agribusiness Review - Vol. 18 - 2010

ISSN 1442-6951

Vol 18 - Paper 1 (pp.1-17)

Is willingness to pay (WTP) for beef quality grades affected by consumer demographics and meat consumption preferences?

Conrad Lyford, John Thompson, Rod Polkinghorne, Mark Miller, Takanori Nishimura, Kate Neath, Paul Allen and Eric Belasco

One of the ongoing problems in beef marketing has been to market a product that is consistent and enjoyable. This paper evaluates the willingness to pay (WTP) by consumers for the defined levels of eating quality and interactions with consumer demographic factors and meat consumption preferences.  The results clearly showed that consumers in all countries were willing to pay more for 4 and 5 star qualities (P<0.0001), and less for 2 star quality, relative to 3 star.  Japanese consumers showed the greatest increase in WTP estimates for quality, with 4 and 5 star samples being valued at 1.7 and 2.9 times the WTP value assigned to 3 star product.  United States consumers were next with Australian and Irish consumers showing the smallest increase in WTP with increased quality. This information can be used in setting prices, marketing and selecting quality for the different markets.

Vol 18 - Paper 2 (pp.18-29)

Trends in Investment in Agricultural R&D in Australia and its Potential Contribution to Productivity

John Mullen

Within the Australian economy, productivity growth in agriculture, fisheries and forestry sector has been around 3 times that in the economy as a whole (ABS, 2007) and has markedly outpaced the decline in the terms of trade facing farmers over the past 15 years. International comparisons are difficult to make but the evidence available suggests that Australian agriculture has performed well against the agricultural sectors of most other counties (Mullen, 2007, Mullen and Crean, 2007, Mullen, 2009).The objectives of this paper are to briefly review trends in productivity growth and then examine recent trends in investment in R&D both in terms of total investment, how it is being funded and where it is being undertaken. Scenarios are developed which assess the potential contribution of domestic investment in R&D to productivity growth in agriculture. This paper updates a paper by Mullen and Orr (2007).

Vol 18 - Paper 3 (pp.30-42)

Classifying public benefit in Australian agricultural research

Simpson, S and Dargusch, P

Australia has a unique system of funding agricultural research and development that involves the establishment of Corporations to collect and manage statutory industry levies that are matched by public investment.This article considers the historical development and reasons for funding agricultural research using the RDC model, and develops some tools that can be used to classify benefits, beneficiaries, source of investment and portfolio characteristics to demonstrate that the goals of public investment are being fulfilled. These tools can also be used as management tools in priority setting and strategic planning at the portfolio and program level – but importantly are best applied as partial inputs under a more comprehensive evaluation or priority setting approach.

Vol 18 - Paper 4 (pp.43-65)

Measuring Beef Cattle Efficiency in Australian Feedlots: Applying Technical Efficiency and Productivity Analysis Methods

Euan Fleming, Pauline Fleming, Garry Griffith and David Johnston

Euan Fleming is a Professor in the School of Business, Economics and Public Policy at the University of New England; Pauline Fleming is a Lecturer in the School of Business, Economics and Public Policy at the University of New England; Garry Griffith is a Principal Research Scientist in the NSW Department of Primary Industries at Armidale and Adjunct Professor in the School of Business, Economics and Public Policy at the University of New England; and David Johnston is a Senior Scientist in the Animal Genetics and Breeding Unit, University of New England.

Vol 18 - Paper 5 (pp.66-84)

Building Producer Loyalty in Malaysia's Fresh Milk Supply Chain

Bonaventure Boniface, Amos Gyau, Randy Stringer and Wendy Umberger

The paper presents results from a survey of 133 dairy producers in Malaysia, and identifies how Malaysian milk buyers can build a loyal customer base with their suppliers as a means to secure uninterrupted milk supplies. A structural equation model was conducted to test the conceptual model using AMOS 17.0 software. The results show that whereas timely and collaborative communication, price satisfaction and cultural fit influence positively suppliers’ contractual and competence trust in their buyers, power dependency negatively influences competence trust. Furthermore, suppliers’ trust in their buyers will eventually lead to loyalty. The principal implication is that milk processors and other buyers need to engage in collaborative communication with the dairy farmers to ensure continuous and uninterrupted supply.

This paper will address the total and capital return performance of a major agricultural area and compare these returns on the basis of both location of land and land use. The comparison will be used to determine if location or actual land use has a greater influence on rural property capital returns. This performance analysis is based on over 35,000 rural sales transactions. These transactions cover all market based rural property transactions in New South Wales, Australia for the period January 1990 to December 2008. Correlation analysis and investment performance analysis has also been carried out to determine the possible relationships between location and land use and subsequent changes in rural land capital values.

Vol 18 - Paper 7 (pp.103 - 135)

Rising Demand for Livestock Products in India:

Nature, Patterns and Implication

Vasant P. Ghandi and Zhang-Yue Zhou

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With a large population and recent growth in consumer income, India’s demand for food has increased. However, research continues to emphasise basic foods, and the demand for livestock products remains poorly understood. This study examines the demand for livestock products by Indian consumers using national sample survey data. The study shows that there has been a rapid rise in the demand for livestock products in India. Within the livestock products group, milk and milk products hold the dominant share. Our analysis further suggests that India’s rapid rise in the demand for livestock products may far outpace its domestic supply. Implications are discussed. 

Vol 18 - Paper 8 (pp.136 - 151)

Old Model, New Problem: when should you update a model and what happens when you do?


G.R. Griffith, Bill Malcolm, S.W. Mounter and H. Slattery


A couple of months ago the phone rings:

BM: G’day mate…(then follows light-hearted bagging of various cricket teams, football teams, state bureaucrats, university administrators, etc; catching up on mates and family; red wine finds; etc)…(then a bit on AAR editorial issues)…(then) listen mate I’ve got this final year student Henry looking for a project and I thought we might be able to do something extra with Amy’s survey on that pig stuff.

GG: do you mean the willingness to pay for low cholesterol pork?

Consumers of pig meat end up being the winners from either cost saving technology at the farm level or new product development or advertising campaigns at the retail level. Even for new technology implemented at the farm level, producers only receive about 20 per cent of the total benefits.

This is the third of a series of papers examining the potential economic effects from the introduction of a hypothetical low cholesterol pork product into the Australian market. Here, a newly updated pig meat model reported by Griffith et al. (2010) is used to model the industry wide impacts of the Bellhouse et al. (2010) survey results on consumer willingness to pay for this new pork product. Six different scenarios are examined that are combinations of a 10, 20 or 30 per cent increase in consumer demand, with and without a 10 per cent increase in the costs of producing the more valuable pork. The simulation results for the various scenarios indicate total annual industry benefits of some $450m for an increase in aggregate willingness to pay of 30 per cent and no cost increase, down to $88m for an increase in aggregate willingness to pay of 10 per cent and a 10 per cent cost increase. Australian consumers receive about 80 per cent of total benefits, pork producers receive about 7-8 per cent and all other market participants together receive about 12-13 per cent. These values provide a guide to the size of the annual investment that could be justified by pork producers to produce a pig that is low in cholesterol.

Vol 18 - Paper 10 (pp.161- 192)

Australian consumers’ willingness to pay and willingness to purchase a hypothetical lower cholesterol pork product

Amy Bellhouse, Bill Malcolm, Garry Griffith and Frank Dunshea

This study investigated whether there would be an increase in consumer willingness to pay and purchase if reduced cholesterol pork was introduced to the Australian market. A stated choice analysis was used, with the following questions addressed. How are current purchases of fresh pork affected by concerns about cholesterol content?  What financial premium, if any, would consumers place on reduced cholesterol pork?  Would consumers buy more pork if a low cholesterol option were available?  Is there a group of consumers, such as those with high cholesterol, who have an increased willingness to pay for or purchase reduced cholesterol pork when compared to consumers without this health problem? Results from this study indicated that at present the majority of consumers are relatively unconcerned about the cholesterol content of fresh pork and that there is a minimal effect of such concerns on fresh pork purchases. The results also predicted a significant financial premium for the reduced cholesterol product at the retail level, with increased willingness to pay for and consume reduced cholesterol pork by the average pork consuming family. However, as these results are the product of a stated choice analysis and not a revealed preference study, and therefore simply reasonable expectations, it is likely that the reported increase in demand in both quantity and price by potential consumers is overstated to some extent.

Vol 18 - Paper 11 (pp.193- 214)

Weather and Wethers: effects of wind, temperature and rain on sheep feedlot production

J. M. Pluske, A.M. Slade and P.E. Vercoe

The purpose of this paper was to explore the capacity of a bioeconomic model to evaluate biological and economic implications of thermal stress on feedlot lamb production. It was expected that strategies aimed at reducing thermal stress of lambs would lead to improvements in growth rates and feed conversion efficiency, and subsequent economic net benefits. The findings from the model indicated that reducing thermal stress on the lamb all had positive effects on growth rates. Treatments involving shelter and increased fleece length reduced the energy needed to maintain a constant body temperature leading to higher energy availability for growth. Simulating near ideal environmental conditions by providing shelter in the feedlot and having fleece length at 40 mm enabled an almost constant growth rate throughout the year indicating that thermal stress was almost completely alleviated. Based on the assumptions used for this paper and depending on fleece length, it would be rational for a producer with an annual turnover of 5,000 feedlot sheep to spend between $29,000 and $53,000 on a shelter.

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