Australian Agribusiness Perspectives: 2006

Paper 70, September 12th 2006

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Depreciation rates for Australian tractors and headers: is machinery depreciation a fixed or variable cost?

Peter R Tozer

Abstract

Seven different remaining value functions for tractors and harvesters were estimated using data from advertised prices for used farm equipment.  The generalised Box-Cox model was used to nest six of the seven functions.  The more complex Box-Cox function explained the data no better than simpler models such as the linear, sum-of-the-year’s-digits, or double-square root models.  The simpler functions were easier to manipulate to estimate depreciation rates and costs.  There were up to four components of depreciation, drive-away, brand, age, and use related, depending on functional form.  Drive-away depreciation is the immediate loss in value of a machine due to purchase, in some models this depreciation cost was higher than either age or use related depreciation costs.  When drive-away depreciation was treated as a separate cost to age and use depreciation, or when there was no drive-away depreciation due to functional form, the age to use depreciation cost ratios were in the range of 1.5-2 to 1.  Hence, tractor and header depreciation is a combination of fixed and variable depreciation.

Paper 69, September 12th 2006

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Conservation Crop Farming: A Farm Management Perspective

Paul Lewis, Bill Malcolm and Graham Steed

This study is about growing broad-area crops in S.E Australia. It is about the many choices of methods crop farmers have for growing their crops. The choice of the best cropping system to use depends on a comples mix of factors.....

Paper 68, June 13th 2006

Evaluating the Potential of VineAccess to Improve Supply Chain Efficiency in Australian Viticulture and Perennial Horticulture

Glenn Ronan, Stephen Blacketer and Lyndal Sterenberg

Efficiency is….

“a condition in which, given the state of technology and information costs, the market has the lowest production and transaction costs attainable.”    Douglass C. North (2005), p15

Abstract

Several years ago some leading winemakers in the Australian wine industry became alert to the need for a more efficient information and communication system to aid management of their supply chains in the sourcing of wine grapes and the satisfaction of retail requirements. Pressures for change included the increasing competitiveness of the international market, reflected in concentrating industry supply chains, and increasing food safety compliance requirements.

An innovative and integrated information and communication system, VineAccess, was developed in South Australia for Australian and international wineries in response to these pressures. Part of the evaluation of VineAccess included a survey of some of Australia’s leading wineries about the production and transaction cost savings in the 2004-05 vintage following adoption of the system. Winemakers indicated that the ICT-based system led to substantial savings compared to the traditional system of transacting business between winemakers and winegrape growers in the Australian wine industry as well as satisfying food safety requirements more efficiently. A benefit:cost ratio of 7.3, imputed from the survey, extrapolates to about $4 million per annum for the Australian industry. The potential for the existing modules in VineAccess to evolve and dovetail with other ICT systems in the chain suggests that the imputed benefits may be quickly eclipsed when considered in the whole-of-chain context of global competitors in an international market. 

The paper concludes with a preliminary observation about the potential for development and application of VineAccess by other names in in other perennial horticulture industries. The embedding of ICT into wine and agri-food supply chains is also a promising source for intelligence about chain performance and international competitiveness for industry organizations and governments.