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Land and Environment : Agribusiness Assoc. of Australia

Australasian Agribusiness Review
Volume 21 - 2013
ISSN 1442-6951

Volume 21 - 2013 - Paper 1 (pp.1 - 14)

Quantifying the extent to which enterprise mix diversification can mitigate economic risk in rainfed agriculture

John M. Kandulu

The extent to which enterprise mix diversification can mitigate climate induced variability in long term net returns from rainfed agriculture is assessed in this paper. Building on APSIM modelling, the assessment applies Monte Carlo simulation, probability theory, and finance techniques, to assess the potential for enterprise mix diversification to mitigate climate-induced variability in long term economic returns from rainfed agriculture.

The decision to switch from a non-diversified agricultural enterprise with the highest expected return to a diversified agricultural enterprise consisting of a mix of agricultural enterprises was analysed.

Correlation analysis showed that yields were not perfectly correlated (i.e. are less than 1) indicating that changes in climate variables cause non-proportional impacts on yields. Results show that diversification can reduce the expected net returns by up to A$96ha-1 and reduce the maximum probable net gain by up to A$602ha-1. 

Volume 21 - 2013 - Paper 2 (pp. 15 - 44)


Recent Food Consumption Trends in China and Trade Implications to 2020

Li-Juan Cao , Wei-Ming Tian , Ji-Min Wang , Bill Malcolm , Hong-Bo Liu , and Zhang-Yue Zhou

China has experienced rapid economic growth in the past three decades. This has resulted in a sustained increase in consumer income, which in turn has led to changes in the patterns and quantities of food consumed. In this study recent trends in food consumption in China over 2000-2010 are examined. Demand has been increasing for a diverse range of foods and for foods of higher quality than traditionally has been supplied. Constrained by limited and sometimes degraded agricultural resources, China will be unable to meet fully the increasing, and changing, demand for foods. However, while the food import needs of China will be significant in the longer term, the evidence of this study suggests the food import needs of China until 2020 will be relatively small. Realistic, though relatively constrained, prospects for increased food trade between Australia and China are outlined.

Volume 21 - 2013 - Paper 3 (pp. 45 - 59)


Cattle breeding in Northern Australia: Revealing how consumers react to alternative technologies

Jo Pluske, Michael Burton, Dan Rigby and Phil Vercoe

In Australia, Bos taurus cattle breeds produce high quality meat, superior in taste and tenderness characteristics. Nevertheless, these breeds do not thrive in the Northern Australian environment. Stem cell transplant technologies, that make use of adult stem cells harvested from a Bos Taurus bull and the subsequent allogeneic transplantation of testicular cells into a Bos indicus bull, could improve northern beef cattle breeding programs by facilitating crossbreeding via natural service. Focus groups were used in this study to explore consumer reaction to specific reproduction technologies and the implications for buying intentions. Findings from these focus groups were then used for development of choice experiment surveys. Survey results suggested that while some consumers indicated that they were not concerned about the specified stem cell technology being utilized in beef production, generally people were willing to pay to avoid eating steak that had been produced in this way. Moreover, it appears that they would pay more to avoid this steak when specific key words providing additional information about the technology (stem cells; radiotherapy) were used to describe the steak being valued. Even so, the wording of the technology description did not have a significant effect on this value. The relatively large discount values required by respondents to purchase steaks produced using stem cell technology may be slightly lower depending on whether consumers have a genuine aversion to the use of artificial insemination. It is beyond the scope of this study to explore the stability of preference estimates from a discrete choice experiment but from a theoretical perspective, it would be worthwhile.

Volume 21 - 2013 - Paper 4 (pp. 60 - 82)

Improving access to credit for smallholder sweet potato farmers in Papua New Guinea: A participatory action research approach*

Hui-Shung (Christie) Chang, Eleo Dowa, Regina Malie, Conrad Anton, Iga Anamo, Peter Dekene, and Debra Bubun

A participatory action research (PAR) approach was used to address the priority issue of lack of access to credit identified by smallholder sweet potato farmers in Papua New Guinea. The main lesson learned was that PAR, when applied to international agricultural research projects, has the benefit of stakeholders identifying local problems and locally appropriate solutions, but its drawbacks include the lack of capacity and support services on the ground. To improve outcomes, more resources are required to build extension and development capacities on the ground.


Volume 21 - 2013 - Paper 5 (pp. 83 - 100)

How Did We Go? Revisiting the Ex Ante Economic Impact Assessment of the CRC for Beef Genetic Technologies, as at the Cessation of Funding


G.R. Griffith, K.S. Pollock and H.M. Burrow

In re-assessing the original estimates of economic benefit as at the end of the CRC investment phase, the most prominent issues to consider were the potential total productivity growth available to the beef and cattle industries as a result of CRC technologies, how each research program contributed to the overall productivity gain, the level of adoption of the technologies by industry and the time lag of this adoption. This paper has reviewed the impact of adjusting these variables on the total economic benefit of the CRC to the Australian beef and cattle industry, given information available in June 2012. A reduction in potential productivity gains (due primarily to slower-than-anticipated delivery of new genomic technologies that also impacted on industry adoption times) had the largest impact on benefit to industry, followed by a reduction in the expected maximum level of adoption. Research program components of growth, R&D lags and adoption lags had more marginal impacts.


Volume 21 - 2013 - Paper 6 (pp. 101-120)

Wheat and corn price skewness and volatility:

Risk management implications for farmers and end users

J. Williams

Little has been documented as to how price skewness and volatility can influence decision making regarding agribusiness risk taking and managing risk in a dynamic environment. Price volatility introduces opportunities for farmers and end users, but it also introduces new risks, which can then require management. Volatility-skewness matrices are developed using CME wheat and corn prices to tactically determine when pricing and hedging might be more successful for farmers and end users. Volatility and skewness may still favour the end user, but the matrices changed considerably during 2007 to 2012. Farmers need realistic pricing targets and hedging triggers in price risk management decision making with timing becoming increasingly important, but production-product risk still remains an important consideration, as does basis and currency risk for international transactions and hedging.


Volume 21 - 2013 - Paper 7 (pp.121-160)

Implications of a Trilateral FTA between China, Japan and Korea for Australian Bilateral FTAs with China, Japan and Korea

Wei Si, JooHo Song, Bill Malcolm and Zhang-Yue Zhou

After many years and many rounds of negotiations seeking bilateral free trade agreements (FTA) between Australia and China, Japan and Korea, progress has been minimal because they cannot agree on access to markets for agricultural products. To add to the complications and lack of progress made in these negotiations, China, Japan and Korea have started negotiating a trilateral FTA. If a China-Japan-Korea Trilateral FTA is struck, it could affect Australian negotiation of bilateral FTAs with each of these countries, with consequential implications for Australian agricultural exports.These concerns are the main focus of this paper.

However when the comparative advantages of agricultural production and agricultural trade complementarities of these countries are examined, it seems that if a China-Japan-Korea trilateral FTA is struck, it ought to not further complicate Australia’s bilateral FTA negotiations. A trilateral FTA between China, Japan and Korea would have limited negative impacts on Australia’s agricultural exports to these countries. Successfully concluding bilateral FTAs with each of China, Japan and Korea remains a formidable challenge because agreement on agricultural trade negotiations remains elusive. In future, Australia’s FTA negotiators may need to be even more pragmatic, strategic and flexible in their approach to agricultural trade negotiations.

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