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How South Australian Broadacre Farms Increased Productivity From THIRTY YEARS OF CHANGE IN SOUTH AUSTRALIAN BROADACRE AGRICULTURE: TREND, YIELD AND PRODUCTIVITY ANALYSES OF INDUSTRY STATISTICS FROM 1977 TO 2006 Ian Black and Chris Dyson January 2009 SARDI Publication Number F2009/000182-1 SARDI Research Report Series Number 340 ISBN: 978-1-921563-09-6 South Australian Research and Development Institute Plant Research Centre Gate 2b Hartley Grove URRBRAE SA 5064 Telephone: (08) 8303 9400 Facsimile: (08) 8303 9403 http://www.sardi.sa.gov.au This Publication may be cited as: Black, I.D. and Dyson, C.B. Thirty Years of Change in South Australian Broadacre Agriculture: Trend, Yield and Productivity Analyses of Industry Statistics from 1977 to 2006. South Australian Research and Development Institute, Adelaide, 79pp. SARDI Publication Number F2009/000182-1. South Australian Research and Development Institute Plant Research Centre Gate 2b Hartley Grove URRBRAE SA 5064 Telephone: (08) 8303 9400 Facsimile: (08) 8303 9403 http://www.sardi.sa.gov.au DISCLAIMER The authors warrant that they have taken all reasonable care in producing this report. The report has been through the SARDI internal review process, and has been formally approved for release by the Deputy Executive Director. Although all reasonable efforts have been made to ensure quality, SARDI does not warrant that the information in this report is free from errors or omissions. SARDI does not accept any liability for the contents of this report or for any consequences arising from its use or any reliance placed upon it. © 2009 SARDI This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the authors. Printed in Adelaide: 2009 SARDI Publication Number F2009/000182-1 SARDI Research Report Series Number 340 ISBN: 978-1-921563-09-6 Author(s): I.D. Black and C.B. Dyson Reviewers: G. Trengove and D. Stephenson Approved by: SARDI Deputy Executive Director Signed: Date: 25 March 2009 Distribution: Public Domain ii Thirty Years of Change in South Australian Broadacre Agriculture: Trend, Yield and Productivity Analyses of Industry Statistics from 1977 to 2006 Contents Map iv Tables iv Figures v Glossary of terms vii Abstract 1 1. Introduction 6 2. Data and Methods 11 2.1 Data sources 11 2.2 Choice of industry sectors for analysis 11 2.3 Estimates of quality improvements in outputs 12 2.4 Analysis of trends in the data 12 2.5 Statistical analysis of total factor productivity and cash costs 12 2.6 Indexes 15 2.7 Statistical analysis methodology and explanatory variables 16 2.8 Wheat yield increase analysis methodology and explanatory variables 18 3. Results and Discussion 20 3.1 Prices of outputs 20 3.2 Farm numbers and farm size 22 3.3 Revenue and production 26 3.4 Wheat and barley yields 29 3.5 Settled areas per ha stocking rates, net turnoff and wool production 32 3.6 Rates of change of selected inputs 35 • Fertiliser and agrichemicals per cropped ha 35 • Fertiliser per grazed ha 37 • Livestock materials per DSE in the settled areas 38 • Labour per ha in the settled areas 39 • Machinery in use per cropped ha and per DSE 40 • Paid advisory services per property 1989-2005 41 3.7 Property financial performance and family income 42 3.8 Productivity and cash cost statistical analyses 45 • Introduction 45 • The livestock properties 46 • The crop and crop-livestock properties 50 • The wheat-sheep and high rainfall zones 52 3.9 Possible adverse climate change and the recent run of poor seasons 55 4. Current and Future Broadacre Farming Evolution 61 5. Implications of these analyses for Research & Development 63 References 65 Appendix 1 67 iii Map 1 ABARE Zones of SA (411 = pastoral zone, 9 421 & 422 = wheat-sheep zone, 431 = high rainfall zone) Tables 1 SA property numbers and summary of average sizes 23 2 Farm management drivers of SA wheat yield improvement 31 3 Estimates of contributions to increased SA wheat yield efficiency 32 4 Quality adjusted livestock per grazed ha averages 34 and annual rate of change measures 5 Livestock properties econometric analyses results 48 6 Mixed crop-livestock and crop properties econometric analyses results 51 7 Wheat-sheep zone and high rainfall zone econometric analyses results 53 8 ABARE commodity price indices 2002-2003 to 2008-2009 61 9 Industry R&D intensity, TFP growth and proportion from R&D 64 iv Figures 1 Australian farmers’ terms of trade 7 2 Australian farmers’ TOT and SA broadacre TFP increase 7 3 Technical change, price change and input substitution 13 4 Technical change, price change and output substitution 14 5 Trend livestock and wool prices 21 6 Trend grains prices 21 7 Fitted trends in property numbers and SA broadacre farm revenue 22 8 Fitted trend of total value of major outputs from SA broadacre 26 agriculture 9 Fitted trends of proportions of SA broadacre farm revenue from 27 major outputs 10 Fitted trends of SA broadacre production 28 11 Other grains production in SA 28 12 SA wheat and barley yields 29 13 SA settled areas April-October rainfall 30 14 Settled areas quality adjusted wool production, stocking rate 33 and net turnoff per grazed ha 15 Lamb and total slaughterings as a percentage of the SA sheep 34 population 16 Indexes of quantities of fertiliser and agrichemicals per cropped ha 35 on crop specialist properties 17 Proportion of crop specialist properties in crop plus mixed 36 crop-livestock total 18 Indexes of quantity of fertiliser and livestock revenue ($2005) 38 per ha on sheep and sheep-beef properties 19 Quantity index of livestock materials per DSE in the settled areas 39 20 Quantity index of labour per ha in the settled areas 40 21 Indexes of machinery in use per cropped ha on crop properties 41 and per DSE on sheep and sheep-beef properties 22 Cost per broadacre farm of advisory services in SA 41 23 HRZ equity and return 42 24 WSZ equity and return 42 25 Farm rate of return (income and capital gain) 43 26 HRZ average property and family income 44 27 WSZ average property and family income 44 28 Fitted TFP on crop and crop-livestock properties 50 29 Mean of Minnipa and Turretfield APSIM wheat yields, 55 10 mm sowing rule, 1967-2007 30 Minnipa APSIM predicted potential wheat yields, 56 10 mm sowing rule 31 Turretfield APSIM predicted potential wheat yields, 57 10 mm sowing rule 32 Mean of Minnipa and Turretfield APSIM wheat yield predictions, 58 10 mm sowing rule 33 Mean of 3rd-6th order curve fits to the 27 May, 10 mm, 15 June 58 sowing rules APSIM wheat yield predictions at Minnipa and Turretfield 34 Mean of APSIM Minnipa and Turretfield wheat yield predictions, 59 10 mm sowing rule, final 10 years randomised v 35 Mean of APSIM Minnipa and Turretfield wheat yield predictions, 60 10 mm sowing rule, mean of final 10 years actual and randomised vi Glossary of Terms ABARE Australian Bureau of Agricultural and Resource Economics ABS Australian Bureau of Statistics APSIM Agricultural Production Systems sIMulator CPI consumer price index $2005 value expressed in terms of the value of the Australian dollar in 2005, using the Adelaide consumer price index DSE dry sheep equivalent HRZ the ABARE SA high rainfall zone IFP input factor productivity K potassium MLA Meat and Livestock Australia N nitrogen OFP output factor productivity OLS “ordinary least squares” statistical analysis Oz-Wheat A program that predicts region crop area and production based on historical records, APSIM predictions and using 1993 crop growing technology P phosphorus PISA Primary Industries South Australia PIRSA Primary Industries and Resources South Australia R&D research and development R&E research and extension RD&E research, development and extension SA South Australia(n) SARDI South Australian Research and Development Institute Settled areas the ABARE SA HRZ and WSZ TFP total factor productivity TOT terms of trade WSZ the ABARE SA wheat-sheep zone These terms are defined in the text at first use only, except where used in headings. vii Abstract This report • presents a review of important trends in the Australian Bureau of Agricultural and Resource Economics (ABARE) data on South Australian (SA) broadacre agriculture, concentrating on the settled areas (the ABARE wheat-sheep zone and the high rainfall zone) for the period 1977 to 20051, 2, • estimates total factor productivity (TFP) increases in various sectors of SA broadacre agriculture, • provides a detailed analysis of the determinants of wheat yield, • provides statistical analysis of the elements of input factor productivity (IFP), output factor productivity (OFP) and TFP in the sectors examined, as well as cash costs, in order to determine which factors were most influential in productivity growth, • discusses the impact of the dry seasons in the last three years (2006-2008) on the evolution of broadacre farming, as well as the future evolution of farming, and • discusses the implications of the results, particularly in relation to R&D management. Prices for farm outputs In terms of prices indexed to a particular year, in this case 2005, trend analysis shows that within the major commodities wool prices have fallen the most from 1977-2005 (45 percent). They are also the most volatile. Sheep and beef prices are now (2005- 2008) approximately the same as they were in 1977 in real terms. They started to trend upwards from around 1995. At their worst in the early 1990s sheep prices were 60 percent lower than in 1977 and beef prices 20 percent lower. In 2005 wheat prices were 40 percent lower than in 1977 in real terms and barley prices 25 percent lower.
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