More BGO’s (Blinding Glimpse of the Obvious)

The panel, headed by former Murray Darling Basin Authority board member George Warne, called for an end to predetermined flow rates.

A quote from this week’s Water Minister’s Brisbane meeting. In a massively variable rainfall/run-off environment, this should surely be a self evident truth. The establishment of a fixed Sustainable Diversion Limit (SDL) for each of the MDB’s main rivers has always been nonsensical.

ABARES has developed a model based on more than 30 years of data, which can identify the different effects of price and climate variability and other factors on Australian broadacre farms.

ABARES most recent analysis finds that changes in climate over the period 2000 to 2019 (relative to the period 1950 to 1999) have had a negative effect on the profitability of broadacre farms in Australia, including both cropping and livestock sectors.

It has now published simulation results showing the effects of climate variability on the profits of typical (average) Australian cropping, mixed and beef farms. These results show the effects of historical climate variability (1950 to 2019) on the profits of current farms, holding all other factors constant, including commodity prices, farm size, and management practices.

Controlling for non-climate factors, ABARES found that changes in climate since 2000 have reduced average annual broadacre farm profits by 22%, or around $18,600 per farm.

These effects have been most pronounced in the cropping sector, reducing average profits by 35%, or $70,900 for a typical cropping farm. This includes a negative effect on cropping revenue of 8% or around $82,000 per cropping farm.

 Nationally, this represents an average loss in revenue (gross value of production) for the broadacre cropping industry of around $1.1 billion a year (based on 2015–16 to 2017–18 production levels).

Cropping farms generally face greater climate risk than beef farms, while mixed-cropping livestock farms sit in-between these extremes. There is a trade-off between risk and return: cropping farms face higher risk but also generate higher average returns.

For a typical cropping farm, profit decreases from around $230,000 in a ‘typical year’, down to a loss of $125,000 in a ‘dry year’ (a 1 in 10 poor climate year). These losses in dry years are driven by large reductions in crop output, due to lower crop yields and area planted. Lower crop revenues (down by about $370,000) are slightly offset by reductions in input costs.

Australian average temperatures have increased by about 1oC since 1950. Recent decades have also seen a trend towards lower average winter season rainfall in the southwest and southeast of Australia. This drying trend is the largest sustained change in Australian rainfall since records began and it is linked with atmospheric changes associated with global warming, ABARES says.

Well how about that! We finally academically realise the fact that all Australian farmers know-price and rainfall variability impact bottom line results!

The changes in winter/spring rainfall patterns in the last 20 years perhaps should tell us something?

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