School of Agriculture, Food and Ecosystem Sciences - Theses
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ItemTactical choices of medium and high input dairy systems( 2013)In the last decade dairy farms in northern Victoria were exposed to increased volatility of input and output prices as well as variable climate conditions that include a big dry period. Two representative case study pasture based dairy farms of ‘medium’ and ‘high’ input were selected to examine the production and financial outcomes that arise from a multi-year sequence of tactical farm management decisions. The approach of the research had several key aspects; case studies were selected as the method of investigation, on-farm interviews of the case study farmers were carried out and their financial and physical history was collected. A stochastic multiyear whole-farm biophysical and economic spreadsheet model was developed to analyse the physical and economical performance of the case study farms. The study found that both farming systems had different optimum choices available year to year to increase profitability. In many of the scenarios tested, the decision option with the highest growth in equity compared to other options tested did not always result in the highest net cash flow. The decision maker would need to evaluate the net cash flow implications of their decisions to determine if they are worthwhile choices. For both farms, in years with greater upside, there was a greater range of outcomes between decisions compared to years with poor financial outcomes. This suggests farm managers cannot get too relaxed and complacent in the good years and need to ensure they are gaining the benefits of the good year as well as minimizing losses in the poor years.
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ItemProfitability and risk evaluation of novel perennial pasture systems for livestock producers in the high rainfall zone( 2011)Increased awareness by farmers, scientists and farm advisors of the potential to expand the role of perennial pastures in livestock grazing systems has lead to the development and evaluation of new perennial pasture systems for livestock production in the high rainfall zone of south west Victoria. Increased stock carrying capacity per hectare compared to current common practice has been reported. In this study, the question investigated is: ‘Does investing in these new perennial pasture systems makes economic and financial sense considering risk for livestock graziers?’. A representative farm case study approach has been used to investigate the economic and financial merit, and the risk profile, of investing in either of two perennial pasture systems compared to current common practice. The representative farm was based on current common practice in the high rainfall zone in south west Victoria, running predominantly sheep producing wool and prime lambs, with a smaller beef enterprise. A partial discounted cash flow budget with a whole farm perspective was constructed to analyse investing in the new pasture systems on a 100 hectare portion of the farm. Investment in the perennial pasture systems was analysed over 12 years. The analysis investigated the effect of both seasonal and price variability on the performance of the new perennial pasture systems over time at a variety of stocking rates. The impact of establishment failure was also examined. The output of the model included the economic measures of net present value and internal rate of return, and the discounted net cash flow enabled financial evaluation. Size and timing of peak debt, time taken to return to positive net cash flows and loan servicing ability were analysed. The risk profile of the alternative future options was established using mean-variance efficiency analysis. Results from the analysis for the 100 hectare portion of the farm showed that, in general, both perennial pasture investment options promised returns on the capital invested of around 20%, which was greater than the opportunity cost of capital. The extra annual net cash flows generate was sufficient to service a 12 year loan under the conditions tested. The good performance of the new perennial pasture systems compared to the existing ‘Base Case’ was largely because supplementary feed requirements per head were reduced during the Summer/Autumn feed gap in most years and increased production per effective hectare that allowed higher stocking levels. Establishment failure substantially reduced the potential returns from the perennial pasture investment options, with the greatest effect seen at lower stocking rates. Whilst an advantage of the perennial pasture investment options was their ability to increase stocking rates per hectare and hence increase annual net cash flows, the analysis showed that the increase in intensification of the system also increased the variability of net cash flows over time. This is important information for producers considering such investments as the extra benefit of increased income per hectare comes with an associated increase in risk. It is up to the individual decision maker to evaluate this information from their own perspective on risk and returns. The results and conclusions drawn from this analysis are specific to the analysis conditions set. Small changes in the assumptions used often had large effects on the performance of the new perennial pasture systems over time. This analysis investigated the investment for a small portion of the total farm area, and larger areas being developed for pasture at any time would have greater implications for the farm balance sheet. Further work is required if more substantial proportions of the farm area is to be transformed to utilise these perennial pasture systems.
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ItemProfitable irrigated dairy farming systems: exploring efficiencies in feeding systems with decreasing water availability( 2010)Changes in climate and water policy, and increasing competition between urban, environmental, amenity and consumptive uses are expected to decrease the amount and increase the variability of water allocations to irrigated dairy farmers in northern Victoria. This thesis examines whether changing to more efficient feeding systems and increasing milk production per cow and/or per farm may enable some dairy businesses overcome the impacts of these changes.