School of Agriculture, Food and Ecosystem Sciences - Theses

Permanent URI for this collection

Now showing 1 - 1 of 1

Economic analysis of ameliorating subsoil constraints using subsoil manure in a cropping system

Henty, Sam James ( 2019)

To date, no studies have accounted for the effects of the yield and/or price risks that will occur over a run of years on the profitability of investing in ameliorating subsoil constraints within a cropping system. While addressing subsoil constraints is likely to increase grain yield, the key economic question for a grower is whether the income from extra grain produced covers the extra costs of ameliorating the subsoil. The focus of this thesis was the likely profit and risk of investing in ameliorating subsoil constraints. Investment costs and annual activity gross margins for a set rotation were used to estimate the economic performance of subsoil amelioration. The marginal change to the gross margin as a result of subsoil amelioration was assessed using partial discounted cashflow budgets. Risk analysis was used to assess the effect of price and yield variability on the mean and variance of outcomes from an investment in ameliorating subsoil constraints in cropping. This study shows an investment in subsoil amelioration was more profitable on average than an alternative investment earning 6% (real). The size of the expected extra yield benefits and longevity of these benefits are the most important factors for a grower to consider when assessing the likely merit (return and risk) of investing in subsoil amelioration in their own situations.