Volume 9 - 2001
or the Editors
Returns from New Technologies in the Australian Beef Industry:
On-farm Research versus Off-farm Research
Xueyan Zhao - Lecturer, School
of Economics, University of Adelaide, Garry Griffith - Principal Research
Scientists, NSW Agriculture, Armidale and John Mullen Principal Research
Scientists, NSW Agriculture, Orange
The issue of the relative returns to farmers from on-farm research versus
off-farm research is examined using a multi-sectoral equilibrium
displacement model of the Australian beef industry. Total economic surplus
changes and their distributions among various industry groups resulting from
1% cost reductions in various farm sectors (weaner production, cattle
backgrounding and grass-finishing) and off-farm sectors (feedlotting,
processing, and domestic and export marketing) are estimated. The results
are consistent with previous studies in showing that in general, the share
of total benefits to farmers is larger from on-farm research than from
off-farm research. The exception is the export marketing sector. The net
returns from the different cost reduction scenarios depend on the costs of
February 6, 2001
Trends in New Zealand Agricultural Productivity
Forbes, Ministry of Agriculture, Wellington and Robin Johnson, and
This paper discusses trends in New Zealand agricultural productivity at the
farm level since 1972. Total input and factor input measures of productivity
are derived and discussed. The method is based on Tornqvist (1936) index
numbers which weight changes in the output and input mix as an average
between base year weights and current year weights. Comparisons are made
with base year weighting systems (Laspeyre Index Numbers) that are derived
from Statistics New Zealand (SNZ) data sets available at the time of
analysis. However, from September 2000 quarter, SNZ have adopted a chain
link system for their national accounts.
It is clear that resources will move out of an industry if relative returns
to those resources are not maintained. In agriculture, this involves the
inputs that producers buy from elsewhere, the land and capital used for
productive purposes, and the producer’s (and family’s) own labour.
March 7, 2001
Economic Evaluation of Interstate Quarantine Protocols for Mangoes Entering
David Cook - Ph.D.
student - University of Western Australia
With appropriate strategies in place the risk posed to domestic
production systems from exotic pests and diseases is reduced.
This often means importers of agricultural commodities are
effectively taxed, with negative effects on consumer welfare.
Hence, analysis of quarantine policy decisions involves a comparison
of expected production gains against social welfare loss. Given the large
variety of agricultural industries and the virtually endless list of exotic
pests posing a risk to domestic industries, there is a continuum of cases of
this nature. In some instances
the effects of quarantine policies will be felt mainly by producers, while
in others it may be consumers, or a blend of the two.
In the case of the mango industry in WA, both producers and consumers
are affected. A quantitative
assessment of the benefits and costs of Agriculture Western Australia’s
import clearance activities governing mango importation is provided here in
which the break-even pest damage avoided through quarantine is emphasised,
rather than the expected level of damage should pests enter.
Resistance and the Decision to Conserve the Herbicide Resource: Review
S. Llewellynab, Robert K. Lindnera, David J. Pannella
& Stephen B. Powlesb
& Resource Economics, Western Australian Herbicide Resistance
bFaculty of Agriculture, University of Western Australia
The demonstrated ability of major cropping weeds to evolve resistance to
most major herbicides threatens the sustainability of herbicide-dependent
weed management systems. In Australia, the rapidly increasing
herbicide resistance problem now presents a need to reassess herbicide use
as a resource management problem. Although resistance to some herbicides is already widespread,
most grain growers have several herbicide options still available to control
weed infestations in crops. These growers are being encouraged to
adopt practices that place less reliance on herbicides to delay, if not
prevent, the emergence of further herbicide resistance. It is argued
that this requires a form of resource conservation decision, the resource
being herbicide susceptibility. To maximise the net present value of
returns, growers need to select the optimal use of herbicide susceptibility
and the more costly alternative practices over time. This paper
integrates concepts of resource economics and the literature on the adoption
of innovations to contribute to a framework for weed management decisions
where herbicide resistance is developing. Implications for achieving
rapid and high level adoption of integrated weed management practices by
growers are discussed, given the requirement for perceived profitability in
a complex adoption context where high uncertainty is present.
Sector Business Opportunities in National Parks
of Environmental Management, Australian National
University, Canberra ACT.
Australia’s publicly owned and managed National Parks estate has been
largely quarantined from the micro-economic reforms that have been
instituted across most other sectors of the economy. The public good,
natural monopoly and equity arguments that are used to justify a continued
dominance by the public sector in the production and provision of Park
benefits are not watertight. Opening up the Parks sector to private sector
competition would afford efficiency improvements for the economy as well as
a range of private sector business opportunities, frequently in rural and
June 5th, 2001
Desk Selling by the NSW Grains Board: Public Benefit or Public Cost?
R.J. Farquharson, Senior
Economist, NSW Agriculture, Tamworth, NSW and G.R. Griffith, Principal
Research Scientist, NSW Agriculture, Armidale, NSW.
In this paper we report an economic analysis of the activities of the NSW
Grains Board over the period 1992 - 1998. This work was undertaken in
conjunction with a NSW State Government review of the legislation that
grants powers of vesting and single desk selling to the Board, powers that
can be considered as restrictions to competition. A net public benefit test
was used as the basis for the review. Economic trade theory, institutional
arrangements and econometric analysis were used to conceptualise conditions
necessary and sufficient for price discrimination to be present, and then
estimates were made of the dimensions of the social benefits and costs
associated with the price discrimination behaviour. The main results were
that for sales of malting barley the Board's activities were found to
deliver a net benefit to producers, but domestic prices were higher
resulting in a net overall social cost.
No net benefit to producers was found for feed barley or
A Public Accounts Committee of the NSW Parliament subsequently reported on
the collapse of the Board and identified a number of reasons, including a
conflict between the Board structure and incentives, industry change and a
high-growth strategy pursued in later years.
August 7th, 2001
of the Australian Beef Industry: A Break-even Analysis
A Kannapiran, Acting
Director / Senior Economist, Economics Branch, THS, NT Government / P.O.Box
: 40160 Casuarina NT 0811 Darwin Australia, Tel 61-08-89992540 Fax:
Profitability of the specialist beef production in the Australian Beef
Industry is undertaken using a break-even model. The results reveal that
during the financial years 1991-1996, the specialist beef producers were
operating above the break-even level in the states of South Australia and to
some extent in Queensland. They were operating marginally below the
profitable break-even level in the states of New South Wales and Tasmania.
In all other states and Northern Territory, they were facing losses and
financial crisis. However during the financial years 1993-1998, the beef
producers in Queensland, South Australia, Northern Territory and Western
Australia were able to cross the break-even level. Beef producers in all
other states continue to face financial crisis. In all the states and
Northern Territory beef producers were not able to fully recover the imputed
value of their family labour. The producers were underpaid entrepreneurs and
the industry is apparently surviving by trading on capital and or other
off-farm income. Increase in production and cost control measures are
possible options to improve the profitability. Although the findings provide
a view of financial profitability of the specialist beef production in
general, the situation may be different in specific cases. The study also
reveals the usefulness of the break-even model in management decision
September 13, 2001
to increase organic food sales: Results
from research based on market segmentation and product attributes
David Pearson, Lecturer in
Marketing, School of Marketing and Management, University of New England,
Armidale, NSW 2351 Australia. Tel (612) 6773 3222 Fax (612) 6773 3914 email@example.com
paper presents results from research on organic food buyers.
The empirical research is based on food buyer’s knowledge, market
segmentation and the attributes of organic fresh fruits and vegetables.
Almost all food buyers have an accurate knowledge of what organic means in
relation to food. The market segmentation leads to two opportunities to
increase sales of organic fresh fruits and vegetables.
First, promotion that is aimed at increasing sales to existing
organic buyers should emphasise the fact that this product is seen as being
more healthy and of a higher quality. Second, promotion that is aimed at selling organic fresh
fruits and vegetables to buyers who currently purchase conventional products
has to consider two issues: the inconvenience of many organic food outlets
and the higher price of many organic foods.
In situations where organic food is available at convenient outlets,
20% is the maximum price premium at which a significant number of buyers
will still consider purchasing it.
Hence, the results from this research suggest that increasing organic food
sales may best be achieved by promoting its positive health and quality
aspects and making it available in convenient retail outlets at a maximum
price premium of no more than 20%.
November 28, 2001
Generation Co-operatives for agricultural marketing and processing in
Australia: Principles, practicalities and a case study
and Ross Kingwellb
Western Australian Department of Agriculture & graduate student
University of Missouri
b Western Australian Department of Agriculture & University
of Western Australia
and a reduced role for statutory marketing pose new challenges for the farm
sector. Possible responses include transformation of co-operatives or
creation of new co-operative structures.
This paper outlines weaknesses in traditional marketing and
processing co-operatives. However,
principles embodied in new generation co-operatives are shown to potentially
overcome those weaknesses. An Australian case study, Tatura Milk Industries
Ltd, is described to illustrate the practicalities of incorporation of these
principles in co-operatives in Australia.
Issues surrounding new generation co-operatives in an Australian
context are discussed. The
paper concludes by suggesting a limited initial role for new generation
co-operatives in Australia.
of Externality Management Instruments in Marine Fisheries using Decision
Hughey*, Geoff Kerr*, Ross Cullen+, Ali Memon
* Environmental Management and Design Division, PO Box 84, Lincoln
University, New Zealand
+ Commerce Division, , PO Box 84, Lincoln
University, New Zealand.
Ph. 64 3 325 3807. Fax. 64 3 325 3847. Email firstname.lastname@example.org
New Zealand marine fishing activities create many types of environmental
externalities, which by law must be internalised. Selection of best
internalisation instruments can be aided by following a hierarchical
decision process, which first screens the universe of instruments against
implementation criteria to establish the feasible set.
Instruments in the feasible set can be evaluated against a range of
environmental, Treaty of Waitangi, economic, socio-cultural and management
criteria. This approach to selection can be formalised in decision support
software to provide a useful tool for fisheries management agencies.