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Estimated Annual Value of a Forage Cultivar Selection Decision Tool for New Zealand Sheep and Beef Farmers

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  • Ludemann, Cameron

Abstract

In 2011, the New Zealand dairy industry developed a forage cultivar selection decision support tool called the DairyNZ Forage Value Index (FVI). Since then, there has been considerable interest shown in development of a FVI-type cultivar evaluation system for the New Zealand sheep and beef industry. The New Zealand Pastoral Industry Forage Strategy for example recommended actions to develop a FVI for the sheep and beef industry and to have closer collaboration between the sheep and beef industry, the dairy industry and the New Zealand Plant Breeding and Research Association. This is unsurprising since the dairy industry estimated the value of the benefits of the DairyNZ FVI as approximately $NZ160 million each year. The present study provides a cost benefit analysis of a forage cultivar selection decision support tool (DST) across the New Zealand sheep and beef industry. The analysis was performed using a nitrogen fertiliser/barley replacement cost method to estimate the value of forage dry matter. The value of sheep and beef farmers choosing 5 star rated cultivars of perennial ryegrass compared to 3 or 1 star rated cultivars was extrapolated to the eight Beef + Lamb NZ Farm Classes and to the whole sheep and beef industry. Multiple scenarios were examined to assess the net present value and modified internal rate of return of investment in the DST. These scenarios reflected differences in assumed rates of adoption over a 10-year period and differences in implementation costs. The modified internal rate of return over a 10-year period was estimated to range between 27 and 62 per cent depending on whether an annual cost of the DST was assumed to be $NZ0.5 million or $NZ1 million under the adoption scenarios considered. The NPV ranged between $NZ6 million and $NZ45 million. This highlights the potential value of improved farmer selection of ryegrass cultivars through a cultivar selection DST in a sheep and beef context in New Zealand.

Suggested Citation

  • Ludemann, Cameron, 2022. "Estimated Annual Value of a Forage Cultivar Selection Decision Tool for New Zealand Sheep and Beef Farmers," AFBM Journal, Australasian Farm Business Management Network, vol. 19(1), April.
    • Handle: RePEc:ags:afbmau:333927
    DOI: 10.22004/ag.econ.333927
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    References listed on IDEAS

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    1. Terrance M. Hurley & Xudong Rao & Philip G. Pardey, 2014. "Re-examining the Reported Rates of Return to Food and Agricultural Research and Development," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(5), pages 1492-1504.
    2. Lowell S. Hardin & Glenn L. Johnson, 1955. "Economics of Forage Evaluation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 37(5), pages 1457-1459.
    3. Ludemann, C.I. & Cullen, B.R. & Malcolm, Bill & Smith, K.F., 2013. "Economic values of changes in energy concentration of pasture in contrasting temperate dairy regions in Australia," AFBM Journal, Australasian Farm Business Management Network, vol. 10, pages 1-15.
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    5. Montes de Oca Munguia, Oscar & Pannell, David J. & Llewellyn, Rick & Stahlmann-Brown, Philip, 2021. "Adoption pathway analysis: Representing the dynamics and diversity of adoption for agricultural practices," Agricultural Systems, Elsevier, vol. 191(C).
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