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Farming systems and their business strategies in south-western Australia: A decadal assessment of their profitability

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  • Kingwell, Ross
  • Islam, Nazrul
  • Xayavong, Vilaphonh

Abstract

This paper draws on a decadal dataset of 250 farms in south-western Australia. These farms, when categorised according to their type of farming system and business strategy, faced different trends in their terms of trade. Profitability measures of these farms for the period 2002/3 to 2011/12 were compared. Most farms, other than some highly crop dominant ones, applied a strategy of maintaining or increasing their cropping intensity and farm size over the decade. The strategy of a greater commitment to cropping was supported by cropping technologies and beneficial change in agronomic practices. Increased cropping was universally profitable among all types of farming systems, providing a statistically significant increase in operating surpluses. By contrast, irrespective of their underpinning farming system, farms which did not strategically increase their intensity of cropping generated statistically significant less returns to their business equity. By maintaining rather than increasing their cropping intensity these businesses failed to capture the operating surplus upside available from increased cropping. Overall, the results show that management of farming systems is not solely about tactics and flexibility. Strategic management can additionally influence the nature and profitability of farming systems.

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  • Kingwell, Ross & Islam, Nazrul & Xayavong, Vilaphonh, 2020. "Farming systems and their business strategies in south-western Australia: A decadal assessment of their profitability," Agricultural Systems, Elsevier, vol. 181(C).
    • Handle: RePEc:eee:agisys:v:181:y:2020:i:c:s0308521x18311880
    DOI: 10.1016/j.agsy.2020.102827
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    References listed on IDEAS

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    1. Garnaut,Ross, 2011. "The Garnaut Review 2011," Cambridge Books, Cambridge University Press, number 9781107691681, January.
    2. Lawes, R.A. & Kingwell, R.S., 2012. "A longitudinal examination of business performance indicators for drought-affected farms," Agricultural Systems, Elsevier, vol. 106(1), pages 94-101.
    3. A. Potgieter & H. Meinke & A. Doherty & V. Sadras & G. Hammer & S. Crimp & D. Rodriguez, 2013. "Spatial impact of projected changes in rainfall and temperature on wheat yields in Australia," Climatic Change, Springer, vol. 117(1), pages 163-179, March.
    4. Richard S. Gray & Ross Stephen Kingwell & Viktoriya Galushko & Katarzyna Bolek, 2017. "Intellectual Property Rights and Canadian Wheat Breeding for the 21st Century," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 65(4), pages 667-691, December.
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    6. Hutchings, Timothy R. & Nordblom, Thomas L., 2011. "A financial analysis of the effect of the mix of crop and sheep enterprises on the risk profile of dryland farms in south-eastern Australia," AFBM Journal, Australasian Farm Business Management Network, vol. 8(01), pages 1-23, October.
    7. Kingwell, Ross S., 2011. "Managing complexity in modern farming," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(01), pages 1-23.
    8. Hutchings, Timothy R. & Nordblom, Thomas L., 2011. "A financial analysis of the effect of the mix of crop and sheep enterprises on the risk profile of dryland farms in south-eastern Australia," 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia 101405, Australian Agricultural and Resource Economics Society.
    9. Ross Kingwell, 2011. "Managing complexity in modern farming," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(1), pages 12-34, January.
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    Cited by:

    1. Bell, L.W. & Moore, A.D. & Thomas, D.T., 2021. "Diversified crop-livestock farms are risk-efficient in the face of price and production variability," Agricultural Systems, Elsevier, vol. 189(C).

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