Examination of risk and stocking rate decisions in the Mulga lands using simulation.

Abstract

A simulation model of a grazing enterprise was used to examine the economic risk associated with stocking rate decisions in the mulga lands. The model used historical daily rainfall records for Charleville (1890 - 1984) as input for determining annual pasture production. Stocking rates were set each year at the end of summer to utilize a portion of the available forage. Gross margins were determined for a total of six levels of pasture utilization (20% to 80%). The simulation results support the hypothesis that higher levels of pasture utilization lead to consistently lower pasture yields, and greater variability in income (high risk). To reduce risk, this simulation study suggests a more conservative use of the pasture. Optimum levels of pasture use therefore need to be determined; both from an individual graziers requirement to meet short term needs, and society's preference for long tern conservation of the pasture resource. This requires the ability to identify the direct benefits and costs of different levels of pasture use. This study has indicated the value of simulation in examining these costs and benefits.