Register      Login
Crop and Pasture Science Crop and Pasture Science Society
Plant sciences, sustainable farming systems and food quality
Shopping Cart: ( empty )
You are here: Home > Journals > CP > AR06195 > Fulltext
RESEARCH ARTICLE
Contents Vol 58(10)

From rainfall to farm incomes—transforming advice for Australian drought policy. II. Forecasting farm incomes

Rohan Nelson A D , Philip Kokic B and Holger Meinke C
+ Author Affiliations
- Author Affiliations

A CSIRO Wealth from Oceans Flagship, GPO Box 284, Canberra, ACT 2601, Australia, and formerly ABARE, GPO Box 1563, Canberra, ACT 2601, Australia.

B ABARE, GPO Box 1563, Canberra, ACT 2601, Australia, and CSIRO Wealth from Oceans Flagship, GPO Box 284, Canberra, ACT 2601, Australia.

C Crop and Weed Ecology, Department of Plant Sciences, Wageningen University, PO Box 430, 6700 AK Wageningen, The Netherlands.

D Corresponding author. Email: rohan.nelson@csiro.au

Australian Journal of Agricultural Research 58(10) 1004-1012 https://doi.org/10.1071/AR06195
Submitted: 14 June 2006  Accepted: 21 June 2007   Published: 30 October 2007

Abstract

Australian drought policy is focussed on providing relief from the immediate effects of drought on farm incomes, while enhancing the longer term resilience of rural livelihoods. Despite the socioeconomic nature of these objectives, the information systems created to support the policy have focussed almost exclusively on biophysical measures of climate variability and its effects on agricultural production. In this paper, we demonstrate the ability of bioeconomic modelling to overcome the moral hazard and timing issues that have led to the dominance of these biophysical measures. The Agricultural Farm Income Risk Model (AgFIRM), developed and tested in a companion paper, is used to provide objective, model-based forecasts of annual farm incomes at the beginning of the financial year (July–June). The model was then used to relate climate-induced income variability to the diversity of farm income sources, a practical measure of adaptive capacity that can be positively influenced by policy. Three timeless philosophical arguments are used to discuss the policy relevance of the bioeconomic modelling. These arguments are used to compare the value to decision makers of relatively imprecise, integrative information, with relatively precise, reductionist measures. We conclude that the evolution of bioeconomic modelling systems provides an opportunity to refocus the analytical support for Australian drought policy towards the rural livelihood effects that matter most to governments and rural communities.


Acknowledgments

The research carried out in this project was partly funded by the Grains Research and Development Corporation, building on earlier research for the Managing Climate Variability Research and Development Program. The vision and support of these two agencies are gratefully acknowledged. Some of the key concepts explored in this research were conceived years before it commenced, in discussions with Graeme Hammer and Roger Stone. The authors gratefully acknowledge the assistance of Vernon Topp, Lisa Elliston, and Peter Martin in helping to refine earlier versions of this paper. For their generous collaboration the authors gratefully acknowledge the efforts of Andries Potgieter, Dorine Bruget, John Carter, and Beverley Henry. The insightful comments of an anonymous referee are gratefully acknowledged. The authors also thank Australia’s farmers, their accountants, and marketing organisations for providing data through ABARE’s farm surveys, and ABARE’s capable team of field survey officers, who made this research possible.


References


ABARE (2002) ABARE advice on exceptional circumstances. Report to the Rural Support and Adjustment Branch, Industry Development Division, Australian Government Department of Agriculture, Fisheries and Forests, February 2002, Canberra, ACT (unpublished).

Anderson JR (2003) Risk in rural development: challenges for managers and policy makers. Agricultural Systems 75, 161–197.
| Crossref | GoogleScholarGoogle Scholar | open url image1

Bernoulli D (1738) Specimen theoriae novae de mensura sortis (Exposition of a new theory of the measurement of risk). [Translated from Latin by Louise Sommer.] Econometrica 22 (1954), 23–36.

Berstein P (1996) ‘Against the gods—the remarkable story of risk.’ (John Wiley & Sons: New York)

Blackadder J (2005) Masters of the climate: innovative farmers coming through drought. Managing Climate Variability Research and Development Program, Land & Water Australia, Canberra, ACT.

Botterill L (2005) Late twentieth century approaches to living with uncertainty: the national drought policy. In ‘From disaster response to risk management: Australia’s national drought policy’. (Eds LC Botterill, D Wilhite) (Springer: Dordrecht, The Netherlands)

Box GE (1979) Robustness in the strategy of scientific model building. In ‘Robustness in statistics’. (Eds R Launer, G Wilkinson) (Academic Press: New York)

Clark A , Brinkley T , Lamont B , Laughlin G (2000) Exceptional circumstances: a case study in the application of climate information to decision making. In ‘Cli-Manage Conference’. Albury NSW.

DAFF (2006) Information handbook—exceptional circumstances assistance. Guide to the policy and assistance provided under Exceptional Circumstances Arrangements. Australian Government Department of Agriculture, Fisheries and Forestry, Canberra, ACT. Available at: www.daff.gov.au/droughassist

Drought Policy Review Task Force (1990) National Drought Policy—Final Report. Vol. 1. Commonwealth of Australia, Canberra, ACT.

Drought Policy Task Force (1997) Review of the national drought policy. Task force of officials from the Commonwealth, State and Territory Governments, Canberra, ACT.

Ellis F (2000) ‘Rural livelihoods and diversity in developing countries.’ (Oxford University Press: Oxford, UK)

Ellis F , Freeman H (2005) Comparative evidence from four African countries. In ‘Rural livelihoods and poverty reduction policies’. (Eds F Ellis, H Freeman) (Routledge: London)

Hammer GL, Holzworth DP, Stone R (1996) The value of skill in seasonal forecasting to wheat crop management in a region with high climatic variability. Australian Journal of Agricultural Research 47, 717–737.
| Crossref | GoogleScholarGoogle Scholar | open url image1

Hardaker J , Huirne R , Anderson J , Lien GI (2004) ‘Coping with risk in agriculture.’ 2nd edn (CABI Publishing: Wallingford, UK)

James P (1973) ‘Economic policy for drought.’ (Ed. J Lovett) pp. 245–262. (Angus and Robertson: Sydney, NSW)

Kahneman D , Tversky A (2000) Choices, values and frames. In ‘The environmental, economic and social significance of drought. Choices, values and frames’. (Eds D Kahneman, A Tversky) (Cambridge University Press: Cambridge, UK)

Keynes J (1921) ‘A treatise on probability.’ (Macmillan: London)

Keynes J (1937) The general theory of employment. The Quarterly Journal of Economics 51, 209–233.
| Crossref |
open url image1

Knight F (1921) ‘Risk, uncertainty and profit.’ (Beardbooks: Washington, DC)

Kokic P, Chambers R, Beare S (2000) Microsimulation of business performance. International Statistical Review. Revue Internationale de Statistique 68, 259–276.
| Crossref | GoogleScholarGoogle Scholar | open url image1

Kokic P, Nelson R, Meinke H, Potgieter A, Carter J (2007) From rainfall to farm incomes—transforming advice for Australian drought policy. I. Development and testing of a bioeconomic modelling system. Australian Journal of Agricultural Research 58, 993–1003. open url image1

Laughlin G , Clark A (2000) Drought science and drought policy in Australia: a risk management perspective. In ‘Early warning systems for drought preparedness and drought management. Proceedings of an Expert Group Meeting’. Lisbon. (Eds A Wilhite, MVK Sivakumar, DA Wood) (World Meteorological Organisation: Geneva)

Lowe I (2002) The need for environment literacy. ALNARC Online Forum. ANTA National Literacy Project, Australian Government Department of Education, Science and Training (DEST), Queensland. Available at: www.staff.vu.edu.au/alnarc/onlineforum/AL_pap_Lowe.htm

McBride J, Nicholls N (1983) Seasonal relationships between Australian rainfall and the Southern Oscillation. Monthly Weather Review 111, 1998–2004.
| Crossref | GoogleScholarGoogle Scholar | open url image1

Meinke H, Nelson R, Kokic P, Stone R, Selvaraju R, Baethgen W (2006) Actionable climate knowledge: from analysis to synthesis. Climate Research 33, 101–110.
| Crossref | GoogleScholarGoogle Scholar | open url image1

Meinke H, Stone R (2005) Seasonal and inter-annual climate forecasting: the new tool for increasing preparedness to climate variability and change in agricultural planning and operations. Climatic Change 70, 221–253.
| Crossref | GoogleScholarGoogle Scholar | open url image1

Nelson R, Kokic P, Elliston L, King J (2005) Structural adjustment: a vulnerability index for Australian broadacre agriculture. Australian Commodities 12, 171–179. open url image1

Potgieter AB, Hammer GL, Meinke H, Stone RC, Goddard L (2005) Spatial variability in impact on Australian wheat yield reveals three putative types of El Niño. Journal of Climate 18, 1566–1574.
| Crossref | GoogleScholarGoogle Scholar | open url image1

Stone RC, Hammer GL, Marcussen T (1996) Prediction of global rainfall probabilities using phases of the Southern Oscillation Index. Nature 384, 252–255.
| Crossref | GoogleScholarGoogle Scholar | open url image1

Thompson D, Powell R (1998) Exceptional circumstances provisions in Australia—is there too much emphasis on drought? Agricultural Systems 57, 469–488.
| Crossref | GoogleScholarGoogle Scholar | open url image1

Tukey JW (1962) The future of data analysis. Annals of Mathematical Statistics 33, 1–67. open url image1

Walker W, Marchau V (2003) Dealing with uncertainty in policy analysis and policymaking. Integrated Assessment 4, 1–4.
| Crossref | GoogleScholarGoogle Scholar | open url image1

White D , Botterill L , O’Meagher B (2005) At the intersection of science and politics: defining exceptional drought. In ‘From disaster response to risk management: Australia’s national drought policy’. (Eds LC Botterill, D Wilhite) (Springer: Dordrecht, The Netherlands)