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Drought and the economic performance of agriculture

Mues, C. Mr; Ph. (02) 6272 2040; Fax: (02) 6272 2001;

Research Organisation: Australian Bureau of Agriculture and Resource Economics, GPO Box 1563, Canberra ACT 2601

Sponsor: LWRRDC, Land and Water Resources Research and Development Corporation


1. To quantify the level and variability of production, prices and incomes;

2. To determine if there are differences in the level of risk faced by farms between regions and industries; and

3. To investigate the impact of climatic change on production risk using seasonal indicator variables.


In order to analyse the source and magnitude of risk in Australian broadacre agriculture, data from ABARE's Australian Agricultural and Grazing Industries Survey (AAGIS) were used to create a time series for selected variables for each farm that has been surveyed over the 1978-79 to 1992-93 period. The AAGIS covers five industries: wheat and other crops, mixed livestock-crops, beef, sheep and sheep-beef industries, and is conducted annually. In most years over this period the sample for the AAGIS was between 800 and 1,000 farms.

The time series created from the annual AAGIS data sets were used to investigate the shape of the frequency distribution for three key variables: wheat yields, output prices, and the ratio of farm receipts to farm costs, excluding interest payments.


Maps of the mean and coefficient of variation for wheat yield, wheat price, wool price and beef cattle price, along with the mean receipts-costs ratio for each of the different agricultural industries, were produced. This shows how production and financial risk varies across regions and industries.

Modelling efforts to quantitatively assess the impact of seasonal conditions on crop yields at the farm level were unsuccessful. Exploratory modelling is being continued within ABARE.

Period: starting date 1993-01; completion date 1994-10

Status: completed

Keywords: production risk, financial risk, modelling, receipts-costs ratio


Scoccimarro, M., Mues, C. and Topp, V. (1994). Climatic variability and farm risk, ABARE report to the Land and Water Resources Research and Development Corporation.

Scoccimarro, M. (1995). Climate variability and on-farm economic performance - the national pattern. Proceedings of Managing with Climate Variability Conference 'Of droughts and flooding rains', 16-17 November 1995, Occasional Paper CV03/96, pp. 23-29.


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