An Economic Assessment of the Value of the NPICC Pasture Species Database
Project start date: | 01 January 1992 |
Project end date: | 03 October 1995 |
Publication date: | 03 October 1995 |
Project status: | Completed |
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Summary
The aim of this project was to analyse the value and possible uses of the NPICC pasture database. The project developed methodology capable of analysing the economic value of the NPICC database. The methodology was demonstrated using sub. clover as an example pasture species. Three Victorian regions in which sub. clover is present were chosen to demonstrate the effects of aggregating fann-Ievel results to regional, State and National results.
The project was conducted in three stages. The fIrst stage was the analysis of example regions in which sub. clover pasture was used. In each region, a number of livestock and crop gross margin budgets were compiled. Threeregions were chosen, primarily based on availability of data. The North Central region was divided in two because of differences in fann types in the northern and southern halves of the region and the third region was the South Western region. Gross margin budgets for crops, pastures and livestock enterprises were developed for each region. The results of these are presented in Appendices I and 2.
The second stage of the analysis involved defIning and constructing a linear programming model of a representative fann for each region based on the gross margin budgets developed in Stage 1. The model was then tested and a base level solution for each representative fann identifIed, these results are presented in Tables 1, 3 and 5. A number of scenarios were then modeled, including hypothetical changes in management and pasture productivity. The differences between the values returned in the base model and the values returned from the alternative scenarios indicated the value of that change to the representative fann. The percentage changes between the base model and results of each of the alternative scenarios are presented in Tables 2, 4 and 6.
The third stage of the analysis was to aggregate the results of Stage 2 to determine the regional impact of the alternative scenarios modeled. The results of this are presented in Tables 7, 9 and 11. In summary, an increase in the annual feed production of sub. clover by 5% (assuming a full 5% improvement in DSE production) led to an additional net fann income in the Northern half of the North Central Region of $4.5 million, in the Southern half of the North Central Region of $4.1 million and in the South West Region of $4.8 million. This was assuming 100% adoption of the new pasture species and immediate re-sowing of all sub. clover.
An assumption was made that a hypothetical new technology increased production of sub. clover by 5% and that this increase in production led to a 5% improvement in available feed. It is recognised that in reality considerably less than 5% in available feed would result from a 5% increase in production, however this assumption was made to simplifY the analysis. It was also recognised that adoption of any new
technology occurs over time and is seldom 100%. To account for this a range of adoption rates were analysed using a Net Present Value (NPV) analysis over ten years. The results of this are presented in Tables 8, 10 and 12. In summary, using an adoption rate of 10% and an increase in the production of sub. clover of 5%, the NPV of additional net fann income over ten years in the Northern half of the North Central Region was $17.6 million, in the Southern half of the North Central Region was $15.9 million and in the South West Region was $18.9 million.
More information
Project manager: | Cameron Allan |
Primary researcher: | Bootie Agricultural & Economic Consulting |