Climate variability

ABARES analyzes the effects of drought and climate variability on Australian farms

Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) Knowledge report provides analysis on the effects of climate variability on Australian crop and livestock farms. The report examines both short-term climate risks such as drought and long-term changes in climatic conditions.

ABARES Senior Economist Dr Neal Hughes said that an observed change to warmer and drier conditions during the period 2000 to 2019, compared to the period 1950 to 1999, had an effect negative on the profits of Australian farms and ranching.

“Average temperatures have risen by around one degree since 1950, while the past few decades have also seen a trend of declining precipitation in winter, particularly in southwest and southeast Australia,” Dr Hughes said.

“Controlling all other factors, we estimate that these changes reduced average farm profits by about 22%. These effects were most pronounced in the crop sector, reducing average profits by 35 percent, or $ 70,900 per year for a typical farm operation.

“Nationally, this equates to an average loss of field crop production of 8%, or about $ 1.1 billion per year.

“Although cattle farms have been less affected overall, some cattle breeding areas have been more affected than others, particularly southwest Queensland.”

Similar to previous research, this study finds evidence of adaptation, with farmers improving in handling dry conditions over time. Our results suggest that without this adaptation, the effects of post-2000 climate change would have been considerably greater, especially for farms.

“While recent trends in precipitation have been driven at least in part by climate change, there is still significant uncertainty about long-term future precipitation. The implications of climate change projections for agriculture are an important area for further work, ”said Dr Hughes.

ABARES Executive Director Dr Steve Hatfield-Dodds said this study provides solid quantitative analysis of the effects of climate variability and recent changes in seasonal conditions on Australian field crops and livestock farms.

“An analysis like this is complex because you have to take into account the many factors that affect farm profits, including seasonal conditions, prices of inputs and products, technology and management practices, and farm size. exploitation, ”said Dr Hatfield-Dodds.

“ABARES is only able to do this thanks to our long-term investments in high-quality agricultural survey data and our multi-year efforts to build the farmpredict model.”

“The results of this study have important implications for the agricultural sector, particularly for how farmers and governments respond to the risk of drought.

“Governments are faced with a dilemma, because helping farmers in times of drought risks slowing the adjustment and innovation of the industry in the long run.

“Adjustment, change and innovation are fundamental to improving agricultural productivity; maintain Australia’s competitiveness in world markets; and provide attractive and financially viable opportunities for farm households.

“Supporting struggling farm households is important, but for the long-term health of the sector, it must be done in a way that promotes resilience and productivity, and enables adjustment and change.

“The main options in this regard include research and development to improve the long-term resilience of farms to drought, including the further development of weather insurance markets.

“Insurance is an important area for further research, as it could offer farmers new options for managing climate risks. “

Source: ABARES. The latest ABARES Insights article, Analyzing the Effects of Drought and Climate Variability on Australian Farms, is available here.


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