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The economic value of saltland pastures in a mixed farming system in Western Australia
AGRICULTURAL SYSTEMS Agricultural Systems 89 (2006) 371–389 www.elsevier.com/locate/agsy
The economic value of saltland pastures in a mixed farming system in Western Australia Michael OÕConnell
a,1
, John Young
b,2
, Ross Kingwell
c,*
a
c
Louis Dreyfus Australia, Level 13, Office Tower Building, 644 Chapel Street, South Yarra, Vic. 3141, Australia b Farming Systems Analysis Service, RMB 309, Kojonup, WA 6395, Australia University of Western Australia, Western Australian Department of Agriculture, CRC for Plant-based Management of Dryland Salinity, Nedlands, WA 6009, Australia
Received 17 April 2004; received in revised form 6 October 2005; accepted 11 October 2005
Abstract Dryland salinity increasingly is affecting large tracts of agricultural land in Australia. In response, technologies are being developed to allow farmers to make productive use of saline land. One option is the use of salt tolerant pasture systems for grazing and localised recharge management. In this study, a whole-farm bio-economic model of the farming system in a saltaffected agricultural region of Western Australia is applied to assess the role and profitability of saltland pastures in the mixed crop and livestock farming system that typifies the region. The results of the analysis show that, across a range of scenarios, saltland pastures suited to moderately saline environments offer the twin advantages of improved profit and reduced recharge that will slow the impacts of salinisation. In practice, for an individual farm the optimal area of saltland pasture is likely to vary according to farm landscape characteristics and market conditions. Key profit drivers for the saltland pasture system are identified, its
*
Corresponding author. Present address: University of Western Australia, Western Australian Department of Agriculture, 3 Baron-Hay Court, South Perth, WA 6151, Australia. Tel.: +61 8 9368 3225; fax: +61 8 9380 1098. E-mail addresses: [email protected] (J. Young), [email protected] (R. Kingwell). 1 Tel.: +61 3 9828 6111. 2 Tel.: +61 8 9833 6259; fax: +61 8 9833 6206. 0308-521X/$ - see front matter Ó 2005 Elsevier Ltd. All rights reserved. doi:10.1016/j.agsy.2005.10.003
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desirable association with lucerne to reduce recharge is highlighted and priorities for future R&D are discussed. Ó 2005 Elsevier Ltd. All rights reserved. Keywords: Dryland salinity; Saltland pasture; Farm modelling; Farm profitability; Recharge management
1. Introduction Dryland salinity currently affects the growth of crops and pastures on approximately 1.8 million hectares of previously non-saline agricultural land in Western Australia. This area is projected to increase to 3.3 million hectares over the next 10–20 years (Kingwell et al., 2003), and could eventually exceed 6 million hectares (about 32% of agricultural land in the state) before final equilibrium is reached (Ferdowsian et al., 1996). Considerable efforts have been directed at developing options for the management of dryland salinity. These management options can be classified as prevention, remediation or adaptation. Prevention refers to implementing recharge management strategies that reduce the leakage of water beyond the root zone into the water table. Most commonly this involves the use of deep-rooted perennial plant species and the manipulation of surface water flows to prevent ponding. Remediation refers to the process of restoring saline land by removing excess water and salts, often by engineering means, while adaptation involves adopting enterprises and management strategies that are designed to cope with, or utilise, high levels of salt in the soil and water (Pannell, 2001). In some regions of Australia, large areas of farmland are already salt-affected (Kingwell et al., 2003) so prevention of salinisation is not feasible and remediation is often not cost-effective (Coles et al., 1999). In these regions, adaptation is often the main course of action available to farmers. One of the most common adaptations to saline land in Western Australia is the establishment of salt tolerant pastures for grazing by livestock. Proponents of this approach highlight benefits such as reduced groundwater recharge, improved soil structure, and extra feed for livestock during periods of the year when feed supply is low (e.g., Bolt, 2001; Lloyd, 2001; BarrettLennard et al., 2003). However, in order for saltland pasture systems to be profitable these benefits must outweigh the cost of establishment, the risk of establishment failure and the cost of lost opportunities to undertake alternative practices. Previous analyses of saltland pastures (e.g., Bathgate et al., 1992) have not addressed the issue of land heterogeneity where there are differing degrees of salinisation across the rural landscape; nor have they analysed the role of understorey species and nor have they been able to examine new forms of saltland pastures such as saltbush (Atriplex species) alleys with annual pasture inter-rows. In this article, we use a whole-farm bio-economic model to describe and analyse an alley-based saltland pasture system that has developed in Western Australia mostly since the mid-1990s. The analysis focuses on saltland heterogeneity and how this new saltland pasture system
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might best be integrated into current farming systems. Key profit drivers of the saltland pasture system are identified along with its impact on recharge and implications for R&D are discussed.
2. Methods 2.1. Description of the study area The study region is the agricultural hinterland of a broad stretch of the southern coast of Western Australia (Fig. 1). The South Coast region of Western Australia covers 5.4 million hectares, of which about 3.7 million hectares is devoted to farming. The dominant agricultural enterprises across the region are broad scale
Fig. 1. The South Coast region of south-western Australia.
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cropping; mostly wheat, barley and canola. Also large areas of subterranean or medic pastures support mostly sheep enterprises devoted to wool and prime lamb production. Across the region the spread of dryland salinity is an issue for many farmers, although the presence or imminence of salinity does vary spatially (Simons and Alderman, 2004). In some sub-regions, salinity currently affects over 10% of agricultural land, with a rapid expansion in the affected area forecast over the next 50 years (Ferdowsian et al., 1996; NLWRA, 2001). In other sub-regions clusters of natural salt lake systems are common with adjacent lands very gradually being salt-affected. Farm size across the region mostly is in the range 1800–2250 ha, of which typically 40–60% is sown to crop (mostly wheat, barley and canola). The remaining area is pasture mostly for sheep kept for wool and meat production. The region experiences a Mediterranean-type climate. Most broadcare agricultural activity in the region occurs where between 375 and 600 mm average annual rainfall is received, of which approximately two-thirds falls between May and October with rainfall increasing with proximity to the coast. The growing season is followed by a summer drought usually lasting from November to March. This highly seasonal pattern of rainfall, coupled with a reliance on annual pasture species, has important implications for livestock feed supply. Availability of pasture is limited in the late autumn and early winter. By contrast, the spring is typified by a ÔflushÕ of pasture growth due to relatively warm weather and plentiful soil moisture. Consequently, on-farm supply of feed throughout the year is uneven affecting the timing, quality and amount of feed available. Accounting for such variability is important when assessing the role and profitability of a new feed source such as saltland pastures. 2.2. Farm modelling Assessing the benefits and costs of a grazing system is not straightforward. This is because the profitability of such systems depends on several factors including pasture growth rates and growth pattern, pasture quality and palatability, the class of livestock and pattern of grazing, and the cost of pasture establishment and maintenance. In addition, profitability can be affected by interactions with other enterprises on the farm. Examples of important interactions include disease and pest breaks, nitrogen fixation by leguminous pastures from which subsequent crops benefit, weed control opportunities, grain feeding, stubble grazing and complementary or competitive machinery usage. For these reasons, accurate and meaningful economic analysis of grazing systems requires a technique that adequately captures the production relationships and their economic impacts. In this analysis, we used representative whole-farm models to examine the role and profitability of saltland pastures for different sub-regions of the South Coast region. These representative models are derivatives of a whole-farm bio-economic model known as the South Coast version of MIDAS (Model of an Integrated Dryland Agricultural System) (Bathgate, 1999; OÕConnell, 2005).
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South Coast MIDAS is a steady-state, whole-farm, mathematical programming optimisation model that describes the physical, technical, biological and managerial aspects of typical broadacre cropping and livestock farming systems in the South Coast region of Western Australia. The model combines sheep simulation model output within a profit-maximising standard linear programming tableau to describe the main farm enterprises and interactions that typify farming systems in the region for expected climatic and market conditions. The model describes the main enterprise options available to farmers in the region, including wheat, barley, oats, lupins, field peas, canola, lucerne, annual and saltland pasture phases. The rotation sequences involving these crops and pastures are described for each of five soil classes. Input requirements and production output for each rotation component on each soil type production are included in the farm model. Inter-year rotational effects, beneficial and adverse, are represented within the steady-state paradigm. Sheep energy requirements and production vary across a year and vary between age groups and classes of sheep. Output from a sheep simulation model is included in the linear programming tableau to describe in detail the nature of sheep production, including energy requirements and growth rates for each class of sheep class in each sub-period of an average production year, their wool yield and quality, lambing percentages, death rates and retention rates required to form a self-replacing ewe flock. The model includes descriptions of farm labour, machinery and finance requirements and overhead costs involved in running a farm business. The modelÕs objective function is to maximise the farmÕs net return to capital and management, achieved by selecting an optimal set of farm enterprises and farm resources. Hence, output from the model is a listing of preferred rotations for each soil type, including their input and resource requirements and production outcomes; the size and structure of the sheep flock including their feed requirements and feed sources; and the use of labour, machinery and finances that accompanies this optimal farm plan. The linear programming tableau is generated by a 13.8 MB Excel file containing 27 worksheets that describe the data sources and data included in the model. The tableau comprises around 1900 columns and 860 rows. Other versions of the MIDAS model, similar to the South Coast MIDAS model, are described in more detail by Kingwell and Pannell (1987), Pannell and Bathgate (1994), Young (1995) and Kingwell (2002). In this study, various versions of the South Coast MIDAS model were used to represent typical farms in main broadacre sub-regions of the whole region. These sub-regions mostly lie between 375 and 550 mm annual isohyets and are shown in Fig. 1 as the Palinup-North Stirlings, the Albany hinterland (also known as South Stirlings), the Fitzgerald biosphere and the Esperance sandplain. The nature and mix of soil types in the representative farms of these sub-regions are outlined in Table 1. A feature of this study different from previous studies of saltland pastures is that several classes of saline soil are represented. Barrett-Lennard et al. (2003) show how saline landscapes on farms are a diverse range of ecological niches for various plant
376
Table 1 Soil types and their relative proportions in the sub-regional South Coast MIDAS models Soil group no.a
North stirlings
Fitzgerald
Esperance Sandplain
Proportion of soil class in the sub-region farm model (%) Waterlogging prone duplex Medium depth sandplain duplex Deep sands Grey loams and clays Reddish-brown loams and clays
Saline Saline Saline Saline a
soils soils soils soils
Sand over clay (with or without gravel) within 30 cm. Slope < 3%. Subject to waterlogging Sand over clay at 30–80 cm, often with a gravel layer above the clay. May be waterlogged in wet years Generally more than 80 cm to clay. Not susceptible to waterlogging Poorly drained and sodic, hard-setting grey clays Loam soils common along drainage lines and on some upper and lower valley slopes, well-drained and moderately wellstructured Mildly affected Moderately affected Severely affected Bare scald, very highly saline, ungrazed
Land resource assessment soil group code Schoknecht (2002).
502,503,504,507,508, 402,404,406,408
31.5
20
5
20
401,403,405,407
12.5
40
25
30
3.5
30
10
40
42.5
5
30
0
506,522,622
0
0
20
0
105,103,101 105,103,101 102 102
2.5 2.5 2.5 2.5
2 1.5 1.5 0
444,441,442,446,464 504,601
3.5 3.25 3.25 0
3.5 3.25 3.25 0
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South stirlings
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species. Often the interplay of waterlogging and salinisation determine what plant species grow best in these various niches. Where severe salinity and waterlogging coincide, often only low productivity species such as samphire grow and these species are normally not recommended for grazing by sheep. As salinity concentrations or waterlogging incidence is reduced then additional plant species become available as preferred feed sources. In this analysis, the main saline environments are represented by various soil classes ranging from bare salt scalds not capable of supporting crop or pasture through to highly productive saline soil that is only mildly affected by salt. Inclusion of a range of types of saline soils allows differences and complementarities between land-uses and enterprise productivities to be considered. 2.3. Saltland pasture production Pasture composition, production and quality estimates for the mildly saline soil were derived from site measurements near Lake Grace (Dynes and Norman, unpublished data), complemented by estimates supplied by editor Barrett-Lennard (personal communication 2003) based in turn on findings of Aslam et al. (1986), Galloway and Davidson (1993), Barrett-Lennard and Malcolm (1995), Barrett-Lennard and Ewing (1998), Short and Colmer (1999) and Barrett-Lennard et al. (2003). Examples of the amounts of feed available for grazing at different times of the year on the mildly affected saline soil are provided in Table 2. Saltbush (Atriplex species) and many annual pasture species in general grow less well if the soil becomes increasingly salt-affected or more prone to waterlogging (Barrett-Lennard et al., 2003). These saline environments are represented in the farm model by three other soil classes. The worst land comprises bare salt scalds, left ungrazed, often known as samphire country. Grazing is possible on the other two saline soil classes. The feed available from grazing the saltbush on these other soil classes is 110% and 80%, respectively, of levels shown in Table 2 for the mildly affected saline soil class. The higher production of saltbush on moderately affected soil compared to mildly affected soil is due to the halophyte (Atriplex species) having higher growth rates at moderate salinities (Barrett-Lennard and Malcolm, 1995). Similarly, the feed on offer from the annual pasture component on the moderately and severely salt affected soil classes is assumed to be 100% and 30%, respectively, of those levels listed in Table 2 (Barrett-Lennard and
Table 2 Feed available for grazing at different times of the year (kilograms of dry matter per hectare) for the mildly affected saline soil type
Saltbush Volunteer grass Volunteer legume Improved legume
May (kg DM/ha)
August (kg DM/ha)
November (kg DM/ha)
February (kg DM/ha)
800 – – –
800 150 25 700
800 300 50 1500
800 150 35 975
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Table 3 Feed value of various pasture components at different times of the year (megajoules per kilogram of dry matter)
Saltbush Volunteer grass Volunteer legume Improved legume
May (MJ/kg DM)
August (MJ/kg DM)
November (MJ/kg DM)
February (MJ/kg DM)
7.1 – – –
7.1 11.0 10.0 11.8
7.1 7.1 9.0 10.0
7.1 5.5 7.0 9.0
Ewing, 1998). High levels of feed production from the annual pasture component on the moderately salt affected soil type is made possible by a draw-down of the water table by adjacent saltbush (Barrett-Lennard and Malcolm, 1999). This drawdown allows salts to be flushed from the topsoil of the moderately affected land, thereby creating growing conditions more suited to annual pastures. Feed value also varies over the season – the highest quality feed is available during winter and spring, with a steady decline in quality over summer and autumn. Representative values are provided in Table 3. 2.4. Cost of establishing and maintaining the saltland pasture system The main saltland pasture system represented in this analysis consists of managed alleys of saltbush species, with a mixed sward of annual species growing in the interrow. Following Ghauri and Westrup (2000), a contract charge of approximately $170/ha was assumed for the establishment of saltbush alleys on the saline soils, apart from the salt scalds on which no planting occurred. A further $55/ha was included to allow for establishment of an improved legume based pasture, bringing the total cost of establishment to $225/ha (Table 4). An adjustment was made for the risk of establishment failure and the cost was amortised over 5 years at a real interest rate of 5%. The total cost per year was calculated by adding the cost of an annual application of fertiliser. For the more saline soils (apart from bare salt scald soil), costs of establishment and annual fertiliser applications were reduced to reflect a Table 4 Costs of establishmenta and maintenance of the saltbush pasture system on each soil type
Cost of establishment ($/ha) Probability of success (%) Investment life of stand (years) Real interest rate (%) Amortised cost ($/ha) Annual fertiliser application ($/ha) Total annualised cost ($/ha) a
Mildly affected saline soil
Moderately affected saline soil
Severely affected saline soil
225 100 5 5 52 20 72
200 80 5 5 58 17 75
175 60 5 5 67 14 82
All monetary values are Australian dollars.
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decreased input level. The assumed costs underestimate some farmersÕ actual costs, especially where farmers supply additional new fencing, new water supplies or earthworks for surface water management. Further detail relating to feed available for grazing and feed value assumptions are available on request from the authors. 2.5. Crop production on saline soils An important consideration when assessing the value of a new enterprise is Ôopportunity costÕ – that is, the cost of lost opportunities to undertake alternative practices. In many situations, it remains feasible to continue cropping saline land, especially when it is only mildly saline. Therefore, the opportunity cost of cropping may be an important consideration when assessing saltland pasture, especially in mildly saline environments. Indicative yields of wheat and barley on the saline soil types are shown in Table 5 and draw on Barrett-Lennard (2003) and Barrett-Lennard et al. (1999). All yields are for a crop grown after a single year of manipulated pasture. 2.6. Commodity price and cost of production assumptions Commodity prices assumed in the analysis are derived from medium-term estimates by the Australia Bureau of Agricultural and Resource Economics (ABARE, 2004), with some adjustments applied to reflect developments in domestic and global commodity markets since the release of their forecasts. Table 6 lists price assumptions for the major commodities.
Table 5 Yields of wheat and barley on the saline soil types (kg/ha) when grown after a single year of manipulated pasture
Wheat Barley
Mildly affected saline soil (kg/ha)
Moderately affected saline soil (kg/ha)
Severely affected saline soil (kg/ha)
1700 2000
730 860
0 0
Table 6 Price assumptions for the major commoditiesa Commodityb
Price ($/ton)
Commodity
Price
Wheat APW Malting barley Feed barley Lupins Canola
210 210 170 200 350
Wool – greasy price for 21 lm fleece wool Merino lambs – dressed weight Shipping wethers – at saleyard Merino hoggets – at saleyard Cast for age ewes – at saleyard
$3.70/kg $2.10/kg $40/head $40/head $25/head
a b
All monetary values are Australian dollars. Grain prices are $/ton pool return, FOB, exclusive of goods and services tax.
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Saltland pasture on mildly and severely affected saline soil Saltland pasture on moderately affected saline
Farm profit ($A’000)
86 85 84 83 82 81 80 0
20
40
60
80
100
120
140
Area of saltland pasture (ha)
Fig. 2. Change in whole-farm profit with different areas of saltland pasture. (Whole-farm profit is profit at full equity before tax, minus the opportunity cost of capital.)
Costs of production were based on current retail prices for agricultural inputs obtained by a phone survey of several suppliers to the region.3
3. Results and discussion In this section, to economise on space, results are presented only for the PalinupNorth Stirlings sub-region (see Fig. 1). Results for the other sub-regions are available from the authors on request. Because similar findings were generated in each subregion there is little to add by inclusion of all results for all sub-regions. 3.1. Economic value of the saltland pasture system Applying the data and assumptions previously outlined, farm profit in the Palinup-North Stirlings sub-region is maximised when saltland pasture is grown on about 115 ha of the total 200 ha of salt-affected land (Fig. 2). The greatest increase in profit comes from establishing the first 50 ha of saltland pasture. Whole-farm profit increases by about $4000 (or $80/ha averaged over the 50 ha). Further increases in the area of pasture beyond the initial 50 ha generate little improvement in profit. The reason for this result is due to the saltland pastures being grown initially on the moderately affected saline soil (Table 1) that displays moderate
3 Information on inputs and costs is available from the authors. Space limitations prevent their listing here.
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productivity (as annotated in Fig. 2). This soil type does not support profitable crops and annual pastures yet can generate reasonable saltland pasture. In other words, there is a lesser opportunity cost associated with establishing saltland pasture on this soil type compared to mildly saline land that still supports crop production. This finding related to differences in the degree to which a saline soil is salt-affected is repeated across all sub-regions. The profitability of establishing saltland pasture on the highly saline, low productivity land is also low – not because of opportunity cost, but because the quality and quantity of pasture provided only just offsets the cost of establishment and maintenance. These results contrast to some extent with previous studies of the economic value of saltland pastures (e.g., Bathgate et al., 1992). In previous studies, the net gain in profit, or marginal value of saltland pastures was directly correlated with yield (e.g., Bathgate et al., 1992; Salerian et al., 1987). However, this will be the case only when either there are no alternative uses for saltland (i.e., no opportunity costs) or other constraints (e.g., cropping machinery capacity) limit the size of enterprises that otherwise could compete for land devoted to saltland pastures. Many farmers will find that the parts of their farm capable of producing the highest yielding saltland pasture are also capable of producing profitable crops. In this case, the net gain in profit from adopting saltland pastures on mildly saline soils is likely to be minimal, and perhaps even negative. In other cases where resource constraints limit the size of an enterprise that ordinarily would compete with saltland pasture, the optimal investment decision may not necessarily be to adopt saltland pasture but rather to lift the restriction on the competing enterprise. 3.2. How does the saltland pasture fit into the farming system? The grazing strategy selected by the model in each sub-region involves utilising the saltland sward from late January to early April. This is a similar strategy to that implemented by farmers who have saltland pastures (e.g., Lloyd, 2001; Walsh et al., 2002). During this period feed available from annual pastures and crop stubbles is of low quality and quantity and, without the saltland pasture, large quantities of cereal grain and lupins are required to sustain sheep. Including the saltland pasture system reduces the quantity of supplement required and increases the number of sheep that can be supported as shown by results in Table 7.
Table 7 Change in supplementary feeding requirements and sheep numbers with the inclusion of saltland pasture Area of saltland pasture (ha)
Amount of supplementary grain (kg/DSE)
Total sheep numbers (DSE)
0 50 100 150
13 10 8 5
8018 8180 8270 8133
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Extra stock can be carried on the farm because the saltland pasture is a lower cost source of feed than grain, i.e., there is a reduction in the cost of carrying stock through summer. This makes it profitable to increase the number of stock carried, which then allows better utilisation of the traditional pastures during winter and spring. The opportunity to profitably increase-stocking rate is limited because the cost of carrying the extra stock through winter begins to outweigh the benefits of the extra stock (even though the cost of carrying those stock over summer is still cheaper than it would have been in the absence of the saltland pasture). 3.3. Where does the profit come from? The important factors that contribute to the profitability of a saltland pasture system are are illustrated in the profit and loss statements in Table 8. The total net benefit comprises savings related to reduced supplementary feeding, benefits of higher wool and sheep sales related to the higher stock number, extra husbandry costs, extra depreciation and extra capital tied up by carrying the extra sheep, a slight increase in interest earned, a reduction in interest paid and an increase in costs associated with establishing and maintaining the saltland pasture system. Results in Table 8 can be categorised as shown in Table 9. Reduced supplementary feeding provides around two-thirds of the total benefit, increased sheep numbers provide about a third and the reduction in financing costs
Table 8 Comparison of profit and loss statements with and without saltland pasturea Difference between with and without saltland pasture in farm plans ($/farm) Grain sales Wool sales Sheep sales Interest received on working account
0 2334 1933 93
Total revenue
4360
Crop and pasture costs Sheep husbandry and replacements Supplementary feeding Overheads Interest charged on working account
3662 1302 4845 0 254
Total cash operating costs
134
Cash flow minus Depreciation minus Opportunity cost of capital
4494 97 383
Whole farm profit before tax
4014
a
All monetary values are Australian dollars. The with case is based on 50 ha of saltland pastures. Results are for the North Stirlings-Palinup region.
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Table 9 Attribution of the gross benefits of the saltland pasture system Source of benefit
Benefit ($)a
Reduced supplementary feeding Increased sheep numbers Reduced financing costs
4845 (63) 2485b (32) 347c (5)
Total
7677 (100)
a
Numbers in brackets are the dollar benefits expressed as a percentage of total benefit. Based on North Stirlings-Palinup sub-region. b $2485 = extra wool ($2334) + extra sheep ($1933) extra husbandry ($1302) extra depreciation ($97) extra opportunity cost ($383). c $347 = extra interest received ($93) + savings on interest paid ($254).
provides the small remainder. These results have important implications for farmers adopting saltland pasture. These farmers can receive the majority of the benefits without having to increase sheep numbers. If required, purchase of sheep would impose large transition costs upon farmers and reduce the attractiveness of adopting saltland pasture. 3.4. What are the key profit drivers of saltland pasture systems? Results in Tables 8 and 9 highlight where differences in returns occur with and without saltland pasture. However, cause and effect is not obvious from Tables 8 and 9, making it difficult to identify what factors determine the profitability of saltland pasture and, more importantly, what areas farmers and researchers should focus on to improve profitability. Sensitivity analysis provides a valuable tool for isolating profit drivers. A summary of key profit drivers based on the assumptions used in this study is provided in Fig. 3.
Summer/autumn quality
Summer/autumn FOO
Pasture establishment costs
Sheep sale prices
Wool prices
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Change in farm profit ($A'000)
Fig. 3. Key profit drivers for the saltland pasture system in this study. Note. FOO is feed on offer.
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Each horizontal bar represents the effect on the profitability of saltland pasture of a favourable 10% change in the listed factor. This approach provides a valuable guide for prioritising action, either managerial on the part of a farmer, or research on the part of a scientist for the saltland pasture system underlying this analysis. The results show that increased feed quality or feed available for grazing in summer/autumn is likely to be very valuable and could warrant further investigation if increases are likely to be achieved. By contrast, having extra feed available for grazing in winter and spring is of low value because the saltland pasture is not grazed at this time. However, this is not the same as saying that extra production in winter and spring has no value, i.e., extra production from winter or spring could be deferred and then grazed in summer and autumn, in which case it would have moderate value. There are several options available to researchers and farmers in the pursuit of increased feed quality and quantity. One possibility is to improve the utilisation of the saltbush component of saltland pastures. For example, Warren et al. (1990) found that supplementation of saltbush with hay resulted in significant increases in dry matter intake by sheep, thereby effectively increasing the quantity of feed available. Supplementing saltbush with crop stubbles or dry pasture may also give similar results. Animal performance could also be improved by increasing the biomass of annual pasture species growing in the rows between saltbush shrubs, especially legumes (Norman et al., 2002). A recent successful example is the development of FrontierA balansa clover. This cultivar is suited to mildly saline sites affected by waterlogging in the Western Australian wheatbelt (Revell et al., 2001; Lloyd, 2001). Further pasture developments of this kind will contribute to worthwhile increases in the profitability of saltland pasture systems. When using the information in Fig. 3 it is important to realistically assess the scale of change possible for each parameter. For example, at first glance it appears that reducing establishment costs has relatively minor scope for improving profit. However, if it were possible to surpass 10% and achieve a 50% reduction in establishment costs then profits could improve considerably. In fact, Ghauri and Westrup (2000) present a farmer case study where cost savings in excess of 50% (compared to contractor rates) have been achieved. Wool and sheep prices are relatively minor profit drivers for adopting saltland pastures, despite being important determinants of whole-farm profit. This is explored further in Fig. 4, which charts the ÔmarginalÕ, or additional, value of extra hectares of saltland pasture under different combinations of wool and sheep prices. In the low price scenario, it is still profitable to include saltland pasture on the moderately saline, moderately productive soil. However, additional area beyond the first 50 ha leads to reductions in profit of $10–$90/ha. These results highlight that saltland pasture on moderately affected saline land will likely be the most ÔrobustÕ, in terms of profitability under a wide range of scenarios. Growing saltland pasture on the mildly saline, highly productive soil increases profit slightly in some price scenarios yet reduces profit slightly in other price scenarios.
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marginal val ue of saltland pasture ($A/ha)
150
100
50
0 0
25
50
75
100
125
150
-50
-100 Area of saltland pasture (ha) Low wool & sheep prices
Medium wool & sheep prices
High wool & sheep prices
Fig. 4. Marginal value of saltland pasture with different wool and sheep sale prices. Note. Medium prices are those provided in Table 6; ÔlowÕ & ÔhighÕ prices for wool are 70% and 130% of the medium prices, respectively; ÔlowÕ & ÔhighÕ sheep sale prices are 60% and 140% of the medium prices, respectively.
3.5. How does saltland pasture affect groundwater management? Saltland pasture can form part of a profitable farming system in each sub-region; but does the adoption of saltland pastures prevent or slow the rise of saline groundwater tables (Nulsen, 1998) that lead to salinisation? The empirical evidence to date is inconclusive. Slavich et al. (1999) noted that the transpiration rates of oldman saltbush (Atriplex nummularia) in a 4-year study were very low and concluded that the plants were having a negligible impact on the water table. Lefroy (2000) also suggests that water use by saltbush grown at low production levels (<0.75 t/ha/yr) would be negligible, given that leaf area is removed by sheep at a time of year (the autumn feed gap) when transpiration is potentially high. However, Ferdowsian et al. (2002) found that water tables were persistently lowered under a plantation of saltbush plants at a location near the South Coast region. Likewise, Barrett-Lennard and Malcolm (1999) indirectly measured groundwater use by saltbush shrubs to be 60–100 mm over a 2-year period. They found that saltbush grown on moderately salt affected soil drew-down the water table enough to allow high levels of feed production from annual pastures growing between the saltbush shrubs. Saltbush is most likely to be grown on salt affected soils, yet these soils typically comprise less than 30% of farm area. So any contribution of saltbush to lowering water tables will be constrained by this area of suitability and comparative advantage. It is more likely that other deep-rooted perennial species, such as lucerne, that could be grown over a larger proportion of the farm will be more effective facilitate the lowering of water tables, or at least slowing their rate of rise. LucerneÕs ability to use water and reduce water tables in many agricultural regions of Western Australia is widely recognized (Latta et al., 2002; Humphries et al., 2004); such is not the case for saltbush.
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Farm profit ($A')000
90 80
No Lucerne & No Saltbush
70
Lucerne & Saltbush
60
Saltbush & No Lucerne
50
Lucerne & No Saltbush
40 15
25 35 45 Recharge (mm per ha)
55
Fig. 5. Trade-off between whole farm profit and recharge for scenarios involving saltbush and lucerne.
Fig. 5 presents the trade-off between whole-farm profit and average groundwater recharge under the following four different treatments: (i) nil saltland pasture or lucerne included in the farm plan; (ii) saltland pasture included, lucerne excluded; (iii) Lucerne included, saltland pasture excluded; and (iv) saltland pasture and lucerne both included in the farm plan. For each treatment, the North Stirlings-Palinup sub-regional representative farm model was solved with varying constraints on groundwater recharge. The results in Fig. 5 show minimal scope to manage groundwater recharge under the Ôno saltland pasture and no lucerneÕ treatment. In this scenario, land use is restricted to annual crop and pasture species. While minor reductions in recharge may be possible with switches in enterprise (or changes to the management of existing enterprises), this incurs large reductions in farm profits and in unlikely to have a material impact on the spread of salinity through rising water tables. Introduction of saltland pasture can reduce groundwater recharge to some extent, although in a whole-farm sense the overall impact on recharge levels is again limited (at least in this case where the model farm has 10% of its arable area affected by salinity). By contrast, introduction of lucerne is technically feasible over most of the non-saline farm area, and so its potential impact on groundwater recharge is commensurably greater. The greatest reduction in recharge comes in the treatment where saltland pasture and lucerne are included. In this scenario, the trade off curve remains flat over a wide range, suggesting a 20–25% reduction in recharge with minimal impact on whole-farm profit.
4. Conclusions Dryland salinity is a major emerging threat to farming systems in many parts of southern and eastern Australia. This study has shown that, in a major southern agricultural region of Australia, saltland pastures are likely to be a profitable inclusion in traditional farming systems in a wide range of scenarios. However, the optimal area of saltland pasture to establish on a farm is likely to vary considerably according to site characteristics and market conditions.
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The largest increase in farm profit consistently comes from establishing saltland pasture on moderately affected saline soil types, i.e., land that is too saline to produce profitable annual crops and pastures, but not so saline as to severely impact on production from the saltland pasture system. By contrast, establishing saltland pastures on mildly saline land that still supports relatively high grain yields is unlikely to deliver large profits due to the opportunity cost of annual crops and pastures. Likewise, highly affected saline soils of low productivity deliver only modest gains in profit at best when saltland pastures are introduced. These results suggest that farmers will be better off establishing saltland pasture on moderately saline soils first. At relatively high wool and sheep prices, as occurred from 1998 to 2003, there might also be some gains from expanding saltland pasture into other saline country of lesser or higher productive capacity. However, growers contemplating such a move need to be aware that this strategy may backfire if there is a synchronised downturn in wool and sheep prices. Under this market scenario, saltland pasture is only profitable on moderately affected saline soil types that do not support high yielding crops but on which saltland pastures grow well. Sensitivity analysis shows that the profitability of saltland pastures is highly sensitive to several key factors such as summer/autumn feed value, amount of feed available for grazing in summer/autumn and establishment costs. Methods to bring improvements in these areas warrant further investigation. Lastly, evidence that saltbush may assist in lessening the spread of salinity through its water use is mixed. However, more certain is that the combination of lucerne and saltbush (the latter grown on soil already salt-affected) does offer the twin advantages of boosting or maintaining farm profit whilst greatly lessening recharge and thereby slowing the rate of any rise in saline water tables.
Acknowledgements The authors thank editor Barrett-Lennard, Andrew Bathgate and David Pannell for helpful comments and advice. Funding support from SGSL is acknowledged.
References ABARE, 2004. Australian Commodities, 1321-7844 11 (1), 1–228. Australian Bureau of Agricultural and Resource Economics, Canberra, Australia. Aslam, Z., Jeschke, W.D., Barrett-Lennard, E.G., Greenway, H., Setter, T.L., Watkin, E., 1986. Effects of external NaCl on the growth of Atriplex amnicola and the ion relations and carbohydrate status of the leaves. Plant Cell and Environment 9, 571–580. Barrett-Lennard, E.G., 2003. The interaction between waterlogging and salinity in higher plants: causes, consequences and implications. Plant and Soil 253, 35–54. Barrett-Lennard, E., Ewing, M., 1998. Saltland pastures? they are feasible and sustainable – we need a new design. In: Proceedings of the 5th National Conference on Productive Use and Rehabilitation of Saline Lands, 10–12 March, Tamworth, pp. 160–161. Barrett-Lennard, E.G., Malcolm, C.V., 1995. Saltland Pastures in Australia – A Practical Guide. Department of Agriculture, Western Australia, p. 112.
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Barrett-Lennard, E.G., Malcolm, C.V., 1999. Increased concentrations of chloride beneath stands of saltbushes (Atriplex species) suggest substantial use of groundwater. Australian Journal of Experimental Agriculture 39, 949–955. Barrett-Lennard, E.G., van Ratingen, P., Mathie, M.H., 1999. The developing pattern of damage in wheat (Triticum aestivum L.) due to the combined stresses of salinity and hypoxia: experiments under controlled conditions suggest a methodology for plant selection. Australian Journal of Agricultural Research 50, 129–136. Barrett-Lennard, E.G., Malcolm, C.V., Bathgate, A., 2003. Saltland Pastures in Australia – A Practical Guide, second ed., Sustainable Grazing of Saline Lands (a sub-program of Land, Water and Wool), pp. 176. Bathgate, A.D., 1999. Whole farm model to optimise profit on South Coast farms. Final Report for the Grains Research & Development Corporation, Department of Agriculture, WA. Bathgate, A.D., Young, J., Barrett-Lennard, E.G., 1992. Economics of revegetating saltland for grazing. In: Herrmann, T.N. (Ed.), National Workshop on Productive Use of Saline Land. South Australian Department of Agriculture, pp. 87–94. Bolt, S., 2001. Salinised resources – a necessity and an opportunity. In: Grose, C., Bond, L., Pinkard, T. (Eds.), Proceedings of the 7th National Conference on the Productive Use and Rehabilitation of Saline Land, Conference Design, Sandy Bay, pp. 24–34. Coles, N.A., George, R.J., Bathgate, A.D., 1999. An assessment of the efficacy of deep drains constructed in the wheatbelt of Western Australia, Bulletin 4391, ISSN 1326 – 415X, Western Australian Department of Agriculture, p. 29. Ferdowsian, R., George, R., Lewis, F., McFarlane, D., Short, R., Speed, R., 1996. The extent of dryland salinity in Western Australia. In: Proceedings of the 4th National Conference and Workshop on the Productive Use and Rehabilitation of Saline Lands. Promaco Conventions, Perth, pp. 89–97. Ferdowsian, R., Pannell, D.J., Lloyd, M., 2002. Explaining groundwater depths in saltland: impacts of saltbush, rainfall, and time trends. Presented at the 8th National Conference and Workshop on the Productive Use and Rehabilitation of Saline Land (PURSL), Fremantle, 16–20 September 2002. Galloway, R., Davidson, N.J., 1993. The response of Atriplex amnicola to the interactive effects of salinity and hypoxia. Journal of Experimental Botany 44, 653–663. Ghauri, S., Westrup, T., 2000. Saltland pastures: changing attitudes toward saline land. Farmnote No. 47/ 2000, Department of Agriculture, Western Australia. Humphries, A.W., Latta, R.A., Auricht, G.C., Bellotti, W.D., 2004. Over-cropping lucerne with wheat: effect of lucerne winter activity on total plant production and water use of the mixture, and wheat yield and quality. Australian Journal of Agricultural Research 55, 839–848. Kingwell, R.S., 2002. Sheep animal welfare in a low rainfall Mediterranean environment: a profitable investment?. Agricultural Systems 74 (2) 221–240. Kingwell, R.S., Pannell, D.J. (Eds.), 1987. MIDAS: A Bioeconomic Model of a Dryland Farm System. PUDOC, Wageningen, The Netherlands, p. 207. Kingwell, R., Hajkowicz, S., Young, J., Patton, D., Trapnell, L., Edward, A., Krause, M., Bathgate, A., 2003. In: Kingwell, R. (Ed.), Economic Evaluation of Salinity Management Options in Cropping Regions of Australia. GRDC & NDSP, ISBN 0-646-42276-6, p. 179. Latta, R.A., Cocks, P.S., Matthews, C., 2002. Lucerne pastures to sustain agricultural production in southwestern Australia. Agricultural Water Management 53, 99–109. Lefroy, E.C., 2000. On the value of saltbush. Land Management 3, 27–30. Lloyd, M.J., 2001. Changing attitudes to saltland – a farmerÕs perspective. In: Proceedings of the 7th National Conference on the Productive Use and Rehabilitation of Saline Land. Conference Design, Sandy Bay, pp. 35–43. NLWRA, 2001. Australian Dryland Salinity Assessment 2000: Extent, Impacts, Processes, Monitoring And Management Options. National Land & Water Resources Audit, Canberra. Norman, H.C., Dynes, R.A., Masters, D.G., 2002. Nutritive value of plants growing on saline land. In: Proceedings of the 8th National Conference and Workshop on the Productive Use and Rehabilitation of Saline Lands. Promaco Conventions, Perth, pp. 59–69.
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Nulsen, B. (Ed.), 1998. Groundwater trends in the agricultural area of Western Australia. Resource Management Technical Report No. 173. Department of Agriculture, Western Australia, p. 88. OÕConnell, M., 2005. Economic evaluation of saltland pastures in Western Australia. Unpublished M.Ec. Thesis, University of New England, Armidale, New South Wales, p. 90. Pannell, D.J., 2001. Dryland salinity: economic, scientific, social and policy dimensions. Australian Journal of Agricultural and Resource Economics 45, 517–547. Pannell, D.J., Bathgate, A., 1994. MIDAS: Model of an Integrated Dryland Agricultural System: Manual and Documentation for the Eastern Wheatbelt Model Version EWM94-1. Department of Agriculture, Western Australia, p. 166. Revell, C., Nut, B., Craig, A., 2001. FrontierA – an early maturing balansa clover for the wheatbelt, Farmnote No. 3/2001. Department of Agriculture, Western Australia. Salerian, J.S., Malcolm, C., Pol, E., 1987. The economics of saltland agronomy. Technical Report 56. Division of Resource Management, Department of Agriculture, Western Australia. Schoknecht, N., 2002. Soil groups of Western Australia: a simple guide to the main soils of Western Australia, Edition 3, ISSN 1039-7205, Resource Management Technical Report 246, p. 116. Short, D.C., Colmer, T.D., 1999. Salt tolerance in the halophyte Halosarcia pergranulata subsp. pergranulata. Annals of Botany 83, 207–213. Simons, J., Alderman, A., 2004. Groundwater trends in the Esperance sandplain and mallee sub-regions, Miscellaneous publication 10/2004. Department of Agriculture, Western Australia, p. 7. Slavich, P.G., Smith, K.S., Tyerman, S.D., Walker, G.R., 1999. Water use of grazed saltbush plantations with saline water tables. Agricultural Water Management 39, 169–184. Walsh, I., Powell, J., Lloyd, M., Munday, B., Brewin, D., 2002. Saltland revegetation – production and diversity, farmer case study. In: Proceedings of the 8th National Conference and Workshop on the Productive Use and Rehabilitation of Saline Lands. Promaco Conventions, Perth, pp. 133–138. Warren, B.E., Bunny, C.J., Bryant, E.R., 1990. A preliminary examination of the nutritive value of four saltbush (Atriplex) species. Proceedings of the Australian Society of Animal Production 18, 424–427. Young, J., 1995. MIDAS: Model of an Integrated Dryland Agricultural System: Manual and Documentation for the Great Southern Model Version GS92-3. Department of Agriculture, Western Australia, p. 180.
The economic value of saltland pastures in a mixed farming system in Western Australia Michael OÕConnell
a,1
, John Young
b,2
, Ross Kingwell
c,*
a
c
Louis Dreyfus Australia, Level 13, Office Tower Building, 644 Chapel Street, South Yarra, Vic. 3141, Australia b Farming Systems Analysis Service, RMB 309, Kojonup, WA 6395, Australia University of Western Australia, Western Australian Department of Agriculture, CRC for Plant-based Management of Dryland Salinity, Nedlands, WA 6009, Australia
Received 17 April 2004; received in revised form 6 October 2005; accepted 11 October 2005
Abstract Dryland salinity increasingly is affecting large tracts of agricultural land in Australia. In response, technologies are being developed to allow farmers to make productive use of saline land. One option is the use of salt tolerant pasture systems for grazing and localised recharge management. In this study, a whole-farm bio-economic model of the farming system in a saltaffected agricultural region of Western Australia is applied to assess the role and profitability of saltland pastures in the mixed crop and livestock farming system that typifies the region. The results of the analysis show that, across a range of scenarios, saltland pastures suited to moderately saline environments offer the twin advantages of improved profit and reduced recharge that will slow the impacts of salinisation. In practice, for an individual farm the optimal area of saltland pasture is likely to vary according to farm landscape characteristics and market conditions. Key profit drivers for the saltland pasture system are identified, its
*
Corresponding author. Present address: University of Western Australia, Western Australian Department of Agriculture, 3 Baron-Hay Court, South Perth, WA 6151, Australia. Tel.: +61 8 9368 3225; fax: +61 8 9380 1098. E-mail addresses: [email protected] (J. Young), [email protected] (R. Kingwell). 1 Tel.: +61 3 9828 6111. 2 Tel.: +61 8 9833 6259; fax: +61 8 9833 6206. 0308-521X/$ - see front matter Ó 2005 Elsevier Ltd. All rights reserved. doi:10.1016/j.agsy.2005.10.003
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desirable association with lucerne to reduce recharge is highlighted and priorities for future R&D are discussed. Ó 2005 Elsevier Ltd. All rights reserved. Keywords: Dryland salinity; Saltland pasture; Farm modelling; Farm profitability; Recharge management
1. Introduction Dryland salinity currently affects the growth of crops and pastures on approximately 1.8 million hectares of previously non-saline agricultural land in Western Australia. This area is projected to increase to 3.3 million hectares over the next 10–20 years (Kingwell et al., 2003), and could eventually exceed 6 million hectares (about 32% of agricultural land in the state) before final equilibrium is reached (Ferdowsian et al., 1996). Considerable efforts have been directed at developing options for the management of dryland salinity. These management options can be classified as prevention, remediation or adaptation. Prevention refers to implementing recharge management strategies that reduce the leakage of water beyond the root zone into the water table. Most commonly this involves the use of deep-rooted perennial plant species and the manipulation of surface water flows to prevent ponding. Remediation refers to the process of restoring saline land by removing excess water and salts, often by engineering means, while adaptation involves adopting enterprises and management strategies that are designed to cope with, or utilise, high levels of salt in the soil and water (Pannell, 2001). In some regions of Australia, large areas of farmland are already salt-affected (Kingwell et al., 2003) so prevention of salinisation is not feasible and remediation is often not cost-effective (Coles et al., 1999). In these regions, adaptation is often the main course of action available to farmers. One of the most common adaptations to saline land in Western Australia is the establishment of salt tolerant pastures for grazing by livestock. Proponents of this approach highlight benefits such as reduced groundwater recharge, improved soil structure, and extra feed for livestock during periods of the year when feed supply is low (e.g., Bolt, 2001; Lloyd, 2001; BarrettLennard et al., 2003). However, in order for saltland pasture systems to be profitable these benefits must outweigh the cost of establishment, the risk of establishment failure and the cost of lost opportunities to undertake alternative practices. Previous analyses of saltland pastures (e.g., Bathgate et al., 1992) have not addressed the issue of land heterogeneity where there are differing degrees of salinisation across the rural landscape; nor have they analysed the role of understorey species and nor have they been able to examine new forms of saltland pastures such as saltbush (Atriplex species) alleys with annual pasture inter-rows. In this article, we use a whole-farm bio-economic model to describe and analyse an alley-based saltland pasture system that has developed in Western Australia mostly since the mid-1990s. The analysis focuses on saltland heterogeneity and how this new saltland pasture system
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might best be integrated into current farming systems. Key profit drivers of the saltland pasture system are identified along with its impact on recharge and implications for R&D are discussed.
2. Methods 2.1. Description of the study area The study region is the agricultural hinterland of a broad stretch of the southern coast of Western Australia (Fig. 1). The South Coast region of Western Australia covers 5.4 million hectares, of which about 3.7 million hectares is devoted to farming. The dominant agricultural enterprises across the region are broad scale
Fig. 1. The South Coast region of south-western Australia.
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cropping; mostly wheat, barley and canola. Also large areas of subterranean or medic pastures support mostly sheep enterprises devoted to wool and prime lamb production. Across the region the spread of dryland salinity is an issue for many farmers, although the presence or imminence of salinity does vary spatially (Simons and Alderman, 2004). In some sub-regions, salinity currently affects over 10% of agricultural land, with a rapid expansion in the affected area forecast over the next 50 years (Ferdowsian et al., 1996; NLWRA, 2001). In other sub-regions clusters of natural salt lake systems are common with adjacent lands very gradually being salt-affected. Farm size across the region mostly is in the range 1800–2250 ha, of which typically 40–60% is sown to crop (mostly wheat, barley and canola). The remaining area is pasture mostly for sheep kept for wool and meat production. The region experiences a Mediterranean-type climate. Most broadcare agricultural activity in the region occurs where between 375 and 600 mm average annual rainfall is received, of which approximately two-thirds falls between May and October with rainfall increasing with proximity to the coast. The growing season is followed by a summer drought usually lasting from November to March. This highly seasonal pattern of rainfall, coupled with a reliance on annual pasture species, has important implications for livestock feed supply. Availability of pasture is limited in the late autumn and early winter. By contrast, the spring is typified by a ÔflushÕ of pasture growth due to relatively warm weather and plentiful soil moisture. Consequently, on-farm supply of feed throughout the year is uneven affecting the timing, quality and amount of feed available. Accounting for such variability is important when assessing the role and profitability of a new feed source such as saltland pastures. 2.2. Farm modelling Assessing the benefits and costs of a grazing system is not straightforward. This is because the profitability of such systems depends on several factors including pasture growth rates and growth pattern, pasture quality and palatability, the class of livestock and pattern of grazing, and the cost of pasture establishment and maintenance. In addition, profitability can be affected by interactions with other enterprises on the farm. Examples of important interactions include disease and pest breaks, nitrogen fixation by leguminous pastures from which subsequent crops benefit, weed control opportunities, grain feeding, stubble grazing and complementary or competitive machinery usage. For these reasons, accurate and meaningful economic analysis of grazing systems requires a technique that adequately captures the production relationships and their economic impacts. In this analysis, we used representative whole-farm models to examine the role and profitability of saltland pastures for different sub-regions of the South Coast region. These representative models are derivatives of a whole-farm bio-economic model known as the South Coast version of MIDAS (Model of an Integrated Dryland Agricultural System) (Bathgate, 1999; OÕConnell, 2005).
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South Coast MIDAS is a steady-state, whole-farm, mathematical programming optimisation model that describes the physical, technical, biological and managerial aspects of typical broadacre cropping and livestock farming systems in the South Coast region of Western Australia. The model combines sheep simulation model output within a profit-maximising standard linear programming tableau to describe the main farm enterprises and interactions that typify farming systems in the region for expected climatic and market conditions. The model describes the main enterprise options available to farmers in the region, including wheat, barley, oats, lupins, field peas, canola, lucerne, annual and saltland pasture phases. The rotation sequences involving these crops and pastures are described for each of five soil classes. Input requirements and production output for each rotation component on each soil type production are included in the farm model. Inter-year rotational effects, beneficial and adverse, are represented within the steady-state paradigm. Sheep energy requirements and production vary across a year and vary between age groups and classes of sheep. Output from a sheep simulation model is included in the linear programming tableau to describe in detail the nature of sheep production, including energy requirements and growth rates for each class of sheep class in each sub-period of an average production year, their wool yield and quality, lambing percentages, death rates and retention rates required to form a self-replacing ewe flock. The model includes descriptions of farm labour, machinery and finance requirements and overhead costs involved in running a farm business. The modelÕs objective function is to maximise the farmÕs net return to capital and management, achieved by selecting an optimal set of farm enterprises and farm resources. Hence, output from the model is a listing of preferred rotations for each soil type, including their input and resource requirements and production outcomes; the size and structure of the sheep flock including their feed requirements and feed sources; and the use of labour, machinery and finances that accompanies this optimal farm plan. The linear programming tableau is generated by a 13.8 MB Excel file containing 27 worksheets that describe the data sources and data included in the model. The tableau comprises around 1900 columns and 860 rows. Other versions of the MIDAS model, similar to the South Coast MIDAS model, are described in more detail by Kingwell and Pannell (1987), Pannell and Bathgate (1994), Young (1995) and Kingwell (2002). In this study, various versions of the South Coast MIDAS model were used to represent typical farms in main broadacre sub-regions of the whole region. These sub-regions mostly lie between 375 and 550 mm annual isohyets and are shown in Fig. 1 as the Palinup-North Stirlings, the Albany hinterland (also known as South Stirlings), the Fitzgerald biosphere and the Esperance sandplain. The nature and mix of soil types in the representative farms of these sub-regions are outlined in Table 1. A feature of this study different from previous studies of saltland pastures is that several classes of saline soil are represented. Barrett-Lennard et al. (2003) show how saline landscapes on farms are a diverse range of ecological niches for various plant
376
Table 1 Soil types and their relative proportions in the sub-regional South Coast MIDAS models Soil group no.a
North stirlings
Fitzgerald
Esperance Sandplain
Proportion of soil class in the sub-region farm model (%) Waterlogging prone duplex Medium depth sandplain duplex Deep sands Grey loams and clays Reddish-brown loams and clays
Saline Saline Saline Saline a
soils soils soils soils
Sand over clay (with or without gravel) within 30 cm. Slope < 3%. Subject to waterlogging Sand over clay at 30–80 cm, often with a gravel layer above the clay. May be waterlogged in wet years Generally more than 80 cm to clay. Not susceptible to waterlogging Poorly drained and sodic, hard-setting grey clays Loam soils common along drainage lines and on some upper and lower valley slopes, well-drained and moderately wellstructured Mildly affected Moderately affected Severely affected Bare scald, very highly saline, ungrazed
Land resource assessment soil group code Schoknecht (2002).
502,503,504,507,508, 402,404,406,408
31.5
20
5
20
401,403,405,407
12.5
40
25
30
3.5
30
10
40
42.5
5
30
0
506,522,622
0
0
20
0
105,103,101 105,103,101 102 102
2.5 2.5 2.5 2.5
2 1.5 1.5 0
444,441,442,446,464 504,601
3.5 3.25 3.25 0
3.5 3.25 3.25 0
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South stirlings
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species. Often the interplay of waterlogging and salinisation determine what plant species grow best in these various niches. Where severe salinity and waterlogging coincide, often only low productivity species such as samphire grow and these species are normally not recommended for grazing by sheep. As salinity concentrations or waterlogging incidence is reduced then additional plant species become available as preferred feed sources. In this analysis, the main saline environments are represented by various soil classes ranging from bare salt scalds not capable of supporting crop or pasture through to highly productive saline soil that is only mildly affected by salt. Inclusion of a range of types of saline soils allows differences and complementarities between land-uses and enterprise productivities to be considered. 2.3. Saltland pasture production Pasture composition, production and quality estimates for the mildly saline soil were derived from site measurements near Lake Grace (Dynes and Norman, unpublished data), complemented by estimates supplied by editor Barrett-Lennard (personal communication 2003) based in turn on findings of Aslam et al. (1986), Galloway and Davidson (1993), Barrett-Lennard and Malcolm (1995), Barrett-Lennard and Ewing (1998), Short and Colmer (1999) and Barrett-Lennard et al. (2003). Examples of the amounts of feed available for grazing at different times of the year on the mildly affected saline soil are provided in Table 2. Saltbush (Atriplex species) and many annual pasture species in general grow less well if the soil becomes increasingly salt-affected or more prone to waterlogging (Barrett-Lennard et al., 2003). These saline environments are represented in the farm model by three other soil classes. The worst land comprises bare salt scalds, left ungrazed, often known as samphire country. Grazing is possible on the other two saline soil classes. The feed available from grazing the saltbush on these other soil classes is 110% and 80%, respectively, of levels shown in Table 2 for the mildly affected saline soil class. The higher production of saltbush on moderately affected soil compared to mildly affected soil is due to the halophyte (Atriplex species) having higher growth rates at moderate salinities (Barrett-Lennard and Malcolm, 1995). Similarly, the feed on offer from the annual pasture component on the moderately and severely salt affected soil classes is assumed to be 100% and 30%, respectively, of those levels listed in Table 2 (Barrett-Lennard and
Table 2 Feed available for grazing at different times of the year (kilograms of dry matter per hectare) for the mildly affected saline soil type
Saltbush Volunteer grass Volunteer legume Improved legume
May (kg DM/ha)
August (kg DM/ha)
November (kg DM/ha)
February (kg DM/ha)
800 – – –
800 150 25 700
800 300 50 1500
800 150 35 975
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Table 3 Feed value of various pasture components at different times of the year (megajoules per kilogram of dry matter)
Saltbush Volunteer grass Volunteer legume Improved legume
May (MJ/kg DM)
August (MJ/kg DM)
November (MJ/kg DM)
February (MJ/kg DM)
7.1 – – –
7.1 11.0 10.0 11.8
7.1 7.1 9.0 10.0
7.1 5.5 7.0 9.0
Ewing, 1998). High levels of feed production from the annual pasture component on the moderately salt affected soil type is made possible by a draw-down of the water table by adjacent saltbush (Barrett-Lennard and Malcolm, 1999). This drawdown allows salts to be flushed from the topsoil of the moderately affected land, thereby creating growing conditions more suited to annual pastures. Feed value also varies over the season – the highest quality feed is available during winter and spring, with a steady decline in quality over summer and autumn. Representative values are provided in Table 3. 2.4. Cost of establishing and maintaining the saltland pasture system The main saltland pasture system represented in this analysis consists of managed alleys of saltbush species, with a mixed sward of annual species growing in the interrow. Following Ghauri and Westrup (2000), a contract charge of approximately $170/ha was assumed for the establishment of saltbush alleys on the saline soils, apart from the salt scalds on which no planting occurred. A further $55/ha was included to allow for establishment of an improved legume based pasture, bringing the total cost of establishment to $225/ha (Table 4). An adjustment was made for the risk of establishment failure and the cost was amortised over 5 years at a real interest rate of 5%. The total cost per year was calculated by adding the cost of an annual application of fertiliser. For the more saline soils (apart from bare salt scald soil), costs of establishment and annual fertiliser applications were reduced to reflect a Table 4 Costs of establishmenta and maintenance of the saltbush pasture system on each soil type
Cost of establishment ($/ha) Probability of success (%) Investment life of stand (years) Real interest rate (%) Amortised cost ($/ha) Annual fertiliser application ($/ha) Total annualised cost ($/ha) a
Mildly affected saline soil
Moderately affected saline soil
Severely affected saline soil
225 100 5 5 52 20 72
200 80 5 5 58 17 75
175 60 5 5 67 14 82
All monetary values are Australian dollars.
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decreased input level. The assumed costs underestimate some farmersÕ actual costs, especially where farmers supply additional new fencing, new water supplies or earthworks for surface water management. Further detail relating to feed available for grazing and feed value assumptions are available on request from the authors. 2.5. Crop production on saline soils An important consideration when assessing the value of a new enterprise is Ôopportunity costÕ – that is, the cost of lost opportunities to undertake alternative practices. In many situations, it remains feasible to continue cropping saline land, especially when it is only mildly saline. Therefore, the opportunity cost of cropping may be an important consideration when assessing saltland pasture, especially in mildly saline environments. Indicative yields of wheat and barley on the saline soil types are shown in Table 5 and draw on Barrett-Lennard (2003) and Barrett-Lennard et al. (1999). All yields are for a crop grown after a single year of manipulated pasture. 2.6. Commodity price and cost of production assumptions Commodity prices assumed in the analysis are derived from medium-term estimates by the Australia Bureau of Agricultural and Resource Economics (ABARE, 2004), with some adjustments applied to reflect developments in domestic and global commodity markets since the release of their forecasts. Table 6 lists price assumptions for the major commodities.
Table 5 Yields of wheat and barley on the saline soil types (kg/ha) when grown after a single year of manipulated pasture
Wheat Barley
Mildly affected saline soil (kg/ha)
Moderately affected saline soil (kg/ha)
Severely affected saline soil (kg/ha)
1700 2000
730 860
0 0
Table 6 Price assumptions for the major commoditiesa Commodityb
Price ($/ton)
Commodity
Price
Wheat APW Malting barley Feed barley Lupins Canola
210 210 170 200 350
Wool – greasy price for 21 lm fleece wool Merino lambs – dressed weight Shipping wethers – at saleyard Merino hoggets – at saleyard Cast for age ewes – at saleyard
$3.70/kg $2.10/kg $40/head $40/head $25/head
a b
All monetary values are Australian dollars. Grain prices are $/ton pool return, FOB, exclusive of goods and services tax.
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Saltland pasture on mildly and severely affected saline soil Saltland pasture on moderately affected saline
Farm profit ($A’000)
86 85 84 83 82 81 80 0
20
40
60
80
100
120
140
Area of saltland pasture (ha)
Fig. 2. Change in whole-farm profit with different areas of saltland pasture. (Whole-farm profit is profit at full equity before tax, minus the opportunity cost of capital.)
Costs of production were based on current retail prices for agricultural inputs obtained by a phone survey of several suppliers to the region.3
3. Results and discussion In this section, to economise on space, results are presented only for the PalinupNorth Stirlings sub-region (see Fig. 1). Results for the other sub-regions are available from the authors on request. Because similar findings were generated in each subregion there is little to add by inclusion of all results for all sub-regions. 3.1. Economic value of the saltland pasture system Applying the data and assumptions previously outlined, farm profit in the Palinup-North Stirlings sub-region is maximised when saltland pasture is grown on about 115 ha of the total 200 ha of salt-affected land (Fig. 2). The greatest increase in profit comes from establishing the first 50 ha of saltland pasture. Whole-farm profit increases by about $4000 (or $80/ha averaged over the 50 ha). Further increases in the area of pasture beyond the initial 50 ha generate little improvement in profit. The reason for this result is due to the saltland pastures being grown initially on the moderately affected saline soil (Table 1) that displays moderate
3 Information on inputs and costs is available from the authors. Space limitations prevent their listing here.
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productivity (as annotated in Fig. 2). This soil type does not support profitable crops and annual pastures yet can generate reasonable saltland pasture. In other words, there is a lesser opportunity cost associated with establishing saltland pasture on this soil type compared to mildly saline land that still supports crop production. This finding related to differences in the degree to which a saline soil is salt-affected is repeated across all sub-regions. The profitability of establishing saltland pasture on the highly saline, low productivity land is also low – not because of opportunity cost, but because the quality and quantity of pasture provided only just offsets the cost of establishment and maintenance. These results contrast to some extent with previous studies of the economic value of saltland pastures (e.g., Bathgate et al., 1992). In previous studies, the net gain in profit, or marginal value of saltland pastures was directly correlated with yield (e.g., Bathgate et al., 1992; Salerian et al., 1987). However, this will be the case only when either there are no alternative uses for saltland (i.e., no opportunity costs) or other constraints (e.g., cropping machinery capacity) limit the size of enterprises that otherwise could compete for land devoted to saltland pastures. Many farmers will find that the parts of their farm capable of producing the highest yielding saltland pasture are also capable of producing profitable crops. In this case, the net gain in profit from adopting saltland pastures on mildly saline soils is likely to be minimal, and perhaps even negative. In other cases where resource constraints limit the size of an enterprise that ordinarily would compete with saltland pasture, the optimal investment decision may not necessarily be to adopt saltland pasture but rather to lift the restriction on the competing enterprise. 3.2. How does the saltland pasture fit into the farming system? The grazing strategy selected by the model in each sub-region involves utilising the saltland sward from late January to early April. This is a similar strategy to that implemented by farmers who have saltland pastures (e.g., Lloyd, 2001; Walsh et al., 2002). During this period feed available from annual pastures and crop stubbles is of low quality and quantity and, without the saltland pasture, large quantities of cereal grain and lupins are required to sustain sheep. Including the saltland pasture system reduces the quantity of supplement required and increases the number of sheep that can be supported as shown by results in Table 7.
Table 7 Change in supplementary feeding requirements and sheep numbers with the inclusion of saltland pasture Area of saltland pasture (ha)
Amount of supplementary grain (kg/DSE)
Total sheep numbers (DSE)
0 50 100 150
13 10 8 5
8018 8180 8270 8133
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Extra stock can be carried on the farm because the saltland pasture is a lower cost source of feed than grain, i.e., there is a reduction in the cost of carrying stock through summer. This makes it profitable to increase the number of stock carried, which then allows better utilisation of the traditional pastures during winter and spring. The opportunity to profitably increase-stocking rate is limited because the cost of carrying the extra stock through winter begins to outweigh the benefits of the extra stock (even though the cost of carrying those stock over summer is still cheaper than it would have been in the absence of the saltland pasture). 3.3. Where does the profit come from? The important factors that contribute to the profitability of a saltland pasture system are are illustrated in the profit and loss statements in Table 8. The total net benefit comprises savings related to reduced supplementary feeding, benefits of higher wool and sheep sales related to the higher stock number, extra husbandry costs, extra depreciation and extra capital tied up by carrying the extra sheep, a slight increase in interest earned, a reduction in interest paid and an increase in costs associated with establishing and maintaining the saltland pasture system. Results in Table 8 can be categorised as shown in Table 9. Reduced supplementary feeding provides around two-thirds of the total benefit, increased sheep numbers provide about a third and the reduction in financing costs
Table 8 Comparison of profit and loss statements with and without saltland pasturea Difference between with and without saltland pasture in farm plans ($/farm) Grain sales Wool sales Sheep sales Interest received on working account
0 2334 1933 93
Total revenue
4360
Crop and pasture costs Sheep husbandry and replacements Supplementary feeding Overheads Interest charged on working account
3662 1302 4845 0 254
Total cash operating costs
134
Cash flow minus Depreciation minus Opportunity cost of capital
4494 97 383
Whole farm profit before tax
4014
a
All monetary values are Australian dollars. The with case is based on 50 ha of saltland pastures. Results are for the North Stirlings-Palinup region.
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Table 9 Attribution of the gross benefits of the saltland pasture system Source of benefit
Benefit ($)a
Reduced supplementary feeding Increased sheep numbers Reduced financing costs
4845 (63) 2485b (32) 347c (5)
Total
7677 (100)
a
Numbers in brackets are the dollar benefits expressed as a percentage of total benefit. Based on North Stirlings-Palinup sub-region. b $2485 = extra wool ($2334) + extra sheep ($1933) extra husbandry ($1302) extra depreciation ($97) extra opportunity cost ($383). c $347 = extra interest received ($93) + savings on interest paid ($254).
provides the small remainder. These results have important implications for farmers adopting saltland pasture. These farmers can receive the majority of the benefits without having to increase sheep numbers. If required, purchase of sheep would impose large transition costs upon farmers and reduce the attractiveness of adopting saltland pasture. 3.4. What are the key profit drivers of saltland pasture systems? Results in Tables 8 and 9 highlight where differences in returns occur with and without saltland pasture. However, cause and effect is not obvious from Tables 8 and 9, making it difficult to identify what factors determine the profitability of saltland pasture and, more importantly, what areas farmers and researchers should focus on to improve profitability. Sensitivity analysis provides a valuable tool for isolating profit drivers. A summary of key profit drivers based on the assumptions used in this study is provided in Fig. 3.
Summer/autumn quality
Summer/autumn FOO
Pasture establishment costs
Sheep sale prices
Wool prices
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Change in farm profit ($A'000)
Fig. 3. Key profit drivers for the saltland pasture system in this study. Note. FOO is feed on offer.
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Each horizontal bar represents the effect on the profitability of saltland pasture of a favourable 10% change in the listed factor. This approach provides a valuable guide for prioritising action, either managerial on the part of a farmer, or research on the part of a scientist for the saltland pasture system underlying this analysis. The results show that increased feed quality or feed available for grazing in summer/autumn is likely to be very valuable and could warrant further investigation if increases are likely to be achieved. By contrast, having extra feed available for grazing in winter and spring is of low value because the saltland pasture is not grazed at this time. However, this is not the same as saying that extra production in winter and spring has no value, i.e., extra production from winter or spring could be deferred and then grazed in summer and autumn, in which case it would have moderate value. There are several options available to researchers and farmers in the pursuit of increased feed quality and quantity. One possibility is to improve the utilisation of the saltbush component of saltland pastures. For example, Warren et al. (1990) found that supplementation of saltbush with hay resulted in significant increases in dry matter intake by sheep, thereby effectively increasing the quantity of feed available. Supplementing saltbush with crop stubbles or dry pasture may also give similar results. Animal performance could also be improved by increasing the biomass of annual pasture species growing in the rows between saltbush shrubs, especially legumes (Norman et al., 2002). A recent successful example is the development of FrontierA balansa clover. This cultivar is suited to mildly saline sites affected by waterlogging in the Western Australian wheatbelt (Revell et al., 2001; Lloyd, 2001). Further pasture developments of this kind will contribute to worthwhile increases in the profitability of saltland pasture systems. When using the information in Fig. 3 it is important to realistically assess the scale of change possible for each parameter. For example, at first glance it appears that reducing establishment costs has relatively minor scope for improving profit. However, if it were possible to surpass 10% and achieve a 50% reduction in establishment costs then profits could improve considerably. In fact, Ghauri and Westrup (2000) present a farmer case study where cost savings in excess of 50% (compared to contractor rates) have been achieved. Wool and sheep prices are relatively minor profit drivers for adopting saltland pastures, despite being important determinants of whole-farm profit. This is explored further in Fig. 4, which charts the ÔmarginalÕ, or additional, value of extra hectares of saltland pasture under different combinations of wool and sheep prices. In the low price scenario, it is still profitable to include saltland pasture on the moderately saline, moderately productive soil. However, additional area beyond the first 50 ha leads to reductions in profit of $10–$90/ha. These results highlight that saltland pasture on moderately affected saline land will likely be the most ÔrobustÕ, in terms of profitability under a wide range of scenarios. Growing saltland pasture on the mildly saline, highly productive soil increases profit slightly in some price scenarios yet reduces profit slightly in other price scenarios.
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marginal val ue of saltland pasture ($A/ha)
150
100
50
0 0
25
50
75
100
125
150
-50
-100 Area of saltland pasture (ha) Low wool & sheep prices
Medium wool & sheep prices
High wool & sheep prices
Fig. 4. Marginal value of saltland pasture with different wool and sheep sale prices. Note. Medium prices are those provided in Table 6; ÔlowÕ & ÔhighÕ prices for wool are 70% and 130% of the medium prices, respectively; ÔlowÕ & ÔhighÕ sheep sale prices are 60% and 140% of the medium prices, respectively.
3.5. How does saltland pasture affect groundwater management? Saltland pasture can form part of a profitable farming system in each sub-region; but does the adoption of saltland pastures prevent or slow the rise of saline groundwater tables (Nulsen, 1998) that lead to salinisation? The empirical evidence to date is inconclusive. Slavich et al. (1999) noted that the transpiration rates of oldman saltbush (Atriplex nummularia) in a 4-year study were very low and concluded that the plants were having a negligible impact on the water table. Lefroy (2000) also suggests that water use by saltbush grown at low production levels (<0.75 t/ha/yr) would be negligible, given that leaf area is removed by sheep at a time of year (the autumn feed gap) when transpiration is potentially high. However, Ferdowsian et al. (2002) found that water tables were persistently lowered under a plantation of saltbush plants at a location near the South Coast region. Likewise, Barrett-Lennard and Malcolm (1999) indirectly measured groundwater use by saltbush shrubs to be 60–100 mm over a 2-year period. They found that saltbush grown on moderately salt affected soil drew-down the water table enough to allow high levels of feed production from annual pastures growing between the saltbush shrubs. Saltbush is most likely to be grown on salt affected soils, yet these soils typically comprise less than 30% of farm area. So any contribution of saltbush to lowering water tables will be constrained by this area of suitability and comparative advantage. It is more likely that other deep-rooted perennial species, such as lucerne, that could be grown over a larger proportion of the farm will be more effective facilitate the lowering of water tables, or at least slowing their rate of rise. LucerneÕs ability to use water and reduce water tables in many agricultural regions of Western Australia is widely recognized (Latta et al., 2002; Humphries et al., 2004); such is not the case for saltbush.
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Farm profit ($A')000
90 80
No Lucerne & No Saltbush
70
Lucerne & Saltbush
60
Saltbush & No Lucerne
50
Lucerne & No Saltbush
40 15
25 35 45 Recharge (mm per ha)
55
Fig. 5. Trade-off between whole farm profit and recharge for scenarios involving saltbush and lucerne.
Fig. 5 presents the trade-off between whole-farm profit and average groundwater recharge under the following four different treatments: (i) nil saltland pasture or lucerne included in the farm plan; (ii) saltland pasture included, lucerne excluded; (iii) Lucerne included, saltland pasture excluded; and (iv) saltland pasture and lucerne both included in the farm plan. For each treatment, the North Stirlings-Palinup sub-regional representative farm model was solved with varying constraints on groundwater recharge. The results in Fig. 5 show minimal scope to manage groundwater recharge under the Ôno saltland pasture and no lucerneÕ treatment. In this scenario, land use is restricted to annual crop and pasture species. While minor reductions in recharge may be possible with switches in enterprise (or changes to the management of existing enterprises), this incurs large reductions in farm profits and in unlikely to have a material impact on the spread of salinity through rising water tables. Introduction of saltland pasture can reduce groundwater recharge to some extent, although in a whole-farm sense the overall impact on recharge levels is again limited (at least in this case where the model farm has 10% of its arable area affected by salinity). By contrast, introduction of lucerne is technically feasible over most of the non-saline farm area, and so its potential impact on groundwater recharge is commensurably greater. The greatest reduction in recharge comes in the treatment where saltland pasture and lucerne are included. In this scenario, the trade off curve remains flat over a wide range, suggesting a 20–25% reduction in recharge with minimal impact on whole-farm profit.
4. Conclusions Dryland salinity is a major emerging threat to farming systems in many parts of southern and eastern Australia. This study has shown that, in a major southern agricultural region of Australia, saltland pastures are likely to be a profitable inclusion in traditional farming systems in a wide range of scenarios. However, the optimal area of saltland pasture to establish on a farm is likely to vary considerably according to site characteristics and market conditions.
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The largest increase in farm profit consistently comes from establishing saltland pasture on moderately affected saline soil types, i.e., land that is too saline to produce profitable annual crops and pastures, but not so saline as to severely impact on production from the saltland pasture system. By contrast, establishing saltland pastures on mildly saline land that still supports relatively high grain yields is unlikely to deliver large profits due to the opportunity cost of annual crops and pastures. Likewise, highly affected saline soils of low productivity deliver only modest gains in profit at best when saltland pastures are introduced. These results suggest that farmers will be better off establishing saltland pasture on moderately saline soils first. At relatively high wool and sheep prices, as occurred from 1998 to 2003, there might also be some gains from expanding saltland pasture into other saline country of lesser or higher productive capacity. However, growers contemplating such a move need to be aware that this strategy may backfire if there is a synchronised downturn in wool and sheep prices. Under this market scenario, saltland pasture is only profitable on moderately affected saline soil types that do not support high yielding crops but on which saltland pastures grow well. Sensitivity analysis shows that the profitability of saltland pastures is highly sensitive to several key factors such as summer/autumn feed value, amount of feed available for grazing in summer/autumn and establishment costs. Methods to bring improvements in these areas warrant further investigation. Lastly, evidence that saltbush may assist in lessening the spread of salinity through its water use is mixed. However, more certain is that the combination of lucerne and saltbush (the latter grown on soil already salt-affected) does offer the twin advantages of boosting or maintaining farm profit whilst greatly lessening recharge and thereby slowing the rate of any rise in saline water tables.
Acknowledgements The authors thank editor Barrett-Lennard, Andrew Bathgate and David Pannell for helpful comments and advice. Funding support from SGSL is acknowledged.
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