Economic analysis of the role of canola in southern and central NSW farming systems.
J Fiona Scott 1, John P Brennan2 and Khaled Y Faour3
1 NSW Agriculture, RMB 944, Tamworth NSW 2340
2 NSW Agriculture, Wagga AI, PMB, Wagga Wagga NSW 2650
3 NSW Agriculture, Yanco AI, PMB, Yanco NSW 2703
ABSTRACT
This paper contains an outline of the cropping system under consideration, a description of the PRISM whole-farm model, analysis of the effect of different yields and price levels on the inclusion of canola and triazine-tolerant canola in rotations and discussion of these results.
ItThis work
will provide useful information for farmers and advisers regarding the yield
and price levels at which canola is a viable crop in the rotation system and. It
will also denote the potential farm-level
economic impacts of the use of triazine-tolerant canola in place of
non-triazine tolerant varieties.
KEYWORDS: crop rotations, economics, whole-farm modelling
Farming systems in southern NSW have been characterised
by two main patterns of land use. Firstly, legume pastures grown in rotation
with cereal crops such as wheat and secondly, extended periods
of fallow (primarily for moisture conservation but also weed and disease
control) followed by a cereal crop. In the drier areas of southern and central
NSW, a common rotation is pasture-fallow-wheat (Poole,
1987).
Since the early 1970’s there has been an intensification of cereal cropping in response to improvement in relative profitability as well as the development of ‘conservation farming’ systems. The expansion of cereal cropping occurred due to opening up of new land and at the expense of pasture and fallow periods (Poole, 1987). Canola has become a commonly grown rotation crop with cereals and pastures. It has the advantages of reducing cereal root diseases, improving soil structure (due to a different root structure to cereals), preventing build up of herbicide resistant weeds and diversifying income.
In this paper we assess the place of canola in the
rotation system in the Wagga region of southern NSW, in terms
of the effects of price changes and relative yield to other crops on the
inclusion of canola in the rotation. In addition, we address the use of
triazine-resistant canola and it’s effect on rotation choice.
2. The PRISM model
PRISM is a whole-farm computer model developed to
analyse the farming systems of the south-eastern wheat belt of Australia. It was composed in a joint NSW Agriculture and
Agriculture Victoria project funded by the Grains Research and
Development Corporation (GRDC). The principalprinciple
objective of the project was to adapt the Western Australian MIDAS model for
use in the wheatbelt of southern Australia. MIDAS (Model of an Integrated Dryland
Agricultural System) is a whole-farm linear programming (LP) framework
that represents biological and economic aspects of a representative mixed farm
(Faour et al.et al,
1997).
Marked differences between the wheatbelt of south-eastern
Australia and that of Western Australia required substantial changes from the MIDAS parent
model, so the new model was renamed PRISM (Profitable Resource Integration
Southern MIDAS). The PRISM model is a Microsoft® Excel for Windows®
workbook of several spreadsheets which uses the LINDO® LPlinear
programming solver, What’s Best!® to
solve the model using a combination of integer and linear programming (Faour
et al.et al,
1997).
PRISM is an optimising annual steady state model which
allocates available farm resources to maximise farm profit for a representative
mixed farm (Faour et al.et al,
1997). There are different versions of PRISM for different regions in
south-eastern Australia, including South Australia (Eyveres
Peninsula), Victoria (Bendigo, Wimmera and Mallee) and southern NSW
(Wagga Wagga and Condobolin). The version for the Wagga region is used in this
analysis.
Crop yields are determined from growing season
rainfall (GSR), growing season losses,
transpiration, and various weed and disease penalties which vary according to
preceding crop history. Monthly live-weight values of livestock are inputs into
the model, which determine the animals’ energy requirements. Monthly energy
supply by pastures are also inputs into the model. Energy may either be used by
the livestock or transferred forward one month (with accompanying quantity and
quality penalties).
Outputs from the model include operating cash surplus,
optimal area of crop and pasture, the area of each crop grown, the amount of
seed to be either purchased or retained, sheep enterprise type (selected from
first cross ewes, second cross ewes, merino ewes and merino wethers) and the
annual amount of single superphosphate fertiliser
required. Shadow costs of rotations not selected as optimal
are also reported.
3. ANALYSING THE ROLE OF CANOLA
3.1 The representative farm
The representative farm used in this analysis is a
1,000 hectare farm operating an integrated crop and livestock system. Farm
revenue is derived from grain, wool and sheep sales as well as interest earned
on positive cash flow. Grain may either be sold or fed to livestock as a
ration. The model analyses only one soil type (red earth) and does not include
cattle. Continuous cropping without a pasture phase was not included as an
option as it is n’ot
standard district practice (Faour et al.,et al
1997).
3.2 PRISM model settings
PRISM-Wagga was run for the representative farm with
various yield and price combinations for standard and triazine tolerant (TT)
canola. For standard canola, canola yield was varied across a range
of outcomes, from 1.4 to 2.86 t/ha in
0.2 tonne increments. For TT canola, a 20% yield penalty was assumed, so yields
were varied from 1.12 to 2.24 t/ha. For each yield level, a price sensitivity
analysis was conducted where the farm gate price was altered from $240 to $450
per tonne in $10 increments. For each combination of yield and price, the PRISM
model identified the rotation which maximised the operating cash surplus of the
farm.
All parameters for other crops were not altered since
the relative effects of relative
yield of and price differences
offor
canola were being tested. On-farm Pprice
levels for the various crops were wheat $140/t, lupins $290/t and oats $100/t.
Yield levels for other crops varyied
according to the rotation (the model takes soil fertility, disease
and weed effects into account) but were in the order of wheat 2.8 t/ha, barley
2.0 t/ha and oats 3.1 t/ha.
Canola yield was lower where canola was cropped after
wheat compared to after pasture due to weeddisease
and soil fertility penalties. The model allowed for yield benefits to wheat
crops following canola. It was assumed that no fertiliser nitrogen was added to
grain crops so there was some yield reduction from the potential in canola.
4. RESULTS
4.1 Variation in yields and prices
When canola was not included in the available set of
crop options, or was not chosen by the model, the
rotation selected was 600 ha of crop and 400 ha of pasture. The model reports the selected
rotation(s) in
acronym form where P represents sub-clover pasture, W for wheat, L for lupins,
Ca for canola and O for oats. The rotations selected were PPWLW
(942 ha) and PPOLW (58 ha) with 200 ha of lupins, 388 ha of wheat, 12ha of oats
and 2,600 second cross ewes. The operating cash surplus was $164 ,466. C. anola
was not selected as part of the rotation until the canola
yield and/or on-farm price
was high enough to increase the operating cash surplus above this
level.
When canola was included in the crop options, the rotations selected were PPCaW (4 year rotation, canola 25% of farm area) and PPPCaWLW (7 year rotation, canola 13% of farm area). Figure 1 summarises the results in terms of percentage of farm area sown to canola at different yield and price levels. The maximum percentage of farm area allowed to be sown to canola was 25%, meaning that canola is only grown one year in four at the most. This was to minimise weed and disease problems.
Low yielding (1.4 t/ha) canola was not included in the
optimal rotation until the price became relatively high ($410/t). Conversely
when canola yields were very high (2.8 t/ha) it was always selected as part of
the rotation. The average yield for
the Murrumbidgee region was 1.77 t/ha in 1996, so
the current situation would
be represented by the 1.6
t/ha and 1.8 t/ha yield graphs.
Tthe
rotations selected were PPCaW (4 year rotation, canola 25% of farm area) and
PPPCaWLW (7 year rotation, canola 13% of farm area) where P represents
sub-clover pasture, W for wheat, L for lupins, Ca for canola and O for oats.
4.2 Herbicide resistant canola
Currently, the only herbicide resistant canola
released in Australia is triazine tolerant (TT) canola. Triazine
herbicides are residual herbicides, mostly used for the control of mustard,
radish and turnip weeds. Previously control of these weeds in canola was
difficult because canola belongs to the same botanical family (Brassicaceae)
and thus was susceptible to the same herbicides. Current TT canola varieties
are Pinnacle, Karoo, Drum, Clancy, Hylite 200TT and Surpass
600TT (Colton et al.et al,
1999). The triazine herbicides that may be used on these varieties are atrazine
and simazine (Mullen and Dellow, 1998).
Currently, the permit for using triazine herbicides on TT canola specifies that only a single atrazine or simazine application or a single application combining atrazine and simazine is permitted. The maximum total amount allowed to be applied to the crop in the growing season is 4 litres per hectare of either chemical or a combination of both chemicals (Mullen and Dellow, 1998).
The non-TT variety Oscar has been used as a benchmark
by the industry for comparing average yields with the TT varieties. Trials have
shown that the TT variety Pinnacle returns 80-85%
the yield of Oscar, 93% of Drum and 77% of Clancy.
Pinnacle is usually recommended over the other TT varieties
because Drum and Karoo have poorer blackleg resistance, and
Clancy has substantially loweress
average yield. Karoo also has relatively poorer seedling vigour
(McDonald, L, pers. comm., 1999). Pinnacle also has a marginally
better average oil percentage than the other three TT varieties
(Colton et al.et al,
1999). There may be some price penalties for oil
percentages below an acceptable level.
For the purposes of this analysisexercise,
the standard canola inputvariable
costs in the PRISM-Wagga model werehave been altered
to suit the Pinnacle variety., with the ‘standard’
variety being Oscar. This includesd
altering the seed cost, herbicide treatments (see Table 1) and average yield.
It was assumed that a 20% yield penalty was incurred compared to the alternative
standard canola variety.
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Table 1: Differences between standard canola and TT canola in the PRISM model
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The herbicide costs for Pinnacle
TT canola were less than for Oscarstandard
canola, while seed costs for Pinnacle were
slightly higher. All other costs were assumed to remain the same. As
illustrated in Table 1,However
there was a net reduction in input costs (of $38.92) for
PinnacleTT
canola. However, Tthe
value of the 20% yield penalty varied from $67.20/ha (for 1.12 t/ha @ $240/t)
to $252/ha (for 2.24 t/ha @ $450/t), which in all cases
was greater that the reduction in costs, which
in all cases resulteding
in a lower relative gross margin for PinnacleTT
canola.
IHowever, if
the achievable yields of PinnacleTT canola
were the same as for Oscarstandard canola
there would be a net improvement in gross margin from Pinnacle, due
it’s relatively lower
input costs.. If As a
result of this PinnacleTT
canola had the same yield potential relative to Oscar, it would
be included in the rotation at lower on-farm prices than
Oscar. For example, at 1.6 t/ha, PinnacleTT
canola is first
incorporatedis included in in the
rotation at an on-farm price of $3440/t
(Figure 2), while at the same yield Oscarstandard
canola is not included untilonce
the price reaches approximately $370/t.
5. Discussion of Results
The analysis of canola in the rotations of a representative farm in the Wagga region of southern NSW revealed that provided canola yield and/or on-farm canola price is adequate, it has a significant place in the rotation. This situation appears the have been the case since the mid-1980’s, with canola increasing notably in the Murrumbidgee region from 1,773 hectares in 1983 to 72,597 hectares in 1996, according to Australian Bureau of Statistics data. However, at lower prices or in lower yielding areas canola has a more limited role in the rotation system.
Compared to the results for standard canola, TT canola
requires higher yields and/or prices to be included in the
rotation. The assumed yield penalty of 20% for TT canola outweighed it’sthe
lower herbicide costs.
However, currently standard canola and TT canola are not in competition for the same crop area, since TT canola is usually grown only when there is a need to control the Brassicacae family weeds and it is impractical to grow standard canola due to the weed problem. TT canola provides the option to grow canola where the farmer would not have otherwise had the option. In the analysed example, the farmer who could only grow TT canola due to a brassica weed problem would wait for higher prices (of the order of $30-$40/t) before growing it than a farmer who could grow ‘standard’ canola.
The implications of these results for
canola breeding programs and the industry areof
these results show that if the comparably lower yields of TT
canola can be improved relative to equate that of the
‘standard’
varieties, TT canola would replace standard canola, due to the formers lower inputvariable
costs.
Acknowledgments
The assistance of Latarnie McDonald and Greg Condon
(both of NSW Agriculture) on
agronomic matters is gratefully acknowledged.
The financial assistance of GRDC in
building the PRISM model is gratefully acknowledged.The
views expressed in this paper are those of the authors and do not necessarily
represent those of NSW Agriculture.
References
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