2009, Volume 17, Paper 8
ISSN: 1883-5675

Re-organising farm businesses to improve environmental outcomes – the case of native vegetation on hill country across south-eastern Australia

Jim Crosthwaite
Jim Moll
Josh Dorrough
Bill Malcolm

Profitable grazing systems used widely since European settlement has been associated with a decline in the extent and quality of native vegetation. In this paper it is shown that, for one farming system, making profit and preserving biodiversity are compatible objectives. Dynamic solutions are available that improve the quality of native vegetation while maintaining or increasing profitability, despite the effects of the continuing cost-price squeeze on grazing businesses.
The method used is based on economic theory of the farm firm. The whole farm approach is apt. Risk and uncertainty are rife; goals are multi-faceted, including growth, survival, entrepreneurship and profit; a range of optimal plans exist; dynamics rule and static equilibrium analyses are insufficient; and the case study approach is valid.
Results are reported for 17 sheep-beef farms in Victorian hill country. Findings are extrapolated to similar hill country across south-eastern Australia. Case study methods were used. Case studies allow generalisation of findings if correctly applied. Analysis of data collected from each farm about vegetation, agronomic potential and farm business situation was used to develop four management strategies that could potentially improve farm environmental outcomes. The strategies were: (1) correcting nutrient deficiencies; (2) intensive rotational grazing; (3) deferred grazing of hill country; and (4) establishing shelter trees by managing for natural regeneration. The first two strategies also involved managing 15% of the farm primarily for biodiversity conservation.The main finding was that 15 of the 17 farms had at least one investment option that advanced both farmer and environmental goals. Circumstances on each farm meant that profitability of the strategies varied. Correcting nutrient deficiencies was profitable on 12 farms, while at least one grazing strategy was also profitable on 12 farms. These strategies vary in degree of intensification, reliance on natural systems and attainment of environmental goals.
The results are relevant to 10 million hectares of land across south-eastern Australia, of which 4 million are native vegetation, including native pasture.
Implications for environmental policy and for further economic research are discussed.

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