Impact of agronomic and economic factors on farm profitability

Abstract

A multi-period mathematical programming model capable of representing cereal/grazing farm firms in South Australia was developed to determine the likely impact on farm profitability of alternative rotational sequences. Historically, crop rotations have been modelled using explicit predetermined rotations. In this study the model freely determines the optimal rotation over the designated planning horizon. Empirical results indicate that the complex inter-relationships involved in a mixed crop/livestock farming operation play a major role in determining the optimal farm plans. The model develops a plausible set of farm plans under various price and yield assumptions, though somewhat different from traditional farm practices. Its broad application across cereal/grazing areas in South Australia suggested an optimal cereal/grazing mix of 75/25. The model has been adapted to many cereal/grazing farm firms, through data changes specific to the environment under study, for farm planning advice and farmer training in management.