Participative research on use of enhanced climate variability information within agribusiness

Abstract

Climate variability impacts significantly on the agricultural service sector, affecting the operations and policies of agribusiness suppliers, banking and insurance companies. For example, bank lending policy and agribusiness advice was likely affected by recent El Nino drought events. Through consultation with agribusiness suppliers, banks and insurance companies, it is clear that their business operations and policies could benefit substantially from access to enhanced processes for dealing with climate variability. The Agricultural Production Systems Research Unit (APSRU) has demonstrated that farmers can utilise information derived from climate forecasts and simulation models in interpreting past experience, planning and decision making. Variability in production also poses challenges for both input suppliers and firms involved in the value chain from farm to consumer. Bank lending policies, crop insurance policies, product inventories and marketing advice may all be positively influenced through better dealing with climate variability. For example, insurance policies based on the Agricultural Production Systems Simulator (APSIM) model’s objective prediction of yields may potentially reduce claimant disputes and cut legal costs, representing significant savings to industry. Likewise, better prediction of seasonal outlooks using the APSIM model, climate forecasts and fallow water reserves would allow farmers and lenders, such as produce suppliers and banks, to negotiate individually-tailored financial packages. APSRU has recently extended risk management tools developed primarily for farmers to agribusiness to determine whether better targeted and costeffective agribusiness services can be provided for the benefit of agribusiness organisations and Australian farmers. In this paper we report on our experiences and learnings from our action research approach, where APSRU researchers are working alongside agribusiness staff on relevant case studies to identify the opportunities for and to resolve constraints against implementation of improved agribusiness operations based on climate forecasts and use of the APSIM model. Our collaborators represent a mix of agribusiness organisations, including input suppliers, marketers, banks and insurance companies. The case studies involving our collaborators are described and discussed in the paper, along with results of our initial evaluation. The use of climate forecasts and APSIM has generated interest amongst the agribusiness sector. While the costs of conducting this research are high, we conclude that there are good opportunities for these tools to assist agribusiness operations in providing better services to Australian farmers.