New study: changes in climate since 2000 have cut Australian farm profits 22%: The Conversation

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The current drought across much of eastern Australia has demonstrated the dramatic effects climate variability can have on farm businesses and households. 

The drought has also renewed longstanding discussions around the emerging effects of climate change on agriculture, and how governments can best help farmers to manage drought risk.

A new study released this morning by the Australian Bureau of Agricultural and Resource Economics and Sciences offers fresh insight on these issues by quantifying the impacts of recent climate variability on the profits of Australian broadacre farms. 

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Read more: Droughts, extreme weather and empowered consumers mean tough choices for farmers

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The results show that changes in temperature and rainfall over the past 20 years have had a negative effect on average farm profits while also increasing risk. 

The findings demonstrate the importance of adaptation, innovation and adjustment to the agriculture sector, and the need for policy responses which promote – and don’t unnecessarily inhibit – such progress.

Measuring the effects of climate on farms

Measuring the effects of climate on farms is difficult given the many other factors that also influence farm performance, including commodity prices. 

Further, the effects of rainfall and temperature on farm production and profit can be complex and highly location and farm specific.
To address this complexity, ABARES has developed a model based on more than 30 years of historical farm and climate data—farmpredict — which can identify effects of climate variability, input and output prices, and other factors on different types of farms.

Cropping farms most exposed

The model finds that cropping farms generally face greater climate risk than beef farms, but also generate higher average returns.
Cropping farm revenue and profits are lower in dry years, with large reductions in crop yields and only small savings in input costs. 

Read the complete article on The Conversation