Integrating financial and environmental data to improve farm business performance : an exploratory analysis of the Tasmanian beef industry

The Tasmanian beef industry is currently under pressure as a result of factors such as declining terms of trade, increased competition from other enterprises, degradation of grazing land, drought, and rising costs of inputs to production. These issues significantly affect the long-term viability of the industry, and highlight the need for improved understanding of the relationships between agricultural productivity, profitability, and the biophysical capacity of the land. This thesis considered key productivity and profitability drivers of beef production in Tasmania through the integration of farm financial and biophysical data. The aims were: • To identify the key, factors affecting productivity and profitability of beef production • To examine the utility of Geographical Information System (GIS) and spatial modelling for analysing and integrating financial and environmental data relevant to assessing farm business performance • To use case studies to investigate relationships between farm business performance and farm biophysical attributes in the beef industry • To consider GIS and spatial modelling applications that may be suitable for decision support and scenario analysis in livestock industries. Farm financial data for the 2006/2007 financial year of 27 beef enterprises were obtained through a financial benchmarking process. Additional data relating to enterprise management were also collected using a questionnaire. Biophysical data for each property were derived using GIS technology. Data from each enterprise were integrated and statistically analysed to identify correlations between financial performance and biophysical capacity of the land. To gain an understanding of how well the enterprises represented the State-wide industry, and to map landscapes suitable for supporting profitable beef enterprises in the state, GIS was also used to characterise the overall beef industry in Tasmania. Building on this exploratory analysis, case studies were used to study in more detail the relationships between financial, biophysical and management data at an enterprise level. Based on Australian Bureau of Statistics protocols, additional information relating to management philosophy, environmental assets and natural resource management was collected for these enterprises. Examining the correlations from the exploratory analyses, and information from the case studies in conjunction with the landscape mapping and characterisation of the Tasmanian beef industry, the suitability of this technique as a decision support and scenario analysis tool was considered. Analysis of the financial data has shown significant variation in the productivity and profitability of Tasmanian beef enterprises. Statistical analysis of the financial data with the biophysical data identified a number of correlations. The proportion of land that is improved pasture, the proportion of relatively high or low fertility soils and the efficiency of beef production (Kg/ha) were strongly related to the profitability of an enterprise. Reduced risk, through increased operating profit margin and reduced cost of production, were explained in part by increased efficiency of beef production and land area. Stocking rate was strongly correlated with biophysical attributes that influence pasture production - in particular, area under irrigation, long term rainfall and air temperature. This project has shown GIS and spatial modelling to be an effective method for identifying statistically significant biophysical variables that help explain the performance of beef producing enterprises in Tasmania