000059088 001__ 59088
000059088 005__ 20171210173151.0
000059088 037__ $$a421-2016-26805
000059088 041__ $$aen
000059088 245__ $$aEconomics of managing acid soils in dryland mixed cropping systems: comparing gross margins with whole-farm analysis derived using a business process model
000059088 260__ $$c2010
000059088 269__ $$a2010
000059088 300__ $$a28
000059088 336__ $$aConference Paper/ Presentation
000059088 520__ $$aA 12-year experiment designed to show the benefits of applying lime to acid soils when
growing annual pasture, perennial pasture, and annual crops in rotations with annual or
perennial pastures, provides the context for comparing methods of economic analysis. In this
study enterprise gross margins are compared with whole-farm cumulative monthly cash flows
derived using a business process model.
The current study gave gross margins comparable with those of a recently published study
based on the first 12 years of the same field experiment at Book Book near Wagga Wagga in
southern NSW (Li et al., 2010). Both gross margin analyses indicated positive results for all
treatments. However, because key fixed and capital cost items were not taken into account in
the gross margin analysis the financial benefits of the treatments were overstated.
In the whole-farm analysis, a full set of accounts (including fixed and capital costs) was
developed for the experimental combinations of prime lamb and dryland cropping enterprises
and used to generate a monthly cash flow sequence for each treatment over the 12-year term
of the experiment. This full financial analysis, where all costs are included, showed all mixed
treatments (cropping and grazing) accumulated unsustainable losses over the period of the
trial. The grazing-only treatments generated positive cash lows over the 12 year period, but
2
accumulated high levels of debt in the initial years. None of these outcomes were predicted
by gross margins, which were consistently positive for all treatments.
This paper concludes that the analysis of trial results benefits from interpretation in the
context of whole-farm analysis, verified by district experience. Relying on gross margin
analysis alone would have supported loss-making outcomes in this trial. This conclusion has
important ramifications for analysis of all systems trials.
000059088 542__ $$fLicense granted by Megan Watmuff (megan@aomevents.com) on 2010-03-10T02:12:32Z (GMT):

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000059088 650__ $$aAgribusiness
000059088 700__ $$aHutchings, Timothy R.
000059088 700__ $$aNordblom, Thomas L.
000059088 700__ $$aLi, Guangdi
000059088 700__ $$aConyers, Mark
000059088 8564_ $$s362380$$uhttp://ageconsearch.umn.edu/record/59088/files/Hutchings_%20Tim.pdf
000059088 887__ $$ahttp://purl.umn.edu/59088
000059088 909CO $$ooai:ageconsearch.umn.edu:59088$$qGLOBAL_SET
000059088 912__ $$nSubmitted by Megan Watmuff (megan@aomevents.com) on 2010-03-10T02:14:36Z
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  Previous issue date: 2010
000059088 982__ $$gAustralian Agricultural and Resource Economics Society>2010 Conference (54th), February 10-12, 2010, Adelaide, Australia
000059088 980__ $$a421