Comparing Profitability And Cash Flows Of Agroforestry And Agriculture On Australian Farms

This paper is a summary of a project that compared the relative profitability of existing, emerging and prospective agroforestry systems with profitability of conventional agricultural land uses in the cropping zones of Western Australia and New South Wales. The project explored the economic boundary conditions under which several promising agroforestry systems may be viable in the lower rainfall zones.

Partial budgeting and discounted cash flow techniques were used to conduct the comparative analysis of alternative land use scenarios. The profitability, cash flows and debt associated with each of the scenario are reported. The analysis underpinning this research provides estimates of the economic value of the temporal and spatial interaction effects of trees on agricultural crops and pastures.

The WA case studies included oil mallees (Eucalyptus kochii subsp. plenissima and E. polybractea), tagasaste (Chamaecytisus proliferus), maritime pine (Pinus pinaster) and wattle (Acacia spp.). The NSW case studies included blue mallee (E. polybractea), narrow-leaved peppermint (E. radiata), jojoba (Simmondsia chinensis), and river red gum (E. camaldulensis).

Some tree species such as oil mallees and tagasaste were nearly as profitable as conventional land uses in WA. Others
such as jojoba were so highly profitable as to raise doubts in the assumptions about its production and the long-term
market outlook for its products. An automated spreadsheet application named “Imagine” was developed in the course of this project. It has proven to be a highly useful, generic partial budgeting, tool for analysis of most land use systems, intentionally designed not to be limited by edaphic and agroclimatic specificity of each site.

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Author(s): Abadi, Dr Amir


Organizations(s): Department of Agriculture Western Australia