PR – Profitability And Risk Evaluation Of Novel Perennial Pasture Systems For Livestock Producers In The High Rainfall Zone: Initial Analysis And Results (p273-286)
Increased awareness by farmers, scientists and farm advisors of the potential to increase the role of perennial pastures in livestock grazing systems has lead to the development and evaluation of new perennial pasture systems for livestock production in the high rainfall zone of south west Victoria. Increased stock carrying capacity per hectare compared to current common practice has been reported. Thorough and convincing whole farm management analysis of the merit of investing in these new perennial pasture systems is required. This evaluation must account for the likely increases in carrying capacity, expected return on extra capital invested, finance implications, effects on the farm balance sheet and other whole farm implications of the change over time including risk. In this work changes to a current-practice, regional representative farm were modelled over time. The approach was to use partial development budgets with a whole of farm perspective to calculate the possible net present values, internal rate of returns and nominal net cash flows of two perennial pasture investment options under a range of stocking rate conditions. Price breakeven and variability of extra net cash flows analysis was investigated, as was risk associated establishment failure. Considering economic returns, risk and finances, investing in these new perennial pasture systems can be an attractive option for farmers in the study region compared the performance of their farm systems under current common practice and also compared to alternative investments off the farm.
Keywords: Pasture Investment, Representative Farm Analysis