SEA News #11 Letters
Hi David and Sally
Thanks for the latest version of SEA News (Issue #10). It's always full of stimulating articles. I notice that several of the articles mention the potential social effects of salinity treatments, including those of large-scale, commercial woody perennial crops. The articles all drew a parallel between the development of woody crops for the wheatbelt and the blue gum experience in higher rainfall areas, where a dispersed population of independent farmers is being replaced by a more centralised population of employees of timber management companies. The articles suggest that a similar pattern will occur in the wheatbelt.
I think a more
positive social outcome will occur, because of different farming conditions in
the wheatbelt, and different characteristics of the woody perennial crops likely
to be developed.
A few points of difference:
1. In the wheatbelt, woody crops will not be grown in large, permanent blocks, because their survival and productivity in a water-limited environment would be too low. Instead, they will be grown in dispersed layouts to allow them greater access to water - either in alley configurations with annual crops or pasture between the rows, or as occasional short-term ‘phase’ crops across whole paddocks for 3 to 5 years. Widespread displacement of farmers is unlikely because of the integrated management of woody and annual crops that will be required.
2. Short-rotation woody crops are more likely to be successful than long-rotation woody crops. Coppicing crops such as mallee eucalypts will be harvested on a two or three year cycle, while phase crops such as Acacia will be harvested once at the end of their three to five year period. The relatively short period of time between establishment and harvest (compared to longer term tree crops such as blue gums and pines) will mean that more farmers will be able to finance their own woody crops. Further, some woody crops may be suited to direct seeding, which would bring establishment costs down to low levels, reducing the strain on farm cash flow.
3. No doubt there will still be opportunities for investors to finance woody perennial crops in the wheatbelt. Access to tax deductions at the highest marginal rate may enable some investors to make farmers attractive offers to grow woody crops on their land, but farmers will be in a good bargaining position to arrange these trees in layouts that suit the rest of their farming, and stay on the land to manage their farms.
4. Short-rotation woody crops will very quickly become mature industries, where costs and returns are known reasonably accurately, and where both uncertainty and profit margins soon decline to levels typical of other mainstream agricultural crops. This is not the favoured environment of prospectus-based investment schemes, which operate in more speculative, newer industries, where there is still much uncertainty, usually with longer periods between establishment costs and returns, and where risks and projected rewards are high.
5. Many wheatbelt farms have strong cash flows, and are also quite profitable, unlike the situation that prevailed in the higher rainfall grazing belt through most of the 1990s. Compared to high rainfall areas, wheatbelt farmers are much less likely to depart agriculture by selling their farms to tree investment companies, and they are much more likely to invest in their own woody crops. On the other hand, tree investment companies are much less likely to want to buy whole farms, on which they would need to be efficient managers of both annual agriculture and woody perennial crops.
6. Processing will almost certainly have to be done locally. Biomass from woody perennials will have a low value per tonne (perhaps $30 per green tonne). Growers will need to sell into local markets if they are to make a profit from woody crops.
7. Opposition to processing facilities and associated infrastructure is likely to be less in wheatbelt areas than in coastal areas, because a higher percentage of the population is dependent on agriculture, and will share in the benefits of local processing.
8. Large-scale processors will be dependent on a steady supply of woody material from their immediate area, and will be likely to enter into long-term supply contracts with local growers, either individually or through a marketing body, which will add stability to individual farm budgets and to the rural economy.
In summary, the social fabric of the wheatbelt should be strengthened by new woody crops, rather than being stressed. The more that woody crops are integrated with, and support current agricultural practices (rather than displacing farming), the less cause there will be for community anxiety. Short-rotation crops in particular, are least likely to have adverse effects on farming communities. They are likely to be owned and managed by individual farmers, their harvesting and bulk handling will have more in common with other agricultural crops than with conventional forestry, they are almost certain to be processed locally, they will add diversity and stability to farm and regional incomes, and they are unlikely to be attractive to prospectus-based investment companies. These crops could very quickly become a part of normal farming practice, and be viewed as part of agriculture, not an alien culture.
Graeme Olsen
Dave,
I find your newsletter very interesting as I am involved in research on dryland
salinity. I am undertaking some salinity monitoring work with the Boorowa
Landcare group in NSW. I have been monitoring a sub-catchment on which the
Landcare group introduced management practices of alley farming and annual
crops, now it is all sown to perennial pastures between the alleys of trees.
There is no clear evidence of lowering in watertables, but things do not appear
to be getting worse. There appear to be very few long term studies of this
nature and I have difficulties in getting funding to keep mine going.
Basil Baldwin
Dear Dave
Thanks for the latest issue of SEA News. I found it interesting and in
particular your article with Michele Marra and Amir Abadi Ghadim. You guys have
the advantage of working with good people.
Thilak Mallawaarachi
Dear Dave
Thank you for including me in your email list for the newsletter. I enjoyed
reading it very much. I am currently involved in the Salinity Risk Mapping
program as a modeller. Will be very much interested in receiving your news
letters as I have some interest in economic modelling as well.
Dr Irene Pestov
Dave
Great paper - Economic Dimensions of Landcare. We have been feeling this same
frustration for many years and the lack of analytical capacity in Landcare at a
business level means any activities basically represent a token gesture - why
would you adopt more broadly when the business outcomes are unknown (or perhaps
blindingly obvious!). See my article in Oct Aust. Farm Journal for more (ignore
their typo in my diagram - extremeties instead of externalities!)
In addition to your point re 'economics is not about costing', I would add that
it is also not about valuing. I am involved in a project with ecologists at UNE
on ecosystem services. Costanza has valued the worlds ecosystem services at
around $3 trillion which excited some ecologists.But I pointed out to them this
is not very useful, other than for catchy press releases. At a practical level,
farmers don't give a toss about the dollar value of an ecosystem service - what
they need for decision making are the costs and benefits to the farm business of
management options that will impact on those services. When combined with
information about the biophysical impacts of the options (and probably other
things), they can begin to make an informed decision. And you are right - if the
economics don't stack up, all the environmental good will in the world won't
give you the adoption rates that governments and community groups are hoping
for.
Cheers
David Thompson
Dave
Thanks for the SEA news. Very informative. I wish other sectors of NRM were so
well organised.
André Taylor
The SEA News index is at http://welcome.to/seanews