P.PSH.1389 - Final Report: Farming for the Future

Summary

Farming for the Future aims to quantify relationships between on-farm natural capital and the productivity, profitability and resilience of Australian producers to ensure that the Australian agriculture sector can factor natural capital more effectively into their business planning processes.

Farming for the Future collected data from 120 livestock businesses in selected regions of NSW, Victoria, Tasmania and Western Australia. We collected fine scale natural capital information, alongside detailed financial and production data, via remote sensing, field surveys and producer interviews. The resulting dataset contained 113 farms with full data considered appropriate for analysis, and is the largest dataset of its kind in the world.

Objectives

Farming for the Future is building the first national-scale evidence base that documents on-farm natural capital and its relationship to business performance on Australian farms. We aim to embed natural capital in mainstream farm valuation and management practices by providing producers with the data, practical support, and tools needed to measure their on-farm natural capital and manage it in ways that help build more productive, profitable, and climate-resilient businesses.
Specifically, Farming for the Future seeks to:
• understand and quantify natural capital – farm business performance relationships
• uncover any benefit pathways through which natural capital can provide benefits to farm businesses and farming families
• design, build and test a natural capital benchmarking module to support farm business decision making by providing insights about how on-farm natural capital can be managed to optimise benefits to producers and their families
• activate the system of supply chain, financial services, and government organisations to support producers to measure, manage and invest in natural capital as a factor of production
• act as a catalyst for systems change, building diverse and effective networks across industry, government, philanthropy and academia to accelerate adoption of natural capital opportunities and help build a more profitable and climate-resilient agricultural sector for current and future generations.

Key findings

The analysis of 113 livestock farms indicated that natural capital is positively correlated with production efficiency, gross margin, earnings before interest and tax (EBIT) and resilience to both climate and market shocks. This findings suggest that natural capital may support production efficiency by substituting for more expensive, and more volatile, inputs like energy, fodder, animal health costs and labour.

The project analysed natural capital – livestock enterprise relationships separately for three different ‘types’ of farms that were evident in the dataset.

Each individual farm type showed a positive association with natural capital across some or all of the range of natural capital scores measured. Given that the farms sampled were representative of farms present in the broader study area, this suggests most farms could improve one (or usually more) elements of natural capital whilst also achieving improvement in livestock production efficiency, although we note that larger sample sizes and additional analyses are necessary to establish causal relationships.

Benefits to industry

Farming for the Future is providing the measurement protocols, evidence base, tools, and resources for producers to manage their natural capital in a way that builds more profitable and climate-resilient farm businesses. These outputs also provide producers with the capacity to report natural capital baselines and associated improvements through time to supply chains, industry bodies and other relevant parties and associated market opportunities.

Farming for the Future engages the farm advisory/accounting industry as its key pathway for sharing information and insights and collaborates with a diverse network of industry partners. By building capacity across all relevant stakeholders, Farming for the Future is catalysing large scale adoption of beneficial land management practices, and helping to build a more financially prosperous, climate-resilient, and environmentally positive agriculture sector for Australia.

Future research

In its next research phase (2024-2026), Farming for the Future proposes to expand its reach to include approximately 270 new farms, and two new focus regions (one in Queensland and one yet to be determined). This larger sample size will enable us to deliver insights into natural capital farm business performance relationships with the desired degree of statistical confidence (95%). Accordingly, our next research phase will include sampling an additional 170 farms in our existing focus regions.

Over the next 5 years, Farming for the Future sees the need to continue to expand our research activities to include 1,500 livestock, cropping and mixed cropping-grazing farm enterprises across all Australian states and territories to achieve these aims. This will enable us to create a dataset that is representative of the breadth of operation types and farm types, sizes, and locations across the Australian agricultural sector. In doing so it will help build a financially prosperous, climate-resilient and decarbonising agriculture sector for Australia.