Agricultural adaptation during times of change - Thilak Mallawaarachchi

Agricultural adaptation during times of change

Thilak Mallawaarachchi, David Adamson, John Quiggin and Peggy Schrobback

Risk and Sustainable Management Group, The University of Queensland, Brisbane 4067

Paper presented to the CCRSPI Conference 2011, The National Climate Change Research Strategy for Primary Industries, February 15-17 2011, Melbourne Cricket Ground (MCG).

Adaptation• Adaptation to climate change

– finding ways to live with scarcer water, higher peak temperatures, higher sea levels and weather patterns at odds with those under which today’s settled patterns of farming developed

The Economist, Nov 25, 2010

Photo credit: Anthea McClintock, Jemalong, NSW, 151210

Agricultural Adaptation

• Crop adaptation – sole basis of agriculture*– The relationships between the environmental

factors and the growth response of plants– Matters of ecology, with elements of geography,

physiology, genetics, meteorology, and agronomy

• Climate risks include issues beyond farm– Linked through markets and trade, and social

imperatives such as food security and poverty*Wilsie, CP & Shaw, RH 1954, 'Crop Adaptation and Climate', in AG Norman (ed.), Advances in Agronomy, Academic Press, vol. Volume 6, pp. 199-252.

Climate risks• Increasing uncertainty

– Affects the set of available options– And the nature of outcomes of decisions

• Potential payoffs are dictated by knowledge and endowment

Faced with the prospect of learning, increasing uncertainty leads to a preference for more flexible strategies

ProblemHow to find the set of flexible and efficient strategies when the distribution of the states of nature is widening

Farm sector performance19

69-7

0

1971

-72

1973

-74

1975

-76

1977

-78

1979

-80

1981

-82

1983

-84

1985

-86

1987

-88

1989

-90

1991

-92

1993

-94

1995

-96

1997

-98

1999

-00

2001

-02

2003

-04

2005

-06

2007

-08

2009

-10

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

0

50

100

150

200

250

Agricultural Returns (2010 Values)

Gross Value of ProductionFarm CostsNet ReturnTerms of Trade

Source: ABARES

TFP and TOT

Source: Shen, Grey & Mullen (2010)

Dairy: Less Cows But Increased Output

1965-66

1969-70

1973-74

1977-78

1981-82

1985-86

1989-90

1993-94

1997-98

2001-02

2005-060

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Dairy Statistics

Dairy CowsMilk (L/Cow)

History matters

• Path dependence• Explanations for path dependence

– increasing returns (size economies)– self-reinforcement (complementarity)– positive feedbacks (early-mover advantage)– lock-in (popular choices, capital fixity)

... and more ...

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

Real Value of Australian Agricultural Output by Commodity

LivestockCereal for grainMilkWoolVegetablesFruit and nutsCottonOtherGrapesSugarcaneOilseedsHay and PastureGrain legumes

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

Fruit and nutsCereal for grainLivestock

Broadacre Farm Performance over time

Sheng et at 2011

Economies of size and technology

Sheng et at 2011

Issues for exploration

• Path dependence of farmers’ technical choices for managing climate risk when farmers have difficulty in separating climate change from natural variability

• Adopting sub-optimal decisions in the interim in adapting to change

• Understanding the role of externalities in defining sub-optimality for society

• Linking agroecological and institutional innovation for optimal decisions under uncertainty

Global climate change

Strategic planning

Global effects

National effectsSectoral effects

Agricultural systems

Economic growth

Population

Technology

Governance

1

2

3

Schematic representation of methods used to combine crop and climate models.

Challinor A J et al. J. Exp. Bot. 2009;60:2775-2789

Farming system

Plot/paddock

Regional/ Landscape

Cross-scale interactionsover time

Represent uncertainty as states of nature and their range of probabilities

Understanding the full picture

It is argued that the Indian peasants in Chiapas, Mexico are backward, they produce only two tons of maize per hectare as against six on modern Mexican plantations. But this is only part of the picture. The modern plantation produces six tonnes per hectare and that’s it. But the Indian grows a mixed crop. Amongst his corn stalks, that also serve as support for climbing beans, he grows squash and pumpkins, sweet potatoes, tomatoes and all sorts of vegetables, fruit and medicinal herbs. From the same hectare he also feeds his cattle and chickens. He easily produces more than 15 tons of food per hectare and all without commercial fertilisers or pesticides and no assistance from banks or governments or transnational corporations.

Jose A. Lutzenberger, former Minister of the Environment for Brazil.

http://www.afgventuregroup.com/dispatches/afg-venture-group-newsletter/october-2010-primary-industries-with-a-focus-on-agriculture-and-agribusiness/

Decline of the Sheep Industry?

19891991

19931995

19971999

20012003

20052007

20090

20406080

100120140160180200

Australian Sheep Numbers (Million)

ACTTasWASAQLDVICNSW