Farm performance and climate: Climate-adjusted productivity for broadacre cropping farms

Overview  

 This study examines the effect of climate variability and climate change on the productivity of Australian cropping farms between 1977-78 and 2014-15. This study combines ABARES farm survey data with spatial climate data to estimate the effect of climate conditions (such as, rainfall and temperature) on cropping farm productivity. The study then presents climate-adjusted productivity estimates with the effects of climate removed. For comparison, similar results are generated for farm wheat yields using the same data sources and methods. 

 Key Issues  
• After removing the effects of climate, a clearer picture of underlying trends in farm productivity emerges. A slowdown in productivity growth is apparent during the 1990s, with productivity growth of 2.1 per cent per year between 1977-78 and 1993-94, and just 0.2 per cent per year between 1993-94 and 2006-07. However, there is evidence of a significant rebound in climate-adjusted productivity since 2006-07, with annual growth of 1.5 per cent per year. 
• During the past 20 years, large changes in Australia's climate have been observed, including reductions in average winter rainfall in southern Australia and general increases in temperature. The recent changes in climate have had a significant negative effect on the productivity of Australian cropping farms, particularly in south-western Australia and south-eastern Australia. 
• Although climate conditions for cropping have declined overall, some regions have been relatively unaffected or even experienced slight improvements since 2000-01, including the coastal high-rainfall zones of southern Australia, and parts of northern New South Wales and Queensland. In general, larger negative effects have occurred in lower-rainfall inland parts of the cropping zone (given these areas are more sensitive to rainfall decline). 
• Strong growth in productivity since 2006-07 has helped the cropping industry to offset the decline in climate conditions. Further, the results suggest that these recent productivity improvements reflect adaptation to the changing climate. 
• The results suggest that farmers have adapted to the longer-term changes in climate by focusing on technologies and management practices that improve productivity during dry years. Anecdotal information suggests that farmers have made a variety of management practice changes-including adoption of conservation tillage-to better exploit summer soil moisture, as an adaptation to reduced winter rainfall. 
• There is also evidence of shifts in the location of cropping activity over time. Both ABARES and ABS data shows that the amount of cropping activity in higher-rainfall zones-such as south-western Victoria-has increased in recent decades. At the same time, there is evidence that cropping activity has decreased in some inland areas that have been heavily affected by the deteriorating climate. 


Tags: Farming, climate, climate change, climate variability, farm, productivity, total factor productivity, wheat yield
Organization: Australian Bureau of Agricultural and Resource Economics and Sciences