Small temperature & rainfall variations significantly impact profits
It would be easy to assume that the relationship between rainfall and pasture growth and thus farm profitability is 1:1. However, any farmer will soon tell you that is not the case.
SLA2030 found that:
- Pasture production response to changes in rainfall and temperature (and increased CO2) levels varies considerably depending on location i.e. depending on existing temperature and rainfall, elevation etc. Many locations can cope reasonably well with 1⁰C increases in temperature, with pasture production also partially compensated by increased CO2 levels. In some places (e.g. Elliot in Tasmania), increased temperature can result in positive pasture growth. Changes to rainfall, generally, have a bigger impact. For further information, Research centres – University of Melbourne
- In general, relatively small reductions in rainfall and temperature, can have large negative impacts on pasture production and larger again on profit. The table below shows the average impact of 8% increase in temperature and 9% reduction in rainfall, leading to a 5% reduction in pasture production, but a 28% reduction in Gross Margin on a self-replacing Merino enterprise at Cootamundra in NSW
- The impacts on profitability can be even greater. CSIRO research has shown that a 10% reduction in rainfall leads to a far greater reduction in profitability. i.e. the relationship between Change in Profit and Change in Rainfall is far greater than 1:1 (a 1:1 relationship is shown by the grey line).
- Other data from CSIRO shows that at 25 locations in 2030, and averaged across 4 GCM’s, the reduction in pasture production was (on a Merino sheep enterprise) down 18% on average
- However, the average impact on profit was a reduction of 38%
- The main reason for the significant drop in farm profits in the face of lower pasture production is due to the need to reduce stocking rate (especially at key times of the year) so as to maintain the farms natural resources (e.g. ground cover)
To view impacts in your area, view map of all locations