Valuing seasonal climate forecasts in Australian agriculture: northern grains case study

Darbyshire, R. and Crean, J. and Kouadio, L. and Cashen, M. and Anwar, M. and Cobon, D. (2018) Valuing seasonal climate forecasts in Australian agriculture: northern grains case study. Technical Report. NSW Department of Primary Industries , Nnew South Wales, Australia. [Report]

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Abstract

Objective of this report
This report focuses on the value of SCFs to the management of grains farms in the Grains Research and Development Corporation (GRDC) northern panel region. The key decision identified by industry was which summer crop to sow. Four potential options were considered, sorghum, cotton, mungbean and summer fallow. The timing of this decision was early October for a rainfall forecast from October to December. Rainfall over this period can have an important influence on crop production. A skilful seasonal climate forecast is potentially valuable if it helps farmers make a different summer cropping decision compared with the decision made based on historical average rainfall.

Key findings
A general finding was that forecasts that led to decisions that run contrary to the direction of conditions provided the most value. For example, a wet forecast under low initial soil moisture and high relative sorghum price was valuable as it triggered a change from mungbean to sorghum. This finding has some parallels with observations of Hirshleifer and Riley (1992) that the ‘news-worthiness’ of information is a critical determinant of its value.
It is important to recognise that the decision investigated here represents only part of the risk grain growers manage. The case study necessarily only represented one site and one production system and other sites, systems and decisions may find different results. However, it is likely that the general findings around the circumstances for which forecast value was found will provide insights for the use and value of SCFs for grain growers more widely.


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Item Type: Report (Technical Report)
Item Status: Live Archive
Additional Information: © State of New South Wales through the Department of Industry, Skills and Regional Development, 2018. You may copy, distribute and otherwise freely deal with this publication for any purpose, provided that you attribute the NSW Department of Primary Industries as the owner.
Faculty / Department / School: No Faculty
Date Deposited: 08 Mar 2019 06:35
Last Modified: 05 Apr 2019 03:44
Uncontrolled Keywords: seasonal climate forecasts; Australian agriculture; Australia; agriculture
Fields of Research : 14 Economics > 1402 Applied Economics > 140201 Agricultural Economics
07 Agricultural and Veterinary Sciences > 0701 Agriculture, Land and Farm Management > 070103 Agricultural Production Systems Simulation
07 Agricultural and Veterinary Sciences > 0701 Agriculture, Land and Farm Management > 070105 Agricultural Systems Analysis and Modelling
04 Earth Sciences > 0401 Atmospheric Sciences > 040105 Climatology (excl.Climate Change Processes)
URI: http://eprints.usq.edu.au/id/eprint/36155

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