The 2002/2003 drought: Part 2: A review of information advice and producer

Summary

The aim of this research project, the second of a two stage review of the 2002/03 drought, is to reduce the impact and economic severity of drought on dry land farming by improving the understanding of how decisions are made by farm business managers and their advisors during periods of significantly below average rainfall. Stage one attached (early draft) reviewed the 2002/03 drought on a monthly basis and showed that its evolution was volatile and differed for crops and livestock. The results of stage one of the report also clearly demonstrates that agricultural drought is the combination of climate, production and prices not just climatic variations and that farm businesses must respond to the prevailing range of conditions not single factors. The results of stage one points to periods of highly increased activity where farm businesses were responding to a range of indicators including climatic circumstances and media reports. This volatility occurred at different times and amplitude for different broad acre enterprises. The volatility and market responses to drought and international supply and demand factors create opportunities for farm businesses to minimise the impact of drought. The objective of this report, stage two is to analyse how farm businesses respond to drought and how the decision making processes can be improved to reduce the impact of dry periods.

Program

National Rural Issues

Research Organisation

ACIL Tasman Pty Ltd

Objective Summary

The aim of this project, stage two of the drought review, is to understand what farm businesses were responding too at these periods of identified activity, what information was contributing to the decisions being made and how these decisions can be improved to reduce the economic impact of drought on farm businesses. Against this background three broad hypotheses will be tested: 1. How farmers responded to this drought, particularly in terms of strategies and information used to help in the development of those strategies. 2. Whether the level, nature and access to information for farmers, livestock producers in particular, was sufficient to enable informed decisions to be made regarding drought strategies; if not what were the gaps and how might these be addressed before or during the next drought. 3. Whether the formal analytical 'real options approach' to onfarm decision making during drought has merit and how might it be developed and applied to assist advisors, farmers and policy makers.