The relationship between viable financial performance and sustainable land management practices on grazing enterprises in the Eastern Mulgalands of South West Queensland, Australia

Slaughter, Geoffrey John. (2002). The relationship between viable financial performance and sustainable land management practices on grazing enterprises in the Eastern Mulgalands of South West Queensland, Australia PhD Thesis, School of Natural and Rural Systems Management, The University of Queensland.

       
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Author Slaughter, Geoffrey John.
Thesis Title The relationship between viable financial performance and sustainable land management practices on grazing enterprises in the Eastern Mulgalands of South West Queensland, Australia
School, Centre or Institute School of Natural and Rural Systems Management
Institution The University of Queensland
Publication date 2002
Thesis type PhD Thesis
Supervisor A/Prof Ray Collins
Total pages 328
Language eng
Subjects 0502 Environmental Science and Management
Formatted abstract The integration of financial goals with sustainable land management goals is a key issue for sustainable development on grazing enterprises in south west Queensland, but one which has received very little research attention. This thesis examines the relationship between sustainable land management practices and financial performance on grazing enterprises in the eastern mulgalands of south west Queensland. Demographic, land management and financial performance data was collected for 42 properties, one-third of the estimated population of 124 properties in the region. The research problem addressed in this thesis is:

How can graziers in the eastern mulgalands of south west Queensland achieve long term financial viability in conjunction with the use of sustainable land management practices?

The Queensland Department of Primary Industries' (QDPI) Safe Carrying Capacity Model (SCCM) was used to assess the sustainability of stocking rates in the region. To assess financial viability, benchmarks for comparison were developed using Australian Bureau of Agricultural and Resource Economics (ABARE) financial data for the Queensland sheep-beef industry and Queensland Rural Adjustment Authority (QRAA) debt survey data for the 1993-94 to 1997-98 period.

Data has been analysed using a mixed methodology that combines quantitative and qualitative approaches as appropriate. Quantitative data has been examined in two stages. In the first stage, standard descriptive and multivariate statistical tests using SPSS and Microsoft Excel provided an insight into the characteristics of the overall sample. In the second stage, Viscovery SOMine, a parameter-free clustering neural networks program was used to identify similarities and differences among graziers' circumstances, their management practices and financial performance. The SOMine analysis identified three distinct clusters, which have been labelled expansionists, consolidators and strugglers. Standard statistical tests, such as t-tests were used to compare the clusters and establish the relative success of each cluster in achieving viable financial performance through the use of sustainable land management practices.

The first stage of the analysis showed that there was a wide range of financial performance over the five years of financial data examined (1993-94 - 1997-98). The average income and cash operating surplus of graziers in the sample exceeded ABARE benchmarks, indicating a relatively strong performance by many properties. However, several properties were below the benchmark, indicating financial difficulties. Smaller property size and financial commitments in terms of the cost of debt played a role in poor financial performance.

Overall, graziers exhibited a good knowledge of sustainable land management practices. However, a key issue was differences in the sustainability of stocking rates. While smaller properties tended to have stocking rates that were less consistent with the estimates of the Safe Carrying Capacity Model estimates, this was also the case for larger properties, with those in the mid size range exhibiting stocking rates that were more consistent with the model.

The second stage of the analysis using SOMine clusters showed that the strugglers and the expansionists, the clusters with the smallest and largest sized properties respectively, had stocking rates that exceeded the SCCM estimates. However the mid sized properties of the consolidators had stocking rates that were more consistent with SCCM estimates. Consolidators had the lowest debt levels and the lowest costs of production. Strugglers had the lowest financial performance due to having the smallest average property of the three clusters, while the expansionists had the highest levels of debt and the highest production costs of the three clusters.

Higher financial pressures appear to be a key factor in driving the expansionists and the strugglers to maintain stocking rates that are less consistent with the SCCM estimates. However, it was found that for a given sized property or carrying capacity, exceeding the SCCM estimates did not necessarily result in higher income or profitability than stocking rates that were more consistent with the model's estimates. This indicates that there is no consistent financial advantage from maintaining stocking rates that are less consistent with the SCCM estimates. This is an aspect of the SCCM that was previously untested.

When examining land development and pasture improvement in terms of area, strugglers had the smallest average area of land development due to their smaller average property size. However, while expansionists tend to have the most optimistic expectations of soil fertility and the largest average property size, their area of land development and pasture improvement is similar to the mid sized properties of the consolidators.

The consolidators tend to have developed and maintained a higher proportion of their land compared to strugglers and expansionists, indicating a more active ongoing vegetation management approach. The consolidators' emphasis on consolidating and maintaining land clearing and pasture development in conjunction with closer adherence to the SCCM estimates has delivered the most sustainable outcomes in terms of land management practices and financial performance. Consolidators place more emphasis on pasture feed condition and less emphasis on mulga in the determination of stocking rates and reduce stocking rates by a larger percentage for drought than do strugglers and expansionists. Consolidators also have marginally higher off-farm income than strugglers and expansionists. In addition consolidators have the lowest costs per dollar of earnings and an average cash operating surplus equal to that of the expansionists on the largest properties. A model developed in Chapter Six outlines the characteristics and circumstances of the consolidators, expansionists and strugglers and sets out the relationships between each cluster.
Keyword Sustainable agriculture -- Queensland -- Southwestern
Grazing -- Queensland -- Southwestern

 
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