Project Title: Better management of climate variability within the agribusiness service sector

Project Supervisor: Dr Peter Carberry

Funding Body: LWRRDC

Admin Contact: Mr Marshall Mackay

Commencement Date: 01/07/1998 Completion Date: 30/06/2001

In this project APSRU will collaborate with agribusiness partners to:

• explore the role for climate forecasts and simulation models in the development and implementation of marketing, lending and insurance policies;
• undertake action research with managers to identify the opportunities for and constraints against implementation of improved agribusiness operations based on climate forecasts and simulation; and
• evaluate the success of and report learning from innovative application of improved information and tools in agribusiness.

This project intends to adopt an action research approach, where APSRU researchers work alongside IAMA staff in order to test the feasibility of an agribusiness firm, if it did have the in-house capability, utilising climate forecasts and APSIM simulations in designing and implementing improved marketing, finance and insurance packages. These packages, after being tested within IAMA’s business operations, will be offered for trial to IAMA’s banking and insurance clients and contacts (e.g. NAB, ANZ, RABO, Zurich). APSRU’s role will be to provide the technical support for using APSIM and climate forecasts and to undertake the on-going evaluation activities. IAMA’s role is to design the financial and insurance packages and to interface with allied banking and insurance companies. A key component of the research is to explore the legal issues in using simulation and climate forecasts in providing financial advice or in settling insurance claims - an explicit task to be tackled using legal resources of both IAMA and CSIRO. While the intention is to explore opportunities initially for the northern grain and cotton regions, the project will also assess the likely benefits in other cropping regions and cropping systems throughout Australia.

The major outcome will be well documented, pertinent experiences, obtained under realistic institutional conditions, on whether better targeted and cost-effective agribusiness services can be provided to Australian farmers through the application of climate forecasts and APSIM simulations. The scope of this research will address financial lending policies, crop insurance policies, product inventories and marketing advice. If successful, agribusiness firms such as IAMA will benefit not only through improved inventory and market predictions but also because they will be able to offer their clients finance and insurance packages that better account for climate variability. For example, insurance policies based on APSIM’s objective prediction of yields could potentially reduce claimant disputes (and cut legal costs), representing significant savings to industry. Likewise, better predictions of seasonal outlook (using APSIM, climate forecasts & fallow water reserves) would allow farmers and lenders (produce suppliers, banks) to negotiate individually-tailored financial packages. Ultimately, a successful project will see the adoption of climate forecasts and simulation within the agricultural service sector beyond the life of this project.