A NEW report by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) says typical broadacre farms are up to $17,500 a year more profitable due to the nation’s tight biosecurity regime.
The 49-page report by ABARES researchers - The value of Australia’s biosecurity system at the farm gate: an analysis of avoided trade and on-farm impacts - is due to be released on Wednesday.
Given the importance of biosecurity activities for farms, the lack of analysis of farm-level benefits of biosecurity activities has been a key knowledge gap, the report concludes.
“This work provides an insight into the farm-level benefits of biosecurity by examining the on-farm costs and export market losses that biosecurity activities prevent,” it said.
“The analysis demonstrates that farm profits are higher as a result of biosecurity activities that reduce the risk of six potentially significant biosecurity threats to agriculture.
“In dollar terms, the profits of typical broadacre farms are $12,000 to $17,500 a year higher than they would be in the absence of an effective biosecurity system.”
The report looks at case studies on the six biosecurity threats to Australian agriculture - foot and mouth disease (FMD), Mexican feather grass, citrus greening, highly pathogenic avian influenza (HPAI), Karnal bunt and red imported fire ants.
It considers the effect on annual farm enterprise profits - or gross margins, defined as gross revenue from an activity less the variable costs incurred - of an outbreak of the six diseases on various commodity sectors: FMD - beef, dairy, pig meat, sheep meat and wool Mexican feather grass - grazing livestock (beef and sheep) Citrus greening - citrus HPAI - poultry (chicken meat and eggs) Karnal bunt - wheat and triticale Red imported fire ants - beef and dairy cattle, sheep, annual crops and citrus.
ABARES executive director Karen Schneider said managing biosecurity was critical to maintaining the productivity of Australia’s agricultural sector, by supporting business as usual operating conditions for farmers.
“Freedom from many of the world’s major pests and diseases provides agricultural industries with a significant trade advantage and is important for maintaining access to valuable export markets,” she said.
“This study estimates the value of Australia’s biosecurity system ‘at the farm gate’, using a case study approach.”
Ms Schneider said that broadacre farms typically undertake a range of cropping and livestock activities and farm profits may be affected by several pests and diseases.
She said without our current biosecurity system in place, the report found that broadacre farm profits would be $12,000 to $17,500 less because of the higher risk of FMD, Mexican feather grass and Karnal bunt outbreaks.
It also found that: annual pig enterprise profits would be 15 per cent lower because of the higher risk of an FMD incursion; annual beef, dairy and sheep enterprise profits would be 8pc to 12pc lower; and annual cropping enterprise profits would be 7pc lower because of a higher risk of a Karnal bunt incursion.
“Freedom from many of the world’s major biosecurity threats is a source of competitive advantage for Australia’s agricultural industries,” the report said.
“On-farm costs would be higher if pests, weeds and diseases - such as citrus greening or highly pathogenic avian influenza - present in other parts of the world established and spread throughout Australia, because of production losses and expenditure on control measures and damage mitigation.
“Even if the production impacts of a pest or disease could be mitigated at relatively low cost - as would be the case with Karnal bunt and, to a lesser extent FMD - losses arising from trade bans and lower farm-gate prices could be significant and make some farming activities unprofitable.”
The report said that in the event that FMD became endemic in Australia, livestock producers would be refused access to premium markets worldwide and that would force producers to sell into less lucrative FMD-endemic markets.
“Also, meat from vaccinated animals is of lower value than meat from FMD-free regions,” the report said.
“Following the United States International Trade Commission farm gate prices of all livestock products are assumed to be 30 per cent lower because of the loss of access to FMD-free export markets and the diversion of products to the domestic market or lower value markets where FMD is endemic.”
It said HPAI can have potentially devastating economic impacts – but the potential risk of a mutated strain of the virus, causing a human influenza pandemic, was of most concern.
“HPAI has not been detected in Australia - however, Australia has had outbreaks of avian influenza, a significantly less virulent strain than HPAI, that have all been successfully eradicated,” the report said.
“The disease has a flock mortality rate exceeding 50 per cent.
“Direct impacts on chicken and egg farms include lost production and costs of decontamination and disinfestation.
“Impacts of HPAI, which are often amplified because of the risk of causing a human influenza pandemic, could also include decreased demand from both domestic and export markets.
“The 2004 HPAI outbreak in Cambodia resulted in a 63pc decline in chicken meat price during the first two months before increasing to 30pc above the pre-outbreak level.
“Egg prices declined by 40pc during the same period before rising to the pre-outbreak level.
“Vaccination of birds is carried out in some countries, including China, as a preventative measure.”