Diversification options for sugarcane farming systems in Central Queensland

The future viability of the sugar industry has been questioned in several major reports. It is generally agreed that the industry will have to undergo some changes. One of the key issues in the Hildebrand report is the need to improve economic efficiency in the industry. At the grower level, the report considers many farms to be economically unviable and advocates the need to increase farm size to achieve better economies of scale. Some growers will not be able to expand and a more viable economic option might be to diversify farm enterprise income. The feasibility of introducing alternative crops is being discussed in many regions. While there are some benefits of adopting alternative cropping patterns, there are also associated costs. There may be potential for increased financial returns, but how do growers weigh these against the associated costs? Generally, the main advice farmers receive about alternative crops is based on gross margins – ie, the income from production minus the costs of production. Such information is based on values measured directly from market information, but there are components of crop diversification which may influence growers’ decisions for which there are no market values, eg, changes in management effort required (growing sugar requires relatively little) or changes in the level of risk associated with a new crop. This paper outlines a study that used the Choice Modelling technique to explore the trade-offs growers make between different components of diversification, when deciding on possible diversification options. Growers opinions on how they view the viability of their farming systems is also outlined.