RiskWi$e: National Risk Management Initiative – Action Research Groups Eyre Peninsula

Funding Source

GRDC

Funding Amount

$1,823,000

Start Date

January 2023

Finish Date

December 2027

Project Manager

Naomi Scholz

Sub-Contracts

EPAG Research, SARDI

Summary

RiskWi$e: the National Risk Management Initiative (NRMI) is a GRDC initiative extending over five years that aims to understand and improve risk-reward outcomes for Australian grain growers through participatory action research (PAR).

Explicitly the NRMI aims to:

1. develop an improved understanding of the risk-reward relationships for important on-farm management practices and decisions,

2. inform growers and their advisers of new insights into managing risks and maximising rewards, and

3. challenge grower decision-making so future management decisions are thought of in terms of probability of upside returns offset against the associated downside risks.

RiskWi$e seeks to understand and improve the risk-reward outcomes for Australian grain growers by supporting grower on-farm decision-making.

5-year national initiative (2023-28)
GRDC investment of $30 million + in-kind contributions of $13 million
26 grower/adviser/extension groups
10 research partners
6 action research group leads
National project lead (CSIRO)
Principal partner (GRDC)

Focus:

How do we improve grower decision making – particularly for decisions that have large profit and/or sustainability implication…when the outcome is uncertain!?

Aim:

80% of grain growers articulate their production management decisions in terms of probability of upside returns (reward) offset against the associated downside risks to improve the quality of on-farm decision making.

How?:

Through a structured network with a national footprint that facilitates the coming together of growers, grower groups, consultants, agribusiness, research agencies and scientists, in a process of inclusiveness for all stakeholders that affords equality to all involved.

Participatory action research:

In PAR, growers and their advisers will quantify the probabilities of uncertainty of outcomes and assess the risk-reward payoffs for given management decisions in the context of their own farming operations. At the conclusion of NRMI, a suite of extension packages and artefacts (decision support tools) will continue to inform and challenge grain growers, their consultants and advisers to consider farm management decisions as informed by probable rewards (profit $/ha) and associated probable risks (loss $/ha).

Eyre Peninsula project

AIR EP will lead the project and convene an EP Action Research Group (Steering Committee) to provide oversight of the project and provide a conduit to link to the NMRI Lead Project Team.

Steering Committee:

EPAG Research will coordinate the delivery of all project activities ensuring partners are well connected and are adding value to the project; and will convene 6 farmer led action research discussion groups across EP. These groups will meet 3 times each year to better understand the probability of outcomes and the risk-reward of implementing management options as identified in the themes.

A theme working group (TWG) will build their capacity in using a range of risk management tools and processes, and in turn provide ongoing support to the discussion groups. Working group members will work closely with a range of experts who will support the project delivery, building the capacity of the TWG to work with the discussion groups. The themes will have members of the working groups interacting with experts in the field to ensure objectives of the theme are being met in a local context. Experts to be engaged include:

Dr Peter Hayman, Principal Scientist in Climate Applications, SARDI
Barry Mudge, Mudge Consultancy Services - risk & farm business management
Ed Hunt, Ed Hunt Agricultural Consultancy Pty Ltd
Josh Hollitt, Hollitt Consulting Pty Ltd
Andrew Ware, EPAG Research
Jake Giles, EPAG Research
Andy Bates, Bates Ag Consulting
George Pedler, George Pedler Ag
Murray Unkovich, University of Adelaide
Therese McBeath, CSIRO
James Cant, BFIG

Theme 1: Nitrogen management

Theme 2: Enterprise mix

This project will link with the CSIRO NRMI Project Lead proposal led by Rick Llewellyn, accessing CSIRO modelling capability, systems modelling and climate change analysis. It will link with other GRDC investments occurring on EP (namely SA node of national Nitrogen cycling project, the Soil CRC/GRDC Calcareous Soils project, the Southern Region Farming Systems project) and Future Drought Fund and SA Drought Hub projects. The SA Drought Hub will support an additional component of this risk proposal, providing funds to further examine the risk-rewards associated with implementing disc seeder/stripper front systems.

Coutts JR will develop a project monitoring and evaluation plan that will ensure continuous feedback loops occur at all levels allowing the project to adapt and maximise impact.

EP Focus sites 2024

RiskWi$e focus sites in 2024:

June 2024

Optimising Crop Yields in 2024: 2024 Season So Far…

Due to the delayed start to the season, crops across the Eyre Peninsula have mostly started emerging in early to mid-June. Generally, crops that establish in June don't have enough time to build up biomass before they enter the reproductive stage. This increases the likelihood of flowering during hotter conditions, which usually results in lower yield potential compared to crops that establish in early May.

However, tools like Yield Prophet® are forecasting that a wide range of potential yields are still possible across all Eyre Peninsula environments given the range of climatic conditions that may still eventuate. Examining the six focus paddocks being followed by the GRDC RiskWi$e project, in some cases, sees shortfalls in the amount of nitrogen available in the soil, if potential yields are to be realised.

Table 1. Eyre Peninsula focus paddock summary information: paddock history, yield potential and nitrogen shortfall, June 2024.

This poses questions like how much N should be applied, where and when? The following article aims to provide a framework that might be a useful guide to work through the decision.

What is Yield Prophet?

Yield Prophet® is a crop modelling tool that simulates crop yields based on local climate data and soil conditions. It predicts potential yield outcomes across various seasonal conditions, ranging from the wettest to the driest years. These outcomes are often expressed in deciles: Decile 1 represents the lowest 10% of years, and Decile 10 represents the highest 10%.

The platform generates graphs that illustrate potential grain yield outcomes. A solid blue line shows yield based on rainfall alone, while a dotted blue line accounts for the negative effects of frost and heat. The green line indicates current yield potential, considering initial nitrogen levels and modelled nitrogen availability through mineralization. These graphs help farmers understand crop yield potential and make informed decisions about inputs and economics.

Decision-Making with Yield Prophet

Making economic decisions about nitrogen application is most effective when considering multiple seasonal outcomes. Farmers aim to either profit from the yield response or minimize losses when there's no response. However, oversimplifying these decisions can lead to unexpected results.

The RiskWi$e Project

Funded by GRDC, the RiskWi$e project aims to help farmers with decision-making in complex or complicated situations. Using focus paddocks across different environments on Eyre Peninsula, we examine yield potential, yield gaps, and decision-making processes to reduce risk and uncertainty.

Example Scenario: Eyre Peninsula Wheat Crop

Consider a wheat crop with a 2.5-tonne yield potential in an average year. If a grower has enough nitrogen for a 2-tonne crop, what should they consider when deciding on additional nitrogen application? Here's a breakdown:

Urea cost: $730/tonne (including freight)
Spreading 40 kg/ha of Urea: $37/ha
Total cost for 1,500ha: $55,500
Profit from a 0.5 t/ha yield increase: $285,000 (1,500ha at $380/tonne)
Yield increase needed to cover input costs: 0.1 t/ha

Based on this information, the potential outcomes could be:

In 3 out of 10 years, no yield response (loss of $55,500)
In 4 out of 10 years, full yield response (profit of $285,000)
In 3 out of 10 years, partial yield response (breakeven)

On average, spreading Urea could yield a profit of $103,000 per year. Conversely, not spreading could cost the grower $103,000 annually.

Key Questions for Decision-Making

To make a well-informed decision, consider the following:

Can my business handle a $55,500 outlay if it's not recouped? How many years can I sustain this without financial risk?
Will unused nitrogen remain in the system for future use?
Is my paddock responsive to nitrogen? Do I understand soil nitrogen levels well enough?
Can I expect a response across all soil types? If not, how can I address this?
Do I need more information, and where can I find it?

Conclusion

Having a structured decision-making process can be really valuable when making decisions that are complex or have high levels of uncertainty. While no single method is perfect, a thoughtful approach helps manage the complexities of farming decisions. Below are the yield potentials and nitrogen-limited yields for six focus paddocks, providing valuable insights. More detailed Yield Prophet reports are available (see downloads further below).

Note that sowing dates are relative to establishment, many sites were sown earlier but the dry start to the season has resulted in delayed establishment dates.

Cleve focus site 14 June 2024

Cockaleechie focus site 14 June 2024

Cootra focus site 20 June 2024

Lock focus site 14 June 2024

Minnipa focus site 14 June 2024

Port Kenny focus site 14 June 2024

April 2024

How is the 2024 season shaping up and how can nitrogen strategy be approached?

With seeding just around the corner (or already started for some), many growers are considering questions like: how will the season turn out? How much of the rain we had last December is still available for this year’s crop? Should I be targeting above average yields? How much money should I spend on this year’s crop?

Crop yields hinge on numerous factors, but if you were to ask most people, they'd likely agree on one primary factor: rainfall. Rain drives good yields, while its absence leads to the opposite outcome. Predicting when to make the best of a good year or cut costs on a poor year can make farming a bit of a 'dark art' as growers navigate a range of decisions. Often, these decisions are based on years of experience, where growers rely on intuition or gut feeling. This intuitive approach often provides a solid base for decision-making and outcomes, but can see some opportunities lost or overspending on poor years.

An alternative approach involves 'calculated' decision-making. It typically involves sitting down, perhaps with a calculator, scribbling numbers on the back of an envelope, or better yet, using a computer and spreadsheet. While this method still incorporates intuition, it presents information in a way that allows growers and/or consultants to clearly weigh the benefits against the risks.

The framework, developed by Barry Mudge and Peter Hayman, where a range of outcomes to decisions are considered, provides a means of examining all outcomes simultaneously to make well-informed decisions and forms part of GRDC’s RiskWi$e initiative. It's about calculating and potentially minimising risk and maximising rewards within a farming operation.

As part of the RiskWi$e project, six paddocks were chosen to run Yield Prophet® on, serving as examples to discuss with growers. This approach benefits from using real numbers from the local area, making them more relatable. The following provides an example of how nitrogen decisions and their long-term outcomes could be worked through to consider a range of outcomes.

Overall, the aim of the RiskWi$e project is to assist growers in managing risk. It's not to suggest that growers aren't already adept at doing so, but rather to work through a range of tools where the spectrum of possible outcomes are considered.

We aim to regularly update the information provided for the focus paddocks, to help track how nitrogen applications respond to seasonal conditions and yield forecasts.

If you require any further information or would like to discuss the way you are approaching nitrogen decisions for the upcoming season, please contact Jacob Giles, EPAG Research, Port Lincoln, 0431 110 018 or jacob@epagresearch.com.au.

All the best for a fantastic opening to the season and a smooth seeding.

Cleve focus site 15 April 2024

Cockaleechie focus site 15 April 2024

Cootra focus site 15 April 2024

Lock focus site 15 April 2024

Minnipa focus site 15 April 2024

Port Kenny focus site 15 April 2024

Yield Prophet Reports 2024

Yield Prophet Reports 2023

Risk in Agriculture discussion blogs

Building a Decision Matrix with Cam Nicholson

Play Video

Theme working group meeting at Cummins, September 2023

Lower EP discussion group session, August 2023

Downloads:

2023 EPFSS Fast graphs for slow thinking

2023 EPFSS Improving risk reward outcomes through on farm decisions

RiskWi$e newsletter June 2024

Yield Prophet heat and frost risk 26 June 2024

RiskWi$e newsletter August 2024

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RiskWi$e: National Risk Management Initiative – Action Research Groups Eyre Peninsula

June 2024

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Building a Decision Matrix with Cam Nicholson

Downloads:

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