Finding out how some livestock producers use biodiversity to increase profit

1 ABSTRACT

The box gum grassy woodlands, an iconic Australian ecological community, have declined by approximately ninety-two percent from their natural extent, largely due to decades of clearing and nutrient enrichment associated with efforts to improve productivity and profitability of agriculture. However, a community of practice of producers (self-styled regenerative graziers) has persistently claimed that they have very good environmental performance and biodiversity on their properties and that they are no less profitable than other producers in their regions. Individual case studies have supported these claims. This project aimed to discover the differences in profitability between graziers whose farms exhibit healthy functional traits and biodiversity of grassy woodlands and all other sheep, sheep-beef and mixed cropping-grazing businesses in their regions. Financial performance of farm businesses was compared with industry benchmarks and the ABARES Farm Survey participants. For additional social context, the project assessed the wellbeing of the graziers and compared this to NSW producers that have contributed to the University of Canberra regional wellbeing survey. The study found that the regenerative graziers that contributed to this project are often more profitable than comparable contributors to the ABARES Farm Survey, especially in dry years, that the levels of farm profit were similar to published industry benchmarks of ‘elite’ producers and they experience significantly higher than average wellbeing when compared to other NSW farmers. Taken together, these findings verify the claim that some graziers are able to be profitable whilst maintaining and enhancing the biodiversity on their properties and suggests that they have a set of management capabilities, different to other producers that creates these outcomes. These findings indicate that there is the potential to increase both public and private benefits by investing to develop additional regenerative grazing capacity.

2 EXECUTIVE SUMMARY

The National Environmental Science Program (NESP) is a long-term commitment to environment and climate research in Australia. Its key objective is to support decision-makers to understand, manage and conserve Australia’s environment with the best available information, based on world-class science. NESP is designed to be responsive to the changing needs of environmental decision-makers. This is managed under the NESP - Emerging Priorities (NESP-EP) program.

This independent research project focused on grazing properties in regions where box gum grassy woodlands are found. The box gum grassy woodlands are an iconic Australian ecological community that was listed under the Environmental Protection and Biodiversity Act (EPBC) as endangered in 2010 (TSSC, 2010). The endangerment of this community is a result of decades of clearing and nutrient enrichment for agriculture that has resulted in their decline by approximately 92% from their pre-1750 extent. Clearing and nutrient enrichment to improve profitability and productivity of agriculture remains the dominant approach to production within these landscapes. However, a community of practice of producers (self-styled regenerative graziers) has persistently claimed that that they generate higher or more dependable profitability than other producers in their regions and that their grazing practices help to conserve valuable ecological functions of box gum grassy woodland communities. If verified, the information gained has the potential to reveal opportunities for improving environmental performances in the landscapes where these iconic and threatened ecological communities are distributed. It should be noted that this study has not specifically measured whether regenerative grazing regimes are maintaining or improving the condition of box gum remnants to the criteria set out in the EPBC Act (i.e. to high conservation values). Nonetheless, a number of key features of this endangered community have been assessed as present within these regenerative grazing production systems.

Funded by the NESP-EP, this project investigated the profitability of commercial-scale producers in NSW who are using and sustaining healthy grassy woodlands as inputs to production. This report presents findings for the financial, ecological and wellbeing characteristics of fifteen regenerative graziers from three regions of NSW grassy woodland biome; Armidale – Uralla (North), Wellington – Gulgong (Central) and Holbrook – Young (South). Participants were selected on the basis that:

• they were of commercial scale and deriving their livelihood from their farm business,

• they had been applying a low or no input operations policy and using sensitive management

  of grazing and

• the property demonstrated characteristics consistent with established principles for

  managing and conserving features of healthy grassy woodlands.

Participants were asked to provide at long-term detailed financial information, describe the history of the property, their business and personal goals and current management policy and complete several questions that were identical to some of those included in the University of Canberra’s annual Regional Wellbeing Survey. The characteristics of the properties relevant to grassy woodland condition and sustainability were assessed for to evaluate the adherence to published principles for the conservation and management of grassy woodlands (McIntyre et al., 2002) and describe the condition of the property as sustaining or regenerating functional and species characteristics of grassy woodlands and native pastures. Key financial performance indicators and driver variables were derived so that their profitability could be compared to industry benchmarks and to participants in the ABARES Farm Survey. Wellbeing was compared to wellbeing of other NSW graziers of similar age and gender, using standard measures of health and wellbeing.

The regenerative graziers that contributed to this study were found to be more profitable when compared to all sheep, sheep-beef and mixed industry farms in a similar geographic region especially in the dry years between 2005-06 and 2008-09. Similar mean profitability between the NESP-EP and the other farm businesses was seen in 2014-15, 2015-16 and 2016-17. In these years, the NESP-EP sample exhibited lower variance (Ogilvy et al., in preparation). Regenerative farms also displayed more stable incomes through time compared to other farms in the ABARES Farm Survey.

Although this study was not configured to identify a causal link between ecological condition and farm profitability, our observation of significant differences in the cost and profit profiles of the regenerative graziers compared to other farms establishes a strong link between different modes of management and farm profitability. We conclude that regenerative grazing can be at least as profitable, and at times more profitable, than other methods whilst maintaining and enhancing grassy woodland biodiversity on their properties.

Analysis of the wellbeing data indicates that the regenerative producers experience a meaningful and significant wellbeing advantage compared to NSW farmers matched for gender and age. Regenerative graziers also reported higher ‘farming self-efficacy’ – confidence in being able to successfully manage different aspects of their farm. Self-efficacy is an important ‘wellbeing determinant’ known to influence wellbeing levels, and this finding suggests regenerative grazing may be associated with improved self-efficacy, which in turn has a positive influence on farmer wellbeing.

Taken together, these findings are suggestive of a previously unrecognised but potentially significant set of benefits being experienced by the regenerative graziers, possibly as a result of their approach to management of their natural resource base. However, while the private benefits to producers may be enough on their own to induce individual investment in skills associated with improvements environmental condition and biodiversity, experiences in other agricultural sectors (e.g. sugarcane (Queensland CANEGROWERS Organisation, 2018)) indicate that there may be other barriers to change. This suggests a path forward to improve our understanding of factors that contribute to farm business profitability, environmental health and rural wellbeing and should enable governments to design and develop programs that build these capabilities throughout the sector.

This study is unique in that it sampled a set of livestock producers based on the environmental health and biodiversity of their properties (regenerative graziers) and compared their profitability and wellbeing to a representative sample of other producers. This gives the study its strength and reveals the opportunity for future studies.

The sample of graziers was small and the lack of data about the ecological characteristics of the broader population of graziers in the grassy woodlands biome means that it is not possible to confirm any causality between the condition of the ecosystem and profitability or with higher wellbeing. Further studies examining the ecological characteristics of a larger sample of livestock producers in the grassy woodlands and other biomes are needed to identify whether the results amongst the group examined in this study apply more broadly and to identify if, when and how improvement of biodiversity is related to positive impacts on farm profitability and producer wellbeing.

We suggest the following areas are investigated with a view to identifying policy directions:

1. Identifying the most effective strategies for raising awareness and understanding of the opportunities to improve profitability, environmental performance and wellbeing, in a whole of farm context, including:

   a. How to increase graziers’ access to high quality regenerative grazing education and consulting that allows them to emulate, adapt or innovate upon leading regenerative graziers’ management skills. This may include support for educators and consultants as well as mentoring and access to field days on farms managed by the leading regenerative graziers.
   

   b. How to increase understanding and acceptance of the environmental, economic benefits of regenerative grazing amongst government agencies, agronomists and government extension officers
   

2. Describing the market and cultural mechanisms that would ensure that financial and-or social rewards exist (and no barriers are perceived) for increasing biodiversity and landscape function. For example:
   a. The emerging efforts of the private sector to use sourcing and capital allocation decisions to increase environmental protection and biodiversity on the properties they purchase from or lend to. (This would include support for development of methods by which they can assess these attributes and recognise farm businesses that generate them.)
   
   b. The emerging efforts of the private sector to use sourcing and capital allocation decisions to increase environmental protection and biodiversity on the properties they purchase from or lend to. (This would include support for development of methods by which they can assess these attributes and recognise farm businesses that generate them.)
   
   c. Land valuation approaches to develop strategic pathways for ‘environmentally friendly’ land valuation practices.
   Related to b above, expansion of existing markets for biodiversity and mechanisms for financial services providers to generate returns from biodiversity investment. This may encourage biodiversity-sympathetic land valuations.
   
   d. Correcting misperceptions that increases in native vegetation and biodiversity may negatively impact property rights for agricultural producers and increasing understanding of obligations and restrictions under the Environment Protection and Biodiversity Conservation Act 1999 and state and territory native vegetation/biodiversity legislation.