Input costs are composed predominately of crop protection chemicals, fertiliser and machinery and labour. Growers expect to maximise their long-term profit by making profits through short-term decisions around crop choices and their allocation of inputs to produce grain. The GRDC aims to assist growers to reduce their input costs relative to outputs over the next five years.
The Australian grain production environment is diverse geographically and environmentally. Growers in various regions produce different crops, use different input mixes, and employ management techniques focused on their local conditions. Growers across all regions face different costs and challenges, so it is difficult to identify a single measure for performance that is relevant for all growers at a national scale.
The GRDC’s efforts to work with growers and their advisers to establish benchmark farm performance data will be critical in allowing the grouping of like farms to compare input cost trends that not only indicate the impact of previous and current RD&E but also highlight the areas of focus where future RD&E might have greatest benefit to profitability. A farm performance database will take at least three years to establish and provide useful trend information. In the meantime, the GRDC will use two measures to monitor costs over time: input costs per hectare, and the ratio of costs to crop revenue. Input costs measured by dollars per hectare are a good measure of inputs relative to farm size and type while the ratio of costs to crop revenue takes greater account of changes in cropping mix that demand different inputs. Taken together, the two measures help to explain costs at the whole-of-farm level.
In the first instance, the trends in the costs of fertiliser and chemicals will be monitored. The other major operating cost relates to machinery (including annual costs of contracting, fuel and oil, leasing etc.). However, overall trends in machinery operating costs are largely unaffected by R&D as are machinery capital costs. Therefore, while individual investments around machinery operating costs may be made, impact assessment at the more holistic scale will be limited to active monitoring of operating and capital machinery costs and how these may affect delivery on purpose.