Uncovering Key Drivers of Profitability in Australian Cotton Production

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Uncovering Key Drivers of Profitability in Australian Cotton Production

Feb 7, 2024

To address challenges faced by cotton growers associated with rising production costs, fluctuating yields, and regulatory constraints, Cotton Seed Distributors (CSD) and the Cotton Research and Development Corporation (CRDC) have partnered with Ag Econ through CSD’s Richard Williams Initiative to better understand the key drivers of crop profitability. It is hoped that this initiative has a positive impact on the cotton industry, by giving growers appropriate information for enhancing profitability across a broad range of cotton cropping systems and areas.

“By leveraging agronomic data collected by both CSD and CRDC, and pairing it with the knowledge of Ag Econ, we aim to develop a clear understanding of which practices are profitable and sustainable, such to establish benchmarks for growers to assess their economic performance and efficiency at a field level,” said James Quinn, General Manager of Growth and Development CSD.

The metrics and benchmarks are focussed around key areas of price, yield, efficiencies, and costs.

This collaboration between CSD, CRDC, and Ag Econ marks a significant step forward in integrating various economic data sources that have been collected across the industry over many years. It acknowledges the vital role of economic factors that affect every day decision making processes related to crop management and investment in crop inputs. It is also envisaged that the information may assist agronomists in understanding the impact of their advice on crop profitability.

“The Initiative has successfully completed its initial phase which focused on assessing the overall value of the datasets collected by CSD and CRDC. This was a critical evaluation to ensure that we could extract the most value out of the data collected,” said Dr. Merry Conaty, CRDC’s Acting General Manager, Innovation.

“Part of this activity also involved developing some economic assumptions based on actual practices about the cost of certain crop management practices as not all practices had the costs associated with them.”

The Initiative is well into its second phase, where Ag Econ is actively engaging with growers and agronomists to validate assumptions and assess the accuracy, usefulness, and value of the economic outputs. They are gathering perspectives and insights that will inform the initiative outcomes.

Specifically, some outputs of the initiative will include comparative profitability assessments across systems with different yield targets, productivity indicators (both positive and negative drivers), estimation of system efficiencies, and a range of costings associated with different management practices.

“The project will not only highlight the economic drivers of cotton production but also provide assessments of the grower feedback which will validate the information collected. The outcome will be a better understanding of how we can best utilise our data moving forward particularly around grower benchmarking,” said Janine Powell, Principal Economist, AgEcon.

This investment is a joint project between CSD’s Richard Williams Initiative and CRDC, and serves to empower cotton growers with the knowledge and tools needed to be successful. A reliable and trusted source of economic information will contribute to ensuring resilience in the face of evolving challenges in Australian cotton.