ASSIGNMENT 1

Assignment 1

Assignment 1

Question 1:

Calculate the water use efficiency for Southern Plains based on the following wheat yields and rainfall. (Use the French-Schulz method).

Year

Actual Yield (t/ha)

Growing Season Rainfall (mm)

Potential Yield (t/ha)

Actual as a % of potential

1

2.2

302

6.64

33.13%

2

1.4

187

2.61

53.63%

3

1.2

180

2.16

55.55%

4

2.6

318

8.26

31.47%

5

2.1

250

5.2

40.38%

Many factors can limit water use efficiency or contribute to its variability. List 8 of these factors.

The factors which limit water use efficiency or contribute to its variability are as follows:

Light

Nutrients

Iron

Aquatic

Global

Human impact and appropriation

Forests

Grasslands

Question 2:

Using the information below calculate the total income as well as the relative costs of growing peas and wheat for Southern Plains using the three methods outlined in the lecture material.

Paddock

Skelly

Maccas

Area (hectares)

225

225

Crop

Wheat

Peas

Crop price ($/tonne)

$270

$312250

Chemical Costs

$6,525

$8,550

Fertiliser Costs

$17,550

$11,025

Machinery Costs

$22,950

$22,950

Other Costs

$3,150

$2,700

Total Tonnes

360

202.50

Total Income

$ 1,057,164

$ 2,174,938

Cost Per hectare

$ 1.15

$1.35

Cost per Tonne

$ 5.90

$ 6.05

Costs % Income

45.59 %

51.81%

Which crop is most profitable to grow under this scenario?

Skelly is most profitable to grow under this scenario.

Which crop has the higher risk associated with it? Why?

Maccas has the higher risk associated with it, because its costs are higher than the other crops.

Analysing the financial performance of a crop is best done by more than one method, as each does not always account for all aspects. Methods include the cost on a per hectare, per tonne or a % of income basis, as well as by a gross margin (income minus the variable costs). List 4 things of which Gross margins do NOT take account. (1 mark)

Gross profit does not take into account the following:

Cost Per hectare

Cost per Tone

Item wise cost

Area wise cost

Question 3:

Compare the gross margins per hectare for Southern Plains' wheat, barley and peas shown below.

Paddock

Skelly

Sandy

Maccas

Income

Crop

Wheat

Barley

Peas

Yield (t/ha)

1.60

2.0

0.9

Price ($/t)

$270

$220

$310

Total Income

$432

$440

$279

Expenses

Chemical Costs/ha

$29

$33

$38

Fertiliser Costs/ha

$78

$78

$49

Machinery Costs/ha

$102

$102

$102

Other Costs/ha

$14

$11

$12

Total Costs/ha

$223

$224

$201

Gross Margin $/ha

$209

$216

$78

Which enterprise has the best return?

Sandy has the best return.

Should Southern Plains sow the whole farm to the highest returning enterprise?

Yes, they should sow the whole farm to the highest returning enterprise.

List 3 reasons to support your answer to b)

Less Cost

Higher Yield

Above average returns

Question 4:

Conduct a sensitivity analysis for growing canola on Southern Plains based on the following assumptions:

Variable Costs of $280/ha

Yields of between 0.6 t/ha and 1.2 t/ha

Canola prices of between $450/t and $550/t

Create a sensitivity analysis table (use 4 yield options and 5 price options from the range provided).

Do you think that canola is a sound choice of enterprise based on this analysis?

Yes, canola is a sound choice of enterprise based on above analysis.

Why/why not?

Because, the returns are higher and the expected growth potential is also high, which eliminates the risk.

Question 5:

Southern Plains has been struggling to return consistent profits of late, and Jack feels that the business is lacking in scale.

List 4 options that Jack could consider to increase business scale.

Diversification (planting other crops)

Cutting-costs

Mass production

High quality product

Refrences

Amthor, J.S. and Baldocchi, D.D. (2001). Terrestrial Higher Plant Respiration and Net Primary Production. In Terrestrial Global Productivity, Academic Press, 33-59

Cooper, D.J.; Watson, A.J. and Nightingale, P.D. (1996). "Large decrease in ocean—surface CO2 fugacity in response to in situ iron fertilization". Nature 383 (6600): 511-513.

ender,, Michael et al. (1987). "A Comparison of 4 Methods for Determining Planktonic Community ...