Answer:

Explanation:

Fundamental to an understanding of the FUTURE challenges facing crop-livestock farmers is the near certainty that current PRACTICES and strategies will be inadequate for the future because of the on-going downwards trend in terms of trade (Figure 5). The long-term trend is downward at an average of 2.2% a year.

While the general trend is downward, crop-livestock farm decisions are likely to be influenced by relative changes in input costs and prices of the key enterprise components which may not all decline at a uniform rate. For instance some analysts are predicting that meat price will rise in real terms during the coming decade (CIE 2001). Such a trend, if sustained over time, would result in a re-balancing of the crop-pasture ratio in favour of INCREASED pasture.

There is substantial uncertainty and disagreement about the future direction of energy costs (Dunlop et al. 2004). High levels of mechanization and dependence on nitrogen fertilizer (Angus 2001) expose crop dominant SYSTEMS to high energy costs. If energy prices increase, the crop-livestock system is likely to adjust to make greater use of leguminous pastures (i.e. less crop area and less nitrogen fertilizer).

Figure 5: Farmers’ terms of trade. Base year 1997-8 = 100. (Source: ABARE, 2003b)

Requirement for innovation and diversification

Productivity and profitability of farming systems are challenged by biotic pressures and threats, resource degradation and unfavourable terms of trade. To offset this, continuous innovation is required. Mullen (2002) has indicated that without productivity growth in the last 30 years, Australian agriculture would have declined to less than 30% of current levels. Sector productivity growth has been variable, with productivity growth associated with cropping being greater than that associated with livestock enterprises (ABARE 2003a).