Browsing by Author "Dooley, Anne Elizabeth"
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- ItemAn ex post economic analysis of research and extension for the cover comb : a thesis presented in partial fulfilment of the requirements for the degree of Master of Applied Science in Agricultural Systems and Management at Massey University(Massey University, 1997) Dooley, Anne ElizabethAgricultural research funding organisations, such as Wools of New Zealand (WONZ), are seeking ways to maximise benefits from their research portfolio. It has been suggested that this can be achieved by reducing investment in on-farm research and increasing investment in post-farm gate research on processing technology, product development and market research. However, little information exists to substantiate this point-of-view, and this gave rise to the research reported in this thesis. The hypotheses tested were first, that the return on the investment made by Wools of New Zealand in research on cover comb technology was positive and comparable to the return on other investment options, and second, that a model for the ex ante economic analysis of on-farm research could be developed using an ex post economic analysis of cover comb shearing technology research. The cover comb is an example of a discrete, relatively simple technology, whose development, research evaluation and extension have been reasonably well documented. Six experiments, funded jointly by Massey University and WONZ, were conducted with the cover comb at Massey University between 1989 and 1995. Most extension costs were incurred by WONZ. The cover comb generates financial advantages to farmers by reducing sheep losses and possibly by conserving pasture when the feed supply is low. Uptake of the cover comb was estimated by surveying shearing contractors and Wool Production Officers, and from the pattern of cover comb sales. A spreadsheet model was developed to provide an ex post cost-benefit analysis of cover comb shearing technology research and extension for the period 1989 to 2020. This model included a sub-model of regional populations by class to estimate the number of sheep shorn by different methods, and a cost-benefit sub-model that described the temporal relationship between costs and benefits and calculated the returns. The model estimated a 1330% internal rate of return (IRR), a $49.22 million net present value (NPV) and a 115:1 benefit-cost ratio (BCR) for the cover comb research and extension investment at a 5% discount rate. The model outputs were sensitive to the post-shearing reduction in sheep losses associated with cover comb use (and therefore benefits per sheep) and the cover comb adoption rate. A sensitivity analysis indicated a 485% IRR, a $12.30 million NPV and a 25.3:1 BCR at a lower adoption rate (an increase in sheep shorn with a cover comb between 1989 and 2000 due to the research and extension, of 9.5% of all adult sheep in New Zealand, versus an increase of 12.9%), a lower net benefit per sheep ($0.23 per ewe shorn versus $0.47 per ewe shorn) and a 10% discount rate. Thus, even where conservative values for the cover comb technology were applied, a very favourable return on the investment made by WONZ was shown. The rapid uptake of the cover comb (over 30% of ewes shorn were shorn in 1995 with a cover comb, compared to 15% of ewes in 1989), and the size of the industry (33.7 million ewes in 1995) the technology is applied to contributed to these returns. The ex post cost-benefit analysis model could be adapted for ex ante evaluations of proposed on-farm wool industry research. This model would be useful for deciding which sheep production research should be funded.
- ItemMilk segregation on farms : a thesis presented in partial fulfilment of the requirements for the degree of Doctor of Philosophy in Agricultural Systems and Management at Massey University(Massey University, 2002) Dooley, Anne ElizabethMilk composition varies between herds, and between cows within herds. The opportunity therefore exists to segregate milk from cows with different milk composition on farm, based on its suitability for the manufacture of particular dairy products. Benefits can result from increased yields, reduced processing costs or the suitability of differentiated milk for the production of high value niche market products. A model was developed to determine the break even premium required for farmers producing differentiated milk to be no worse off economically than under the status quo. This model incorporated breeding (quantitative and qualitative traits), cow requirements and feeding, transport, and economic sub-models. Cows were segregated within herd and milk composition was altered over time by breeding. Four quantitative trait ("white" milk colour) scenarios and two qualitative trait (BB β-lactoglobulin milk) scenarios were considered. Manipulation of milk composition by feeding was allowed for in the model, although an example was not modelled. The transport model was developed to calculate the increase in milk collection costs associated with differentiated milk and this extra cost was included in the milk volume charge. A cost-benefit analysis was run over 20 years using a partial budget approach. This timeframe allowed for the long transition time required to manipulate milk composition by breeding. The breakeven premium on the status quo milksolids price was calculated over 10 year, 20 year and infinity time periods at a 7% discount rate. Milk selection on a "differentiated" trait can lead to lower genetic gain in other production traits compared to the status quo. Lower production per cow allows for higher stocking rates (and therefore increased costs), and lower production per hectare. The scenarios modelled also included initial setup costs e.g. vat, cow testing, cow purchase. Sensitivity analyses were conducted on transport costs, premiums, and discount rates. The possibility of redistributing premium payments so a higher price was paid in earlier years was also explored. The premium required to break even for the quantitative scenarios was $1.11/kg of "white" milkfat over 20 years. The lower production of the "white" milk cows compared to their status quo counterparts had a considerable impact on the premium. The premium was lower ($0.46/kg milkfat) where a greater proportion of the cows produced "white" milk in year 1. The premium required for the qualitative scenarios was lower, requiring an extra 3.4% to 4.1% for differentiated milkfat and protein compared to the status quo to break even over 20 years. Production per cow was similar to the status quo for these scenarios, and transport costs contributed to a high proportion of the premium required. Risk associated with a discontinuance of a differentiated milk policy is high. The breakeven premium required was considerably greater when a premium was received for only a few years e.g. $0.92/kg milkfat for 20+ years compared to $9.66/kg milkfat if the premium was discontinued after 10 years. The rate of technology adoption will be important to the success of a differentiated milk policy. The premium required for milk differentiation policies may need to be considerably greater than the breakeven value to compensate for risk and encourage technology adoption. Farmers already producing milk closer to the required specifications could initially be targeted. Companies may need to consider taking some of the risk e.g. through price redistribution. Effective strategies involving both industry and farmers will need to be developed to facilitate the uptake of milk segregation. This research model could be used by dairy companies and farmers considering milk segregation policies.