Innovation and productivity in dryland agriculture: a return-risk analysis for Australia

Abstract

SUMMARYDespite a highly variable climate and fragile soils, dryland farming systems in Australia continue to be productive and viable. This review nominates the farming practices, and their development through investment in science and technology, that have helped sustain dryland farming systems in Australia. It sets the context for dryland agriculture in Australia and specifically examines the risks and returns from technological innovations over the past 30 years. It then examines possible sources of productivity gains in the next 20 years.Australian dryland farming systems have performed favourably compared to the agricultural sectors in most other countries over the past 30 years. Australian Research, Development and Extension (RD&E) has been a significant contributor to the realized agricultural productivity growth over this period. However, growth in the productivity of agriculture appears to have slowed down in the last 10 years: this is partly a result of extended dry conditions and declining growth in public investment in RD&E. It is reflected in slowing rates of technology adoption on broadacre farms and changes in investment confidence of farm owners.Future productivity gains will require continued strong investment in RD&E to meet current and emerging challenges. Future technologies and policies will help improve productivity by removing inefficiencies, increasing the efficiency of resource use and developing breakthrough innovations.As evidenced by Australia's success in productivity growth, meeting the global challenge to produce more food in the future will depend partly on investments in RD&E, risk management systems, farmer skill and human capital and policies that encourage efficiency gains.