Sosheel Solomon Godfrey1*, Muhuddin Rajin Anwar1,2, Thomas Lee Nordblom1
1 Graham Centre for Agricultural Innovation (an alliance between Charles Sturt University and NSW Department of Primary Industries), Albert Pugsley Place, Wagga Wagga, NSW 2650, Australia. https://www.csu.edu.au/research/grahamcentre, email@example.com
2 NSW Department of Primary Industries, Wagga Wagga Agricultural Institute, PMB Wagga Wagga, NSW 2650, Australia
Dryland (rainfed) cotton is affected by weather variability, particularly extreme temperatures and rainfalls, which influence crop growth, development and yield. This variability in production was quantified in two important dryland cotton-growing regions of Australia using the Agricultural Production Systems Simulator (APSIM)-Ozcot cotton model. The present study integrates @RISK for multivariate distributions of risk posed by weather and price variations over time to define financial risk profiles that show the probabilities of losses and gains for a given management plan. These results highlight how misleading a gross margin analysis can be on its own, accounting only for variable costs and neglecting the greater share of fixed costs such as depreciation, interest on the debt, wages of permanent labour and managerial allowance controlling a farm’s economic profitability over time.