2016-17 has been a great year for Australian farmers, with record production, exports and profits. These records have been driven largely by good weather, in particular a wet winter in 2016, which led to exceptional yields for major crops.

Unfortunately, these good conditions go very much against the long-term trend. Recent CSIRO modelling suggests that changes in climate have reduced potential Australian wheat yields by around 27% since 1990.

While rising temperatures have caused global wheat yields to drop by around 5.5% between 1980 and 2008, the effects in Australia have been larger, as a result of major changes in rain patterns. Declines in winter rainfall in southern Australia have particularly hit major broadacre crops (like wheat, barley and canola) in the key southeastern and southwestern cropping zones. There is strong evidence that these changes are at least partly due to climate change.

Climate change is affecting farm productivity

A recent study by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) confirms that changes in climate have had a negative effect on the productivity of cropping farms, particularly in southwestern Australia and southeastern Australia.

In general, the drier inland parts of the cropping zone have been more heavily affected, partly because these areas are more sensitive to rainfall decline. Smaller effects have occurred in the wetter zones closer to the coast. Here less rain can have little effect on – and can even improve – crop productivity.

ABARES

Farmers are reacting

However, it’s not all bad news. The study finds that Australian farmers are making great strides in adapting to climate change.

Much has been written about the fact that farm productivity in Australia has essentially flatlined since the 1990s, after several decades of consistent growth. The ABARES research suggests that changes in climate go some way towards explaining this slowdown.

After controlling for climate, there has been relatively strong productivity growth on cropping farms over the past decade. However, while farms have been improving, these gains have been offset by deteriorating conditions. The net result has been stagnant productivity.

ABARES

Furthermore, there is evidence that this resurgence in productivity growth is a direct result of adaptation to the changing climate. Our study found that over the past decade cropping farms have improved productivity under dry conditions and minimised their exposure to climate variability.

This contrasts with the 1990s, when farms focused more on maximising performance in good conditions at the expense of increasing their exposure to drought.

Anecdotal evidence suggests that winter cropping farms have made a range of changes over the last decade, to better exploit soil moisture left from the summer period. The most obvious is the shift toward conservation tillage during the 2000s, where some or all of a previous crop’s residue (such as wheat stubble) is left in a field when planting the new crop.

It seems that farmers are adapting to new seasonal trends of rainfall, which for most cropping farms means less rain in winter and more in summer.

Is the Australian cropping belt moving south?

Previous research has suggested that the zone of Australia suitable for growing broadacre crops, known as the cropping belt, appears to be shifting south.

Our study found evidence to support this, with ABARES and ABS data showing increased cropping activity in the wetter southern fringe of the cropping belt in Western Australia and Victoria. At the same time, there have been declines in some more inland areas, which have been heavily affected by the climate downturn.

ABARES , Author provided

These shifts may be partly due to other factors – such as commodity prices and technology – but it’s likely that climate is playing a role. Similar changes have already been observed in other agricultural sectors, including the shift of wine grapes into Tasmania in response to rising temperatures.

What does this mean for the future?

At present there remains much uncertainty over future rainfall patterns. While climate models and recent experience suggest a clear direction of change, there is little agreement over the magnitude.

On the positive side, we know that farmers are successfully adapting to the changes in climate and have been for some time. However, so far at least, farmers have only been able to tread water: improving productivity just fast enough to offset the decline in climate. To remain competitive, we need to find ways to improve productivity faster, especially if current climate trends continue or worsen.

Neal Hughes is Director, Water and Climate, at the Australian Bureau of Agricultural and Resource Economics and Sciences, and a visiting fellow at the Australian National University’s Crawford School of Public Policy.