Economics, Wheat Pests, and Kangaroos: Reporting from Australia

Sometimes when I give a talk on the economic outlook for Montana crops, I get a question about Australia.  Australia typically produces about half of the wheat the U.S. does. This year’s crop is projected to come in at approximately 33 million metric tons, according to the WASDE report released on February 9.  (That’s a roughly 35% increase over last two years’ production.) That increase is projected to offset some of the global production hits likely in India and Kazakhstan this marketing year.

Right now, I’m in Australia for the Australian Agricultural and Resource Economics Society Conference. I organized a symposium of case studies examining the economics of agricultural pests and diseases at varying regional scales—from regional to global. In the session, I presented ongoing research on the economics of seed potato diseases in Montana. Julian Alston spoke about various grape pests and diseases.  The two other presenters spoke about issues in wheat.

Dave Pannell spoke about herbicide resistance, which is a major issue here—and has been for over 20 years now. (Aside—herbicide resistance in several crops may be one reason Australia has been hesitant to approve glyphosate-resistant GM crops.  Only GM canola is grown here.) The amount of herbicide resistance and corresponding economic consequences differ across production region and individual farmers.  Farmers everywhere must weigh current benefits of different herbicide application practices against the risk of developing resistance and losing access to those tools in later years.  In Australia, that calculation is much more immediate. This problem has induced innovation in new and different technologies, however.  Wheat producers with serious herbicide resistance have moved to (often more expensive) non-chemical controls instead, such as catching and destroying weed seeds during harvest.

Phil Pardey, who was our MSU Ag Outlook Conference speaker a couple years back, talked about wheat rust. Australia’s wheat crop is more susceptible to wheat rusts than Montana’s.  Phil and co-authors use simulation models to estimate different scenarios for wheat rust. They find that under a worst-case scenario, wheat rust losses could cause losses worth approximately $5 billion annually. They estimate the economically justifiable investment in wheat rust research is $139 million per year to prevent those losses.  That equates to an annual investment of $0.27 per acre, across all of the world’s wheat acreage.

And, in case you were wondering about what kangaroos eat…Well, the ones I fed at the Lone Pine Koala Sanctuary outside of town were eating grass pellets. And sticking their tongues out at me.