Irrigated agricultural development in northern Australia: Value-chain challenges and opportunities

There is renewed interest in expanded agricultural development in northern Australia supported by increasing global demand for food, the region's proximity to Asian markets, and the current government policy initiatives to support economically sustainable and vibrant rural and regional communities. The production potential, financial returns, and the supply chain implications for irrigated agriculture were assessed in four different regions across northern Australia to provide a systems analysis of development opportunities and challenges. Gross margins for high volume, low value broadacre crops were mostly either negative or weakly positive, principally due to high transport costs to established markets in southern and eastern Australia. The returns were largely positive for higher value horticultural and specialist niche crops or industrial crops with local processing facilities. Scenarios incorporating alternative transport routes to Asia provided modest cost savings, but required assumptions for suitable shipping routes and cost-effective availability of containers, but did not significantly boost gross margins. When scaled to whole irrigation areas, the regional gross value of production could be significant but improving returns at farm scale requires more cost-effective supply chains. The ability to generate sufficient returns on capital investment was strongly influenced by the sequence of years associated with climatic variability and/or other unexpected shocks experienced in the years immediately following investment. The analysis highlighted that each component of the system - climate, soils, water, agronomic practice, pests and diseases, farm operations, management, planning, supply chains, infrastructure, labour, services, markets - needs to be understood but ultimate success will depend on managing the complexity of the whole farming system and value-chain. Further, scaling up development at a considered pace and being prepared for considerable lags before positive returns on investment are achieved will be critical for successful long-term irrigated agricultural ventures in northern Australia.