For all the uncertainties that come with farming, one thing is certain: it is not a profession for the faint-hearted.

The risks associated with food production have escalated in recent years, making grain farming more challenging. In response, GRDC will soon be investing in five-year projects as part of the new National Risk Management Initiative (NRMI).

The initiative aims to better understand and improve the relative risk and reward outcomes for growers – a concept that emerged through various forums, including the National Grower Network.

The NRMI will have a different approach from most other GRDC projects, using a format called ‘participatory action research’, or PAR. This means grain growers, scientists and technical and extension staff will come together to identify what risk-reward research, development or extension is needed, which helps inform the observe, reflect, plan and act cycle of PAR.

Aims of the NRMI

The initiative intends to challenge the decision-making processes of growers, so future decisions are better informed by the likelihood of positive returns (rewards) versus the associated downside variability and uncertainty (risk).

With the right tools, knowledge and insight, the level of risk of a farming decision can be better quantified, allowing it to be managed more effectively.

This will be achieved formally through analysis of historical data and informally through grower intuition as well as a suite of other methods. The work will help growers estimate the expected likelihood of a range of possible outcomes from a management decision for individual farms.

The NRMI also aims for growers to better understand the relationship between risks and rewards for important farming practices and decisions. It also intends to provide new insights into maximising rewards while managing risks.

The initiative will require a whole-of-industry engagement to better define the levels and variability – or ‘boundaries’ – of rewards and risks.

Understanding rewards relative to risk

There will always be risks in any on-farm investment, and these need to be weighed up against potential rewards.

GRDC northern region grower relations manager Graeme Sandral says a reward from making a successful improvement on-farm could come from cost savings or a lift in productivity.

Risk is the chance of a bad outcome or the variability or uncertainty of outcomes. While some outcomes are manageable, others are not. The outcomes can be considered in terms of profit (reward) or risk; both can be measured in dollars per hectare.

Our approach is one national project effort that comprised local and national themes focused on risk and reward.

“Through this project we may be able to better define the average profit per hectare, and the variability in that profit, by looking at the whole farm over many years and different scenarios,” Mr Sandral says.

“For example, we may be able to better manage disease outcomes – and better define those outcomes over many years that have different disease pressure. And, through that knowledge, we may be able to reduce the risk that’s associated with the profit we receive.

“Other growers may be more interested in lifting the average profitability – and accept the variability that may occur with that. Different growers, in different environments and personal settings, may prefer one of these over the other.”

Participatory action research format

The initiative provides flexibility for research groups to choose specific risk management themes.

“Our approach is one national project effort that comprised local and national themes focused on risk and reward,” Mr Sandral says.

“We will have four action research groups in each of the three GRDC regions – making 12 action research groups – coordinated by a national lead.

“While data gathering and its interpretation are very important, equally important is the equality you afford all people in the PAR process.”

The groups will follow the PAR process of the ‘action research cycle’. This involves planning, testing, observing, reflecting and re-planning with the various grower groups and the supporting partners.

National lead

The national lead will play an important coordination role. It will support the action research groups (ARGs) by collecting, analysing and modelling data, possibly including data not generated by the NRMI.

Importantly, the lead will also undertake social science research to better understand growers’ behaviour when presented with new knowledge and the risk-rewards associated with this new knowledge.

The national lead will also be responsible for monitoring, evaluating and assessing the impact of the NRMI themes and the overall GRDC investment.

Action research groups

Each ARG consortium will be led by one organisation. They will be made up of grower groups, commercial groups, research providers, consultants, agribusiness, drought hubs and others.

Each ARG will undertake research, development and extension on up to three themes, including a compulsory topic of nitrogen management strategies.

“The ARGs will need to select the other two themes themselves – risks that are critical and manageable in on-farm decision-making. And they’ll need to reflect on what is going to be the best value for the regional community they are representing,” Mr Sandral says.

The themes could be issues such as logistics, input costs, grain prices, soil water budgeting and mapping, frost, crop protection, soil amelioration or other risks identified by participants.

The ARGs will also identify how the probability of uncertain factors can be influenced by more manageable factors – such as crop nutrition, farming systems and soil amelioration.

“They’ll undertake that work in a participatory action research framework – and that’s particularly important.”

Nitrogen focus

The nitrogen management theme will be rolled out nationally as it is a significant cost/risk for every grower. The ARGs will address the aspects of interest to growers looking to improve the relative risk and reward outcomes for their environment.

Nitrogen management is particularly problematic as current recommendations require a yield estimate each season, which is rarely accurate early in the season. Low nitrogen supply is considered the single most important factor contributing to the water-limited yield gap in Australian grain crops; under-fertilising causes forgone yield and profits.

Luck and quality of decisions

Mr Sandral says the initiative will challenge growers’ intuitive, subconscious thinking to make better decisions in the future using the framework of participatory action research.

“In her book about professional poker, author Annie Duke wrote that there are only two things that determine how life turns out: ‘luck and the quality of our decisions – and we only have control over the latter.’

“GRDC is asking the industry to examine the quality of decisions we make around growing food for others both here in Australia and internationally,” Mr Sandral says.