Professional Documents
Culture Documents
Laurie Buys, Kerrie Mengersen, Sandra Johnson, Neil van Buuren and Evonne Miller
Chartridge Books Oxford 5 & 6 Steadys Lane Stanton Harcourt Witney Oxford OX29 5RL, UK Tel: +44 (0) 1865 882191 Email: editorial@chartridgebooksoxford.com Website: www.chartridgebooksoxford.com First published in 2014 by Chartridge Books Oxford ISBN print: 978-1-909287-88-4 ISBN ebook: 978-1-909287-89-1 Laurie Buys, Kerrie Mengersen, Sandra Johnson, Neil van Buuren and Evonne Miller 2014. The right of Laurie Buys, Kerrie Mengersen, Sandra Johnson, Neil van Buuren and Evonne Miller to be identified as authors of this work has been asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. British Library Cataloguing-in-Publication Data: a catalogue record for this book is available from the British Library. All rights reserved. No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording or otherwise) without the prior written permission of the publishers. This publication may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published without the prior consent of the publishers. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. Permissions may be sought directly from the publishers, at the above address. Chartridge Books Oxford is an imprint of Biohealthcare Publishing (Oxford) Ltd. The use in this publication of trade names, trademarks service marks, and similar terms, even if they are not identified as such, is not to be taken as an expression of opinion as to whether or not they are subject to proprietary rights. The publishers are not associated with any product or vendor mentioned in this publication. The authors, editors, contributors and publishers have attempted to trace the copyright holders of all material reproduced in this publication and apologise to any copyright holders if permission to publish in this form has not been obtained. If any copyright material has not been acknowledged, please write and let us know so we may rectify in any future reprint. Any screenshots in this publication are the copyright of the website owner(s), unless indicated otherwise. Limit of Liability/Disclaimer of Warranty The publishers, author(s), editor(s) and contributor(s) make no representations or warranties with respect to the accuracy or completeness of the contents of this publication and specifically disclaim all warranties, including without limitation warranties of fitness for a particular purpose. No warranty may be created or extended by sales or promotional materials. The advice and strategies contained herein may not be suitable for every situation. This publication is sold with the understanding that the publishers are not rendering legal, accounting or other professional services. If professional assistance is required, the services of a competent professional person should be sought. No responsibility is assumed by the publishers, author(s), editor(s) or contributor(s) for any loss of profit or any other commercial damages, injury and/or damage to persons or property as a matter of products liability, negligence or otherwise, or from any use or operation of any methods, products, instructions or ideas contained in the material herein. The fact that an organisation or website is referred to in this publication as a citation and/or potential source of further information does not mean that the publishers nor the author(s), editor(s) and contributor(s) endorses the information the organisation or website may provide or recommendations it may make. Further, readers should be aware that internet websites listed in this work may have changed or disappeared between when this publication was written and when it is read. Typeset by Domex, India Printed in the UK and USA
Contents
vii xi xiii
Conceptual Model
Triple bottom line sub-models Economic sub-model nodes, indicators and measures Social sub-model nodes, indicators and measures Environmental sub-model nodes, indicators and measures
1
1 2 4 6
2 3
7 11
11 13 15 18 19 20 21 24 26
vi
Evidence Base
Design Quantify Validate Evaluate Adapt
31
32 34 38 39 41
Conclusion
43 49
49 50 51
References
115
Foreword
Sustainability is a key driver for decisions in the management and future development of organisations and industries. However, quantifying and comparing sustainability across the triple bottom line (TBL) of economy, environment and social impact, has been problematic. There is a need for a tool which can measure the complex interactions within and between the environmental, economic and social systems which affect the sustainability of an industry in a transparent, consistent and comparable way. The authors acknowledge that there are currently numerous ways in which sustainability is measured and multiple methodologies in how these measurement tools were designed. The purpose of this book is to showcase how Bayesian network modelling can be used to identify and measure environmental, economic and social sustainability variables and to understand their impact on and interaction with each other. The authors acknowledge that key decisions on aspects of the Scorecard were made by community organisations associated with the case study for the project and these do not necessarily reflect the views of the authors. Additionally, limitations on the availability and reliability of specific environmental data reduced the number of indicators in the Bayesian network model developed for this project. The quality, reliability and standardisation of data for measuring sustainability is an important ongoing issue for measuring sustainability. A systematic review of literature relating to measurement of sustainability identified the absence of any uniform measurement tool or metrics to measure aspects of sustainability. Regardless of this shortcoming the authors believe the model developed can be adapted across other sustainability measurement tools ahead of the
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development of a more standardised way of measuring sustainability. Rather than focus on which indicator or metric was chosen by the community organisations associated with the case studies, the purpose of this book is the methodology and approach used to bring together indicators and metrics to measure sustainability. The benefits of the Scorecard include enabling stakeholders to establish baseline performance benchmarking using validated existing measures and industry standards, whilst incorporating flexibility for the addition of new measures when available. The Scorecard results can be used to model predictive scenarios, exploring the impact that change in one area has upon multiple measures and domains, thus reducing the risk of unintended negative consequences of changes in industry practice. In this book, we introduce the Sustainability Scorecard, and describe it through a case study on sustainability of the Australian dairy industry. This study was conducted in collaboration with the Australian dairy industry. The evidence base used to identify the key variables to be addressed in each of environment, economic and social domains and to determine the measures used in developing a Scorecard for the dairy industry, included: A systematic literature review, based on searches of 11 primary electronic English language library databases. Engagement of key informants and stakeholders in the dairy industry through: a workshop with key Australian dairy manufacturing industry members and nominated Dairy Australia staff on 30 June 2011 in Melbourne; a workshop with the Australian Dairy Manufacturing Industry Group on 3 April 2012 in Melbourne; and ongoing key informant consultations for the refinement of identified measures. Building on key Dairy Australia reports including: the 2009 Dairy Sustainability Project (QUT); the 2011 Materiality Survey (NetBalance); and the 2007/08 Australian Dairy Manufacturing Industry Sustainability Report (DMSC).
The result was the development of the Bayesian network model with nodes incorporating environmental, economic and social sustainability
Foreword
ix
variables for the industry in the contexts of farm, factory and market. Indicators were identified to measure the performance of each sustainability variable. The model was quantified using probability tables based on the information obtained from the evidence base. The resulting probabilities of high, medium and low sustainability for each of the farm, factor and market contexts, the environmental, economic and social variables and the overall industry as a whole, were translated onto the Sustainability Scorecard. The processes for development of the Sustainability Scorecard are detailed in the Evidence Base section (chapter 4) of this book. Within this book a description of the variables for each node, the measures for these variables, with explanatory notes on the implications of results for sustainability are provided. The Scenario Testing section (chapter 3) illustrates the way in which scenarios can be modelled to demonstrate the impact of changing one variable, e.g. a significant weather event might directly impact market outcomes. The case studies highlight the usefulness of the Sustainability Scorecard to organisations and industries in order to generate an assessment across systems that can be aggregated to give an overall score or be disaggregated to identify risks which need to be addressed. The Scorecard can also be used to model how improvement strategies might impact, positively or negatively, across all the systems of an industry. Overall, the Sustainability Scorecard is a versatile industry tool that supports decision-making in the areas of social, economic and environmental performance. This project identified baseline performance measures that can be used to identify and track future positive and negative trends in sustainability and identifying sustainability best practice in the Australian dairy industry. The Scorecard provides rigorous, scientifically verifiable and comparable measures that can be used to engage government, the community and other stakeholders in conversations around social, economic and environmental challenges to the industry and to allow policy makers and stakeholders to develop collaborative responses. Finally, the Scorecard gives the dairy industry a tool to test for future growth and new investment opportunities through scenario testing of case studies.
Acknowledgements
The researchers would like to thank the team from Dairy Australia for the ongoing partnership in projects that we believe have significant positive impacts on the sustainability and adaptation to change for a key Australian industry. Thank you to all the individuals and industry representatives who participated in the workshops and gave their time and expertise to the project. Finally, thank you to the QUT research team: Jeff Sommerfeld, Karla Morris, Anita Chauvin, Kimberley van Megen and Lindsey Dixon for their dedication and tenacity in achieving these outcomes. For further information, please contact Professor Laurie Buys on L.buys@qut.edu.au
Introduction
Over two decades ago, the Bruntland Report defined sustainable development as development that meets the needs of current generations without compromising the ability of future generations to meet their own needs (WCED, 1987). The purpose of this report was to generate a more integrated approach to sustainability, emphasising that multiple systems are at work: economic growth, development of social equality and improved protection of the environment. Its proposals were endorsed by world leaders at the United Nations Conference on Environment and Development in Rio de Janeiro in 1992 and the World Summit on Sustainable Development in 2002 in Johannesburg. Progress in developing strategies to improve sustainability has been hindered, however, by debate over definitions and intent, and the lack of tools to assist the making of an integrated assessment of risk and the modelling of potential positive and negative impacts of strategies employed in one system (e.g. economics) on others (e.g. environment) (Barlund, 200405; Drexhage and Murphy, 2010; Staniunas et al., 2012). Recommendations from the Brundtland Report have been the impetus for many global meetings of experts seeking strategies to operationalise its recommendations and to be able to measure progress in improving sustainability. In 1996 the International Institute for Sustainable Development met in Bellagio, Italy, to review the progress achieved in sustainable development since the Brundtland Commission and to develop the principles which need to underpin ongoing assessment of progress in the development and implementation of strategies for improved sustainability (Hardi and Zdan, 1997). The Bellagio Principles, as they have become known, underpin much contemporary work and formed the basis for the development of the assessment model in this report.
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There have been some successes in the implementation of the recommendations, with local governments now much clearer on, and committed to, sustainable development as a parameter for planning and decision-making, and the Brundtland Report has acted as a catalyst to develop education for young and future generations (Barlund, 2007). Its implementation in industry and government policy, however, has been fraught with debate on how to identify priorities for action, and has suffered an absence of the integrated assessment and risk management tools, which would support the more coordinated approach to strategy development which is needed (Barlund, 2007; Drexhage and Murphy, 2010; Staniunas, Burinskiene and Maliene, 2012). Critiques of the definitions alone have hindered political and policy decision-makers, preventing the development and implementation of assessment and remediation strategies to address risks to sustainability on the ground (Drexhage and Murphy, 2010). The most recent critiques on the human social element, for example, suggest that being able to meet needs now and in the future is dependent on defining what exactly these needs are, with the United Nations Development Program (UNDP) Report, Human Development Report 2011, suggesting the attainment and sustainability of social equity must focus on freedom, opportunities and choices (Nunan, 2011). It may be that progress will be most effectively stimulated by industries at the local level, assessing their sustainability against accepted global and industry specific criteria. In engaging local and cross-sector stakeholders, and involving decision-makers in these assessment processes, useful definitions and strategies may emerge from practice (Sneddon et al., 2006). Developing strategies to measure and improve sustainability within and between each of the environmental, economic and social domains, however, has also suffered from intense debate as advocates for one area fear that efforts within another could have unintended adverse impacts on their domain: the risk of sacrificing soil for solvency. Vested interests continue to construe development as an economics issue and sustainability as an environmental issue. However, what appears to be galvanising some cohesive response across sectors is the imperative of climate change (Drexhage and Murphy, 2010).
Introduction
xv
Nevertheless, quantifying and comparing industry sustainability across the triple bottom line of economy, environment and social impact continues to be problematic. Each is a complex system in its own right, with unique parameters that must be analysed both individually and for their effect on one another (Sneddon et al., 2006), at a level that can contribute to concrete, realistic solutions on the ground (Barlund, 2007). At present, each of the three domains has developed its own measures of risk and success and largely discreet strategies for sustainability with no analysis of how activity for improvement in one area might affect another (Sneddon et al., 2006) not recognising the need for a cohesive measure across the interconnected triple bottom line (Buys and Miller, 2009). Without this integrated analysis it is impossible to model how change in one area might benefit or harm another or work synergistically overall. Studies attempting to compare the sustainability performance of countries and industries have found performance ratings to be variable depending on which domain is measured and which sustainability indices are used (Staniunas, Burinskiene and Maliene, 2012). Any measure that is developed must be an adaptable tool that enables informed assessment, dialogue and negotiation of strategies at a global level, as well as being applicable to developing local solutions. Stimulated by economic growth in developing countries, the imperative for global cooperation, performance comparison and strategy sharing increases with the impact of climate change, population growth and diminishing resources (Brundtland, 2007). However, efforts to validly and reliably measure where problems lie and how successes are built have faltered for 20 years, in part due to the absence of an integrated measurement tool that can provide the data and analysis on which to build agreement on priorities and strategies (Drexhage and Murphy, 2010).
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complicated that it is impossible for a human to keep track of the resultant processes. Moreover, the system can change through selforganisation and complex patterns can arise from relatively simple interactions (Capra, 1996; Johnson and Mengersen, 2012). Sustainability is one such complex system. It comprises complex interacting factors and processes (e.g. in the context of the dairy study: farm, factory and market processes; and environmental, social and economic factors). It is self-organising; it does not require external intervention to thrive or deteriorate (e.g. an ecosystem can be sustainable through self-organisation). It can also exhibit emergent behaviour, since intervening in one part of the sustainability system can have unintended and quite extreme effects in seemingly unrelated parts of the system (Johnson and Mengersen, 2012). It is necessary to be able to rigorously assess the impact of current natural resource management, industry development and distribution of resources, so as to model likely future scenarios, should current trends remain unchanged. It is also critical to be able to model possible outcomes of strategies which might be mooted and to address risks to sustainability to ensure no unintended negative consequences are triggered in other areas. It is necessary to understand the impacts of each system on one another, for example, the impact of industries on climate change, diminishing resources, economic shifts and social change. In turn, it is necessary to understand the impact of variables such as these on an industry, its future viability, its surrounding communities and the economies they feed or depend on (Brundtland, 2007). Thus, a tool is required that can measure complexity within and between systems and model how changes in one element, positive or negative, might flow on to others. Only then can strategies for sustainability be developed with reduced risk of unintended negative consequences (Johnson and Mengersen, 2012).
Introduction
xvii
describe nested systems within larger systems (Johnson and Mengersen, 2012). The model structure and parameters may be learnt entirely from data, or elicited from experts, or a combination of both (Jensen and Nielsen, 2007). When the Bayesian network model structure is built by experts to represent sustainability of a particular industry, the key sustainability indicators within the contexts in which that industry functions need to be jointly identified by industry stakeholders, e.g. in the case of a primary industry such as the dairy industry, the contexts are: farm, factory and market. Each of these contexts has key sustainability indicators relating to environment, economics and social impact. The Bayesian network may be constructed as a hierarchical model, with the high-level model giving an uncluttered overview of the system, and the nested sub-models containing more detailed information (Johnson and Mengersen, 2012). Each of these nested sub-models may also contain sub-models, e.g. the Economic sub-model in figure I.1 contains three sub-models: Economic Farm, which contains the key sustainability indicators which affect a farm economically; Economic Factory, which contains the key economic sustainability indicators for a specific factory, and Economic Market, which contains the key economic sustainability indicators specific to a market. These key indicators are graphically represented as nodes in the network, and the relationships between them are shown as directed arrows. Each key sustainability indicator identified across the TBL and within the contexts of farm, factory and market, has one or more sub-indicators, which combine to represent its level of sustainability. These subindicators are also represented as nodes in the BN, as well as the measures (or metrics) that are used to calculate the probabilities of these sub-indicators. Stakeholders identify the key indicators which are important for understanding and representing sustainability on each of the TBL sub-models in the Bayesian network. Each key sustainability indicator then needs to be assessed, to understand performance on issues affecting the sustainability of the industry and the ways in which the industrys current functioning could be impacting on the sustainability of, e.g. the environment, and communities. Each key indicator is further broken down into sub-indicators. For example,
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Economic
Social
Environmental
Farm
Factory
Market
Figure I.1 Summary of the Sustainability BN the high level view of the Bayesian network model
the key social sustainability indicator Employment is broken down into three sub-indicators: Labour, Training and Management for farm, factory and market. Stakeholders identify existing measures to assess these sub-indicators, where such measures exist, or they define what measures could be designed or what data accessed from other sources to best describe and capture the indicators. The available data is then analysed to create a probability distribution to quantify the nodes. For example, it may be possible to use existing measures, such as global environmental indices or industry specific measures and to also obtain data from other available information, e.g. peer reviewed research literature, industry reports, pilot studies, trials, experiments and through expert key informants assessments. The outputs of the Bayesian network can be represented and communicated as a Sustainability Scorecard in each of these unique contexts of an industry, thus allowing for specificity of analysis on the ground. The scores can then be aggregated to give an overall score for the industry across a region or a country. For example, in the Australian dairy industry there may be boutique farms producing gourmet products, large industrialised farms owned by private enterprises, farmers cooperatives across a geographic region, small independent producers, etc. Some dairy communities may be in small, well-established rural pastoral communities in the fertile
Introduction
xix
periphery of the continent, fertile country with a stable environment and plentiful resources; some may be in areas subjected to regular or intermittent environmental extremes such as floods or fire and some may be in remote outback settings (Dairy Australia, 2013). A Bayesian network can be developed using the local data at the local community or regional level of each of these contexts, to examine their unique features and challenges. The scores of the industry in particular sites or settings can be aggregated upwards to give an overall industry score for a larger region or the country. The scores can also be disaggregated to drop back down to that level of detail, specific to the Bayesian network for specific regions, to retain analysis of the issues specific to unique settings (Johnson and Mengersen, 2012). Bayesian networks allow the integration of multiple variables (represented as nodes in a BN) across the range of systems which impact upon sustainability in whatever context is being examined. That is, they allow the triple bottom line of sustainability, i.e. environment, economics and social impact to be measured for specific industries, for particular issues, in the range of the functional contexts of that industry and the unique geographies or communities, where that industry exists. Because the Bayesian network can incorporate whatever measures are standardised and well-accepted by that industry, it provides a common language and standardised measurement system for comparisons between regions, and could be adapted as a tool for global comparisons, such as the Sustainability Scorecard. Because the Sustainability Scorecard is developed from the ground up, identifying issues unique to industries and being able to incorporate existing agreed-upon measures, it can be adapted and customised to any industry. To assess the development of primary industries, for example, the triple bottom line can be examined in the contexts of farm, factory and market, in order to understand current performance, future demands and risk management for the sustainability of the industry. Scenarios can be modelled to assess the impacts of climate change, population growth, shifting economics, changing industry methods, market forces, and other emergent issues in each of these contexts.
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Because the nodes, indicators and measures for the Bayesian network are developed and customised by and for the industry to which they are being applied by the range of stakeholders in that industry, there is an opportunity to source converging evidence of key issues and find agreed-upon measures for important variables. It is also possible to have timely warning of emerging issues and to work collaboratively to reconfigure the network to assess the impact of those issues (Johnson and Mengersen, 2009), a Bayesian network is always a work in progress (Johnson, Low Choy and Mengersen, 2012). This approach, the engagement of the range of stakeholders involved in and affected by an industry, generates ownership of the findings and the action required to position the industry for sustainability (Johnson and Mengersen, 2009), which is critical when diverse interest groups may have competing or conflicting interests (Dimitrov and Sami, 2010). The forces which drive the social, economic and environmental sectors, the decision-makers who have the power or influence to accept or reject change, cannot be ignored, if change is to be achieved (van Kerkhoff and Lebel, 2006). It may be that part of the problem with the progress of sustainable development in the past has been the traditional divide between those undertaking the systematic research and those on the ground required to take up and act on the results of such. The dissemination of research results has usually only occurred on completion, in a unidirectional, linear communication (van Kerkhoff and Lebel, 2006), whereas, as grounded researchers explain, the ownership of ideas and a willingness to implement these relies on a more collaborative approach from the outset, before research has even commenced. It requires acknowledging that experts exist in all spheres and need to be able to share information and debate, in order to come to agreement on issues, assessment tools, priorities for remediation and an optimal approach to solving problems (Corbin and Strauss, 2008; Johnson and Mengersen, 2009), e.g. improving sustainability. Developing Bayesian networks with industry stakeholders as a measurement and planning tool addresses two of the critical factors which have stalled progress on sustainability to date, i.e. dealing with complexity across the multiple systems which affect and are
Introduction
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affected by sustainability, and engaging the divergent interest groups of environmental, economic and social systems in dialogue which generates a collaborative, coordinated effort.
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may be used for the benchmarking and sharing of good practice between regions. Where global sustainability indices or industry standards have been used the Scorecard can be used for standardised comparisons between the same type of industry in different countries. This is why Bayesian networks and a corresponding Scorecard could provide a tool which facilitates comparisons of performance and dialogue, both locally and globally. Use of the Scorecard to establish a baseline, against which to measure change over time and in response to any changing parameters, allows the industry to which it is being applied, that the industrys stakeholders and its government and other decisionmakers to discuss those aspects of the industry which are identified as being at risk, and to collaboratively consider what strategies may need to be developed to improve sustainability as a holistic, integrated concept. A Sustainability Scorecard allows stakeholders on the ground, decision-makers in the industry, and policy and political decision-makers to: Identify key drivers and key weaknesses of sustainability: By identifying baseline performance measures of the Australian dairy industry in the areas of social, economic and environmental performance, this data, and subsequent measurements, can be used to identify and track positive and negative trends in sustainability towards identifying best practice. The measurement of triple bottom line sustainability now and in future years, using the Sustainability Scorecard, can assist in identifying opportunities to make the dairy industry more sustainable. Differences between regions and states can be identified and drive improvement strategies when developing best practice policies and strategies. Equally, the impact of policy or climatic changes can be measured or tested to promote appropriate policy responses to mitigate negative or unforeseen consequences of policy or long-term climatic changes. The Scorecard provides valuable data for establishing industry emission reduction targets for dairy and to direct initiatives to reach targets. The Scorecard which incorporates indicators like the carbon and water footprint as measures in its nodes can form
Introduction
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the basis for the industry to provide annual sustainability reporting and benchmarking. Assist communities and industry to anticipate and adapt (future focus v. reactive): The Sustainability Scorecard provides a tool for exploring future growth and new investment opportunities for the growth of the industry. The economic and social capacity of communities to sustain a dairy industry is an important aspect of the Scorecard. The outcomes of key investment decisions can be modelled and interrogated within a community or industry planning strategy. The Scorecard may be useful when addressing complex issues, such as whether a community has the workforce and other infrastructure to support the industry, or if competition for resources is imposing upon sustainability. The rigour of the Sustainability Scorecard and the Bayesian network model used to develop the Overall Sustainability Score can assist when examining a wide range of variables which correlate with economic considerations, and which directly and indirectly determine economic sustainability. The Scorecard can be an invaluable tool to identify best practice in sustainability in different areas and regions and to illustrate how these can be adapted across the industry, where possible, to achieve greater sustainability outcomes. Form a strategy for involving diverse stakeholders through a transparent engagement process: The Sustainability Scorecard provides Dairy Australia with a tool for the development of government and community responses to major structural change resulting from climate change or other sustainability challenges. Because the Scorecard is based on transparent scientific measures and demonstrates how those measures interact with one another the format gives users the ability to interact with and understand the complexity of sustainability. Thus, the Scorecard can be used to promote greater engagement with all stakeholders across the dairy sector towards ensuring that future policies and adaptation strategies can be monitored and tested for their impacts on triple bottom line outcomes. Equally, it will provide early identification of negative trends to allow Dairy Australia to advocate on the adjustment of policies
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or strategies that may have unintended negative effects. The Sustainability Scorecard gives the dairy industry a high level of flexibility in developing responses to key climatic and policy changes in the 21st century. As the Australian public becomes more aware of the need for sustainability, the Scorecard gives the dairy industry the credibility to engage in the public dialogue on behalf of its multiple stakeholders.
1
Conceptual Model
Economic
Social
Environmental
Farm
Factory
Market
Figure 1.1
Economic Farm
Economic Factory
Economic Market
Economic TBL
Social Farm
Social Factory
Social Market
Environmental Farm
Environmental Factory
Environmental Market
Environmental TBL
Conceptual Model
INDICATOR NODE
FARM Measurement FACTORY Measurement MARKET Measurement
INDICATOR
FARM Measurement FACTORY Measurement MARKET Measurement
INDICATOR
FARM Measurement FACTORY Measurement MARKET Measurement
1.1 DEBT
1.1.1 Debt to Asset ratio 1.1.2 N/A 1.1.3 N/A
1.2 ASSETS
1.2.1 Debt to Equity Ratio 1.2.2 N/A 1.2.3 N/A
1.3 INVESTMENT
1.3.1 Rate of return on assets 1.3.2 N/A 1.3.3 N/A
ECONOMICS
2.2 INTEREST
2.1.1 Interest expense ratio 2.1.2 N/A 2.1.3 N/A
2.2 INCOME
2.2.1 Net farm income ratio 2.2.2 N/A 2.2.3 N/A
2.3 COMPETITIVENESS
2.3.1 N/A 2.3.2 N/A 2.3.3 N/A
PROFITABILITY
3.1 EMPLOYMENT
3.1.1 N/A 3.1.2 N/A 3.1.3 N/A
3.2 PRODUCTIVITY
3.2.1 Milk produced 3.2.2 N/A 3.2.3 N/A
3.3 MANAGEMENT
3.3.1 Attitude to future 3.3.2 Skills & Training 3.3.3 N/A
WORKFORCE
4.2 SUPPLY
4.2.1 Milk production 4.2.2 Volume of milk processed* 4.2.3 N/A
4.3 RISKS
4.3.1 N/A 4.3.2 N/A 4.3.3 AUD/Exchange rates
MARKET
5.1 EFFICIENCY
5.1.1 Milk yield per cow 5.1.2 N/A 5.1.3 N/A
5.2 RESOURCE
5.2.1 Cost of water 5.2.2 N/A 5.2.3 N/A
5.3 INPUTS
5.3.1 Fodder costs 5.3.2 N/A 5.3.3 Product consumption
PHYSICALS
Figure 1.3 The key economic sustainability indicators and sub-indicators which were used in the case study
debt (1.1), assets (1.2) and investment (1.3). Each of these subindicators has a measure for farm, factory and market. For example, the debt to asset ratio (1.1.1) is the metric which was used to measure the performance of the debt sub-indicator for farming. Note that N/A means that no metric was identified for a sub-indictor. The reason for this may be due to the difficulty in obtaining access to suitable data to measure the sub-indicator, or due to resource constraints for the pilot case study. When information was not available, the sub-indicator was treated as being uninformative, and therefore it was equally likely to be at a high, medium or low level of sustainability. The numbering system for the indicators and measures are as follows: the first number is the key indicator node, the next refers to the sub-indicator and the last digit identifies whether the measure is for farm, factory or market. For example, 4.3.3 means the 4th key indicator node (market), the 3rd sub-indicator for that node (risks) and the 3rd measurement for the sub-indicator, which is a market measurement (farm is 1, factory is 2, and market is 3).
Conceptual Model
INDICATOR NODE
FARM Measurement FACTORY Measurement MARKET Measurement
INDICATOR
FARM Measurement FACTORY Measurement MARKET Measurement
INDICATOR
FARM Measurement FACTORY Measurement MARKET Measurement
1.1 LABOUR
1.1.1 Work-life balance 1.1.2 Work-life balance 1.1.3 N/A
1.2 TRAINING
1.2.1 VET Courses 1.2.2 VET Courses 1.2.3 N/A
1.3 MANAGEMENT
1.3.1a Attitude to future 1.3.1b Age composition 1.3.2 N/A 1.3.3 N/A
EMPLOYMENT
2.1 DISCRIMINATION
2.1.1 N/A 2.1.2 Labour equity 2.1.3 N/A
2.2 COMPLIANCE
2.2.1 Regulations 2.2.2 Regulations 2.2.3 N/A
3.1 CULTURE
3.1.1 Family farming 3.1.2 N/A 3.1.3 N/A
3.2 VALUE
3.2.1 Residents Perceptions 3.2.2 Wage contribution 3.2.3 Childrens Understanding
3.3 COHESION
3.3.1 Participation 3.3.2 Corporate Social Responsibility 3.3.3 N/A
COMMUNITY
4.2 OCCUPATIONAL
4.2.1 Farm injuries 4.2.2 Lost time injury frequency 4.2.3 N/A
4.3 CONSUMER
4.3.1 Perceptions of safety 4.3.2 Product recalls 4.3.3 Foodborne Illness
5.1 NUTRITION
5.1.1 N/A 5.1.2 N/A 5.1.3 N/A
5.2 MARKETING
5.2.1 N/A 5.2.2 N/A 5.2.3 Product Consumption
PRODUCT
Figure 1.4 The key social sustainability indicators and sub-indicators which were used in the case study
INDICATOR NODE
FARM Measurement FACTORY Measurement MARKET Measurement
INDICATOR
FARM Measurement FACTORY Measurement MARKET Measurement
INDICATOR
FARM Measurement FACTORY Measurement MARKET Measurement
1.1 WATER
1.1.1 Consumption & diversion from environmental flows 1.1.2 Recycling 1.1.3 NA
RESOURCE EFFICIENCY
WASTE
Figure 1.5 The key environmental sustainability indicators and sub-indicators which were used in the case study
2
Dairy Sustainability Scorecard
The Dairy Sustainability Scorecard builds a sustainability score, informed by the Bayesian network model. This score is an aggregated score and although it is an abstract concept, it provides the mechanism for comparing relative sustainability across sustainability indices, triple bottom line and dairy industry sectors. Having established a base line, changes in sustainability in Dairy Australia can be visually represented and communicated to stakeholders. Figure 2.1 below illustrates the utilities assigned to the stochastic nodes in the Dairy Australia Bayesian network model, and Table 2.1 shows the mapping of these scores onto a Scorecard. The colour palette on the right of the Scorecard depicts the level of sustainability of each entry in the Scorecard. The Sustainability Scorecard models for each of the TBL Economic scorecard, Social scorecard and Environmental scorecard models for dairy farms are shown in Figures 2.2 to 2.4 below.
Economic
Social
Environmental
Farm
High 34% Medium 43% 23% Low
Factory
29% High Medium 41% 29% Low
Market
High 31% Medium 41% 27% Low
High Low
27% 29%
Medium 44%
Figure 2.1 Dairy Australia Sustainability Scorecard model Table 2.1 Dairy Australia Sustainability Scorecard
TBL KEY INDICATOR Economics Protability Economic Workforce Market Physicals Economic sustainability Employment Legal & Ethics Social Community Health & Safety Product Social sustainability Environment Resource efciency Waste Environmental sustainability Dairy Australia sustainability FARM 0.73 0.56 0.47 0.59 0.42 0.60 0.21 0.59 0.54 0.46 0.50 0.43 0.62 0.46 0.55 0.56 FACTORY MARKET 0.50 0.50 0.50 0.61 0.50 0.54 0.51 0.54 0.54 0.43 0.50 0.50 0.48 0.35 0.41 0.50 0.50 0.50 0.50 0.54 0.55 0.52 0.50 0.50 0.53 0.45 0.57 0.51 0.50 0.50 0.50 0.52 OVERALL 0.58 0.52 0.49 0.58 0.49 0.56 0.41 0.54 0.54 0.45 0.52 0.48 0.53 0.44 0.52 0.53 0.04 0.09 0.13 0.17 0.22 0.26 0.30 0.35 0.39 0.43 0.48 0.52 0.57 0.61 0.65 0.70 0.74 0.78 0.83 0.87 0.91 0.96 1.00
Market - Farm sustainability score Expected utility 0.588857 Physicals - Farm sustainability score Expected utility 0.423376 Economic Farm sustainability score
Expected utility 0.601312
Figure 2.2
Figure 2.3
Figure 2.4
3
Scenario Testing for the Scorecard
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The dairy TBL is assessed across farm, factory and market, and culminates in a probability distribution across the levels of sustainability for the dairy industry. The value assigned to a sustainability level may be interpreted as the probability that the dairy industry has that level of sustainability. This probability should be compared to the probabilities of the other possible levels of sustainability to better understand the overall picture and the certainty we have that the industry is at a particular level of sustainability. At 100% we are certain that it is definitely in a particular state, and at the other end of the scale 0% indicates that it is definitely not at that level of sustainability. The current baseline values for the Dairy Australia Scorecard show that the probability of being highly sustainable is 27%, the probability of having a medium level of sustainability is 44% and the probability of a low level of sustainability is 29%. Consequently, a medium level of sustainability is the most likely outcome. The relatively flat nature of the distribution (the highest probability is less than 50%) is likely representative of the gaps in knowledge in some of the indicators. However, this should not detract from the importance of having a baseline from which we can build more exact
Economic
Social
Environmental
Figure 3.1 The probability distribution for the overall sustainability score for Dairy Australia
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models. The strength of the relationships between the various indicators and perspectives are also captured in the model, and a Bayesian network allows us to run queries against the model. This is a powerful feature of Bayesian networks. We present several scenarios and discuss the results of these scenarios.
Economic
Social
Environmental
Figure 3.2
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Another perspective on this may be to ascertain which dimension of the industry to concentrate on to achieve overall sustainability most expediently. In this case we would look at farm, factory and market in turn to see what effect it has on the overall sustainability score. Figure 3.3 shows the result of setting farm, factory and market to having definitely achieved a high level of sustainability. The model predicts that there is not really much to choose between them, so the choice of which area to concentrate on will depend on Dairy Australias priorities and beliefs. Nonetheless we see that the model now predicts that the most likely level of overall sustainability will be high if any one of the sectors attains a high level of sustainability. It is important to note that there are several indicators which have not yet been informed by data or expert judgement, and as is the norm with Bayesian networks, the model should be continuously updated with new information. These scenarios should then be rerun to see whether the results provide new insights into proposed courses of action.
Economic
Social
Environmental
Economic
Social
Environmental
Economic
Social
Environmental
High Low
Medium 43%
Figure 3.3 The effect on the overall sustainability score of Dairy Australia when either farm, factory and market is highly sustainable
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Scenario 2 Low sustainability in farm, factory or market If sustainability in farm, factory or market deteriorates to a low level, how is this likely to reflect on the overall sustainability score of Dairy Australia? We represent this scenario in the model by first setting just one of the sectors, factory, to a low sustainability level (Figure 3.4(a) has a 100% low for factory). This information results in the overall sustainability score being equally likely to have a medium or low score, which is a marked deterioration compared to our current knowledge about sustainability in the dairy industry (see Figure 3.1 above). If we set another sector to a low level of sustainability, for example the farming sector (Figure 3.4(b) has a 100% low for farm), then the most probable state of the industry is at a low level of sustainability.
Economic
Social
Environmental
Economic
Social
Environmental
(a)
(b)
Figure 3.4 Low sustainability at factory level only (a), and also at Farm level (b).
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may be the result of one or more measurements that provide an insight into the level of sustainability of the indicator. In this initial version of the Dairy Australia Scorecard, the majority of subindicators have been informed by only one metric. The metric used to map onto the investment sub-indicator is rate of return on farm assets. This metric is showing a low level of sustainability with a high degree of certainty (90% probability of being at a low level of sustainability). If the rate of return on farm assets is targeted to become highly sustainable, (we do this by setting high to 100% in the model) then the model predicts that the Economics Farm indicator will also become highly sustainable with a probability of 90%, which is shown in Figure 3.5(b). Furthermore we see in Figure 3.5(b) that by targeting this one sub-indicator, the overall economic sustainability prediction also improved, so that it is now equally likely to be high or medium. If further action is taken to ensure that farming profitability (the synthesis of sub-indicators interest, income and competitiveness) is highly sustainable, we see a marked increase in the overall economic sustainability of dairy farming so that the most probable state is now a high level of sustainability (62%). One type of activity that could be considered would be first of all to gather further knowledge about the sub-indicators to provide a more accurate assessment of the level of sustainability. This is achieved by adding more metrics to the subindicators, and especially for the competiveness sub-indicator, which has no metric associated with it. If there is no empirical data available for an additional measurement, expert judgement will be required to estimate the probabilities. Once there is agreement that the level of sustainability of profitability has been accurately estimated, certain metrics can then be targeted to explore activities and strategies for improving their sustainability assessment. It is also interesting to note that this scenario of high profitability (indicator) and investment (sub-indicator) flows down to a healthy improvement of overall sustainability at the farm level. Previously, (Figure 3.6 (a)) the most likely farm sustainability level was medium (45%) and now both high and medium are predicted to be approximately equally likely at 42% and 43% respectively.
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(A)
Measures for Economics - Farm
(B)
Measures for Economics - Farm
Medium Low
Medium Low
Medium Low
(C)
High Low
Medium
Medium Low
Medium Low
Figure 3.5 Current estimate of economic sustainability of dairy farms (a), achieving high sustainability of investment sub-indicator (b), and achieving high sustainability of protability indicator (c).
The synthesis of economic sustainability across farm, factory and market resulting from this scenario has a similarly positive outlook on the level of sustainability, as shown in Figure 3.6 below, so that Dairy Australias economic TBL now predicts high and medium sustainability to be roughly equally likely.
Economic - Factory
Economic - Factory
Economic - Farm
Economic - Market
Economic - Farm
Economic - Market
Figure 3.6 Initial estimates for the economic TBL for Dairy Australia (a); the ow-on effect of Scenario 3 for Dairy Australias economic TBL (b).
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Medium Low
Medium 42%
Medium 36%
Medium 38%
19
Social - Factory
Social - Factory
Social - Farm
Social - Market
Social - Farm
Social - Market
(a)
(b)
Figure 3.8 Social TBL prior to running Scenario 4 (a), and the ow-on effect of this scenario on social sustainability (b).
Economic
Social
Environmental
Economic
Social
Environmental
Figure 3.9 Factory sustainability prior to running Scenario 4 (a), and after running this Scenario (b).
social TBL synthesises across farm, factory and market, and the overall factory sustainability synthesises across economic, social and environmental sustainability.
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(A)
Measures for Waste - Farm
(B)
Measures for Waste - Farm
(C)
Measures for Waste - Farm
(D)
Measures for Waste - Farm
Waste - Farm 27% High Medium 40% Low 34% High Low
Medium 49%
Medium 32%
Figure 3.10 Environmental sustainability for dairy farming prior to setting any levels (a), results from having solid waste as highly sustainable (b), a medium level of sustainability (c) and a low level of sustainability (d).
It is clear from the model inference above that taking into account the current levels of sustainability of the other environmental indicators, a high level of sustainability for solid waste will translate into a high level of environmental sustainability for dairy farming. However, a medium or low sustainability level for solid waste will retain the most probable level of sustainability as medium.
21
Economic
Social
Environmental
Figure 3.11 Strength of inuence for the overall sustainability score. The thickness of the arrows gives an indication of the strength of inuence between the parent and child nodes.
Economic - Factory
Economic - Farm
Economic - Market
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In Figures 3.13, 3.14 and 3.15 below the three dark, thick arrows from the measurement sub-networks imply that the sub-indicators are completely defined by the measures in the sub-network. The reason for this is that the initial version of the model has generally only one metric to set its level of sustainability. For the Economic Farm sub-model (Figure 3.13 below), the sub-indicators all contribute equally to the indicator. For example, the arrows from interest, income and competitiveness all have equal thickness. The five indicators differ in their influence on economic sustainability for farming. Economics, profitability and market appear more influential than workforce and physicals. Likewise for the Economic Factory sub-model (Figure 3.14 below), the sub-indicators all contribute equally to the indicator and economics; profitability and market are more influential than workforce and physicals.
Profitability - Farm
32% High Medium 47% 21% Low
Workforce - Farm
24% High Medium 46% Low 30%
Market - Farm
37% High Medium 45% 19% Low
Economics - Farm
50% High Medium 45% 5% Low
Economic - Farm
44% High Medium 44% 12% Low
Physicals - Farm
100% High Medium 0% Low 0%
Figure 3.13 Strength of inuence in the economic sustainability for farming. The thickness of the arrows gives an indication of the strength of inuence between two nodes.
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Debt
33% High Medium 33% 33% Low
Assets
33% High Medium 33% 33% Low
Figure 3.14 Strength of inuence in the economic sustainability of dairy factories. The thickness of the arrows gives an indication of the strength of inuence between two nodes.
The strength of influence diagram for the Economic Market submodel (Figure 3.15 below) also follows the same relative strengths as Figures 3.13 and 3.14 above. So the sub-indicators all contribute equally to the indicator and economics; profitability and market are more influential than workforce and physicals.
Measures for Profitability - Market Measures for Workforce - Market Measures for Market - Market
Debt
33% High Medium 33% 33% Low
Assets
33% High Medium 33% 33% Low
Figure 3.15 Strength of inuence in the economic sustainability of the market sector. The thickness of the arrows gives an indication of the strength of inuence between two nodes.
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Social - Factory
Social - Farm
Social - Market
Figure 3.16 The strength of inuence diagram for social TBL shows that it is inuenced more strongly by farm and market than by factory sustainability.
In the Social Farm sub-model (Figure 3.17 below), the subindicators all contribute equally to the indicator, except for the Employment Farm indicator, which is influenced more strongly by labour and management sub-indicators than by training. Social sustainability is the synthesis of five indicators with two, employment and product, exerting a slightly stronger influence on social sustainability for farming than legal and ethics, community or health and safety. Similarly, Figure 3.18 below showing the strength of influence in the Social Factory sub-model has all sub-indicators contributing equally to the associated indicator, with the exception of employment, where sub-indicator management and training have a stronger influence than labour. As for farming, the employment and product indicators have a stronger influence on the sustainability of factories.
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For social sustainability at the market level (figure 29), the strength of influence mimics that of the social sustainability of farming.
High Compliance 95% High Medium 5% 0% Low Discrimination 0% High Medium33% Low 67% Low
Legal & Ethics Farm High Low 33% 16% Medium 51%
Health & safety Farm 44% High Medium 43% Low 13%
Medium 32%
Medium 50%
Medium 38%
Figure 3.17 Strength of inuence in the social sustainability for farming. The thickness of the arrows gives an indication of the strength of inuence between two nodes.
Medium 43%
Medium 42%
Social Factory High Medium Low 26% 49% 25% High Low
Medium 42%
Figure 3.18 Strength of inuence in the social sustainability of dairy factories. The thickness of the arrows gives an indication of the strength of inuence between two nodes.
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Animal welfare
Occupational
Consumer
Legal & Ethics Market 31% High Medium 38% Low 31%
Medium 41%
Medium 43%
Labour
Training
Management
Medium 42%
Low
Figure 3.19 Strength of inuence in the social sustainability of the market sector. The thickness of the arrows gives an indication of the strength of inuence between two nodes.
Environmental TBL
Environmental Factory
Environmental Farm
Environmental Market
Figure 3.20 Strength of inuence diagram for environmental TBL showing that it is inuenced most strongly by farm environmental sustainability. Factory and market have an equivalent, but lesser inuence on environmental TBL.
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Figure 3.20 above shows a much stronger influence being exerted by the environmental sustainability of dairy farms than the environmental sustainability of factory and market. However, within each of the three perspectives of farm, factory and market (Figures 3.21, 3.22 and 3.23) we see that the two indicators which synthesise environmental sustainability, resource efficiency and waste, have an equal influence on the resulting sustainability levels. For both these indicators, the sub-indicators which combine to yield their sustainability have equal influence on the outcome of the associated indicator.
Medium 40%
Figure 3.21 Strength of inuence on the environmental sustainability for farming. The thickness of the arrows gives an indication of the strength of inuence between two nodes.
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Medium 39%
Figure 3.22 Strength of inuence on the environmental sustainability of dairy factories. The thickness of the arrows gives an indication of the strength of inuence between two nodes.
29
Medium 39%
Figure 3.23 Strength of inuence on the environmental sustainability of the market sector. The thickness of the arrows gives an indication of the strength of inuence between two nodes.
4
Evidence Base
The Australian dairy industry agreed to collaborate in the development of a Bayesian network for the dairy industry in Australia, and to test the adaptation of that Bayesian network as a Sustainability Scorecard to measure their performance on the triple bottom line of environmental, economic and social impacts (TBL), and to utilise this model to explore the changes the dairy industry in Australia may need to make to be sustainable. The viability of the Australian dairy industry is dependent on how well it addresses and adapts to unprecedented and long-term challenges such as those posed by population growth, social change, technological improvements, internationalisation, climate change, and so on; not just for their impact on the industry, but also for the industry to respond constructively to the imperative to adopt more sustainable practices. The successful adaptation of the industry is also critical as a major contributor to meeting one of the great challenges facing agriculture globally, i.e. the need to ensure a secure supply of food in the face of increasing global populations, particularly in the Asia-Pacific region. This project builds on previous work undertaken by the Queensland University of Technology (QUT) with Dairy Australia (Buysand Miller, 2009), Understanding the value of the Dairy Industry in Australia, Identifying a sustainability framework and key variables to measure it: Preparing for the future and the Commonwealth Scientific and Industrial Research Organisations (CSIRO)
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A synopsis of the vulnerability of Australian dairy farming to climate change. The development of a BN is an iterative process with five key stages: Design (conceptual model) Quantify Validate Evaluate Adapt
Design
The Bayesian network for Dairy Australia was designed using input from a wide range of stakeholders. Therefore the design phase included both the design of the stakeholder engagement processes for developing the dairy industry Bayesian network and then the design of the Bayesian network itself. The Bayesian network for sustainability in the dairy industry comprises two sets of factors: those that describe the context, i.e. farm, factory and market, and those that describe the sustainability domains i.e. environmental, economic and social. The Bayesian network model was designed so that it reflects sustainability from different viewpoints. It represents sustainability at each of the TBLs, aggregating across farm, factory and market, and also at each of the three dairy industry domains of farm, factory and market, aggregating across the TBL. For example, the Economic TBL in the Bayesian network model opens out into three subnetworks: economic farm, economic social and economic environmental and sustainability, and the farm combines information from the sub-networks farm economic, farm social and farm environment. Each of the sub-networks has nodes representing sustainability indicators for that particular context. For example, in the dairy industry case study, the nodes relating to social sustainability at the farm level (the farm social sub-network) were health and
Evidence Base
33
safety, community, product, legal and ethics, and employment. If warranted, the factors in the sub-networks can extend to other networks, and so on. Very complex systems can be described in this manner, with measures specific to each variable in each sub-network, allowing a depth of analysis to be explored. For the dairy industry case study, stakeholder engagement was undertaken through three workshops with a range of stakeholders and through ongoing collaboration with key informants: 1. In March 2011 a workshop was held with representatives from QUT and Dairy Australia to develop a framework for a predictive tool for measuring the sustainability of the dairy industry. A collaborative, industry-based approach was selected to maximise industry participation and strengthen industry confidence in and ownership of the process. 2. In June 2011 a workshop was held in Melbourne, Victoria with representatives from QUT, Dairy Australia and the Dairy Manufacturers Group. During the workshop, participants endorsed a triple bottom line approach, i.e. examining the environmental, economic and social impacts relating to farm, factory and market to form the basic framework for the sustainability Bayesian network (Figure I.1) and for the eventual adaptation of the Bayesian network (BN) to develop a Sustainability Scorecard for ongoing industry self-assessment. 3. In March 2012 a workshop was held in Melbourne, Victoria with representatives from Dairy Australia, the Dairy Manufacturing Group and QUT. The participants reviewed the BN structure together with nodes and indicators as developed from a Sustainability Measurement Review, which included: Systematic Review Key Dairy Stakeholder Review 2009 Dairy Sustainability Project 2011 Materiality Survey (Netbalance) 2007/08 Australian Dairy Manufacturing Industry Sustainability Report (DMSC)
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The participants concluded that the BN nodes and indicators would be taken from the Dairy Stakeholders Framework review. Through a targeted exercise the group also identified possible measures for the nodes and indicators. Regular meetings were held with representatives from Dairy Australia to identify and confirm measures for the BN. The principles accepted for indicators and measures were driven by consultation with field experts, and alignment with the SAFE framework and the dairy focus report. Measures deemed to have limited sensitivity or data not representative of the industry were removed by dairy field experts. Through a number of telephone conferences, workshops and general correspondence, Dairy Australia and QUT finalised the measures deemed to be immediately appropriate and relevant to the industry for the working BN model. The challenge with building a Bayesian network is determining the level of detail necessary to assess the critical issues for that industry, to be alert to risks and to be able to assess complex, interacting driving forces within and between the systems. That is, how many layers of nested systems (sub-networks) and how many variables (sub-indicators) for each key indicator (nodes) need to be measured to rigorously assess these variables, while keeping the choice of variables and their measures simple enough to be comprehensible (Johnson and Mengersen, 2012). Bayesian networks can make complex systems and their functioning easier to grasp by breaking them down into their smaller sub-systems to examine smaller problems.
Quantify
The objective of this stage was to select appropriate indicators, including the identification of variables for which proven measures already exist, which could be incorporated into the Bayesian network, e.g., global indices such as the carbon footprint or dairy industry accreditation standards. There are many approaches to measuring sustainability, which have been developed with varying
Evidence Base
35
degrees of rigour, and which need to be examined to assess the value and potential use of these tools as measures on relevant nodes. At the dairy industry stakeholder workshops and in meetings with key informants, initial indicators were put forward and measurement tools identified, which could be incorporated into the network. Two approaches to identifying frameworks and/or tools were used. First, a review of industry measures based on searches of 11 primary electronic English language library databases, most of which are linked to a range of other databases which expanded the scope of searches for this study, was undertaken. These databases were: Academic Search Elite (via EBSCOhost), ASM Handbooks Online, BEDP Environment Design Guide, Compendex (via Engineering Village), CRCnetBASE, EBSCOhost, Ecospecifier, GreenFILE (via EBSCOhost), Informit, ProQuest Research Library, ScienceDirect, Scopus, SpringerLink Online Journals, UlrichsWeb. com, and Web of Knowledge. The search strategy is detailed in Table 4.1 below, which outlines the process that was used to identify the 72 publications. These 72 publications were then used to confirm the comprehensiveness of the nodes, indicators and measurements, as well as the measurements that could be useful for benchmarking or other comparisons, as standardised industry measures or sustainability indices. Overall, this review utilised a total of 357 different library databases to search books, journals, magazines, trade publications, government reports and a range of other documents dating from 1998 to 2011 for relevant data. Publications were included if they defined or evaluated sustainability based on the three TBL dimensions or other similar dimensions and were peer reviewed. They were excluded if they related only to single bottom line dimensions, such as the environment. Second, the industry relevant sustainability frameworks or tools were identified, including:
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Vital Capital Survey Nestle SAFE framework Lactalis / Parmalat / Pauls (under internal corporate review at time of stakeholder review) DairySAT Danone Sustainability Report (performance indicators) Fonterra Sustainability Indicators RISE Unilever Sustainable Code GRI (Global Reporting Initiative)
The QUT team of researchers undertook a systematic review of these tools, which was triangulated with a systematic review of the literature, to identify any further variables or measures which should be considered. We adopted the Bellagio Principles as they are often used as a guiding philosophy when defining indicator criteria and requirements, particularly in sustainability (Meul, Neveens and Reheul, 2009; Hass, Brunvoll and Hoie, 2002; Van Passel, 2007). The Bellagio Principles were agreed upon in 1996 in a meeting of the International Institute for Sustainable Development in Bellagio, Italy, to review the progress achieved in Sustainable Development since the 1987 Brundtland Commission (Hardi and Zdan, 1997).
Evidence Base
37
The Bellagio Principles cover ten key issues related to the design and implementation of indicator-based assessments. Specifically, the Bellagio Principles advocate for guiding vision and goals, a holistic perspective, identification of essential elements, adequate scope and practical focus, openness and communication, participation, ongoing assessment, and institutional capacity. Bayesian networks measure very different classes of variables; therefore once each has been measured using the appropriate tool, these need to be transformed into a measure which can be aggregated across nodes to provide a total score. Therefore, after the indicators have been chosen, each indicator is then described by a set of states (e.g., Yes/No, High/Medium/Low, 0-50/50+). The states are then quantified using probabilities (probability that the score reflects sustainable practices/probability) based on evidence in research literature, reports, expert knowledge, etc. In the dairy industry case study, the states of High/Medium/Low were used for all indicators, where these were carefully defined in collaboration with stakeholders. The available information was then used to determine the probability tables for each indicator, for example, the probability of High, Medium or Low labour availability (as part of the employment node of the social farm component of the BN). Although the overall Bayesian network may be quite complex, determining the probabilities for any individual node in the network only depends on the factors that directly impact on that node (i.e., feeding into the node via an arrow in the BN). This greatly simplifies the quantification process. Moreover, the probabilities can be based on a very wide range of information sources, including empirical findings, outputs of simulations, published literature and expert knowledge. The probabilities then filter down to give the overall probability of the final response node, the Overall Sustainability Score. Importantly, all of the probabilities related to these outcomes are determined in light of all of the other factors and all of the information in the BN model, that is, systems are cross-checked for their potential impact on each other. Hence the probability of financial sustainability may be high, but if a measure for a node
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elsewhere is changed, e.g. the environment was affected by a flood, then the new measure for environment would be taken into account in the revision of the financial sustainability. After the BN is fully quantified, the probability tables can then be used to give sustainability scores for economic, environmental and social impacts in each of the Bayesian networks subsystems, i.e. farm, factory and market. For example, in the dairy case study a total score can be obtained for social sustainability at the farm, factory and market. The quantification of the Sustainability Scorecard is based on the probability outputs of the sustainability Bayesian network. For example, the Scorecard designed for the dairy industry study reports the probabilities of a favourable sustainability score for each of the TBL domains, for each variable. The probabilities are colour-coded in traffic-light form, with shades of green indicating that the factor has a high chance of achieving high sustainability in that TBL domain, shades of orange indicating a medium chance, and shades of red indicating a low chance.
Validate
The Sustainability BN and Scorecard can be validated in two ways: internal validation and stakeholder validation. Internal validation involves cross-checking the Bayesian network probabilities for consistency. For example, if the probabilities for a particular node in the network are changed, the consequent changes in the probabilities of other nodes should conform broadly as expected. Stakeholder validation involves a critical review of the Bayesian network and Scorecard design and outputs from different perspectives and needs.
Internal validation was undertaken by members of the research team who were experts in mathematical modelling. Stakeholder validation was undertaken through the dairy industry stakeholder workshops and through ongoing meetings with stakeholders and experts in the
Evidence Base
39
field. In designing a sustainability Bayesian network to feed into an associated Sustainability Scorecard it is useful to identify the range of different interest groups to ensure stakeholder engagement is representative and constructively explores any conflicting interests by engaging them in collaborative identification of key issues which need to be tested and the measures they will all accept as credible. This supports ownership of the results and a willingness to act on findings.
Evaluate
The Sustainability BN and Scorecard can be used for a wide range of evaluations: Key drivers of sustainability can be identified by interrogating the Bayesian network to assess which factors have most impact on important nodes in the network. Information gaps can be identified by inspecting the information available for designing and quantifying the Bayesian network. Scenario (what if) evaluations can be undertaken by changing the probabilities and the BN in accordance with a specified scenario in inspecting the resultant change in probabilities of nodes of interest. Causal (explaining away) assessments can be undertaken by setting the desired probabilities for target nodes and identifying how the other nodes in the network would need to behave in order to achieve this target.
One of the strengths of a BN is that it is able to operate in a predictive or diagnostic way (what if assessments), as well as an inter-causal way (explaining away). In other words, even though the model is constructed in a top-down manner, the queries can be bottom-up. For example, we can ask the question, For economic sustainability to be High what are the necessary adjustments that need to be made to the economic indicators? or we can ask, If the sustainability score of each of the TBL dimensions improves by
40
10%, what is the predicted improvement in the overall sustainability score? The Sustainability Scorecard aims to capture information which can also be used as a tool to provide alerts to risks and indicators of issues which need to be addressed so that the industry is positioned early, to anticipate and respond to emerging issues, e.g. resulting from climate change, shifting economic (protection) policies in purchasing countries, and resource degradation or loss. Such data assist in the negotiation of risk management strategies and proactive planning for the short, medium and long term. This tool was developed to have the capacity to model scenarios to understand the complex interactions of change in one area with impacts on others, to make optimal decisions and reduce the risk of unintended negative consequences. There was a patchwork of measures already in place for each of the economic, environmental and social impacts for the dairy industry, but these had been addressed separately in the past, often on an issue by issue basis. The Food and Agriculture Organization of the United Nations Report (FAO, 2010) on the greenhouse emissions of the global dairy industry indicated it was responsible for 2.7% of total anthropogenic emissions, and these emissions are rising as the global demand for meat and milk continues to grow. Projected population growth and rising incomes are expected to drive higher total consumption, with meat and milk consumption doubling by 2050 compared to 2000 (FAO, 2006). The four key sustainability challenges confronting dairy, for which the Scorecard needs to support assessment, analysis and problem solving are: Its environmental legitimacy (right to farm, sell). The ongoing social viability of rural communities that form the basis of the industry. The volatile nature of the markets and conditions in which dairy operates. Climate change and carbon trading.
Evidence Base
41
Development of the Scorecard to establish a baseline of performance on this range of critical variables means that the industry can then be positioned to work with researchers to model scenarios for problem solving, in order to understand how strategies for improvement in one area might affect risk factors in others.
Adapt
The Bayesian network model is adapted and refined resulting from changes being identified during the development, testing and evaluation of the model. Furthermore, when new information or research becomes available the model needs to be adapted to incorporate this information so that it is a dynamic, living model, reflecting current knowledge and uncertainty (Johnson and Mengersen, 2012). It is advisable to put regular model reviews in place, such as annual reviews to prompt a re-assessment of the state of the art in the sustainability model (Johnson et al., 2010). This final stage of the development cycle ensures that the model reflects current trends, research and information and continues to be an effective tool to guide policy development and evaluation.
5
Conclusion
The concept of sustainability has been described as the most challenging policy concept ever developed (Spangenberg, 2004). There are more than 100 definitions of sustainability and sustainable development (Labuschagne et al., 2005). The most frequently cited definition comes from the pivotal 1987 World Commission on Environment and Development Brundtland Report, development that meets the needs of the present without compromising the ability of future generations to meet their own needs (WCED, 1987). Within the broader discourse, sustainability has emerged as a metadiscipline, combining information and insights across multiple disciplines and perspectives (Mihelcic et al., 2003), bringing together three things: a critique; a set of principles; and a focus for strategies for change (Gibson, 2001). A systems approach has been proposed to cover the core principles of sustainability and to translate the definition of sustainability to the institutional level (Labuschagne et al., 2004). These systems are multidimensional and influenced by divergent economic, social, and environmental aspects, interactions and responses (Mayer, 2008). Strategies for change require sustainability to be viewed as a dynamic process in which the targets have to be continuously checked and improved (Callens, 1999). In recent years several conceptual sustainability frameworks have been proposed and developed in various disciplines, each with a limited capability to deal comprehensively with sustainability issues and to deliver a unified interpretation (Waheed et al., 2009).
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The existence of multiple meanings was examined by Kidd (1992), who said several branches of thought about sustainability had emerged since the 1950s, many being fundamentally different concepts. Kidd identifies the book Blueprint for Survival (Goldsmith et al., 1972) as being the first time the word sustainability was used in the context of mankinds future. At the same time, the 1972 book Limits to growth (Meadows et al.) warned of the impact of human development in terms of famine and over-population. The current discourse is now focused on the impact of continued development on ecosystems and the consumption of natural resources (Marshall et al., 2005). There are also divergent views on whether sustainability activities can be achieved in isolation by a subset of the populace, or whether it needs to be integrated with other sustainability activities (Seager, 2008). This is based on the proposition of conflicts arising when sustainability solutions proposed by differing subsets of the populace are incompatible: when a sustainable solution for one sector is non-sustainable for another (Gremmen et al., 1997). Within the hundreds of definitions of sustainability, Labuschagne et al. (2005) identify that within most of these definitions is an acceptance of social, environmental and economic goals also referred to as the three pillars or triple bottom line (TBL) objectives of sustainable development. The term TBL was first coined by John Elkington in 1994 to express an expansion of the environmental agenda, which until then had been the main focus of sustainability (Elkington, 2004). The TBL concept emphasised and integrated the three key dimensions of sustainable development, profits, planet and people, and was a way of focusing not just on the economic value of development, but also on the environmental and social value they add or destroy (Elkington, 2004). Progress towards sustainability requires the development of standard measures that allow progress to be tracked or managed (Morrison et al., 2007). However, the dynamic and multi-dimensional nature of sustainability makes it complex and difficult to directly measure results in a range of measurement tools to assess multiple objectives (Lamberton, 2005). The methodology used to measure sustainability remains uncertain, in particular what and how to measure, and the linkages between the indicators used to measure them (Pinter, 2005).
Conclusion
45
Sustainability frameworks comprising the TBL dimensions have been developed in abundance, although not necessarily for sustainability assessment purposes (Spangenberg, 2002). What is missing from all of these are: Frameworks with a limited number of selected indicators based on a standardised, transparent and methodologically sound basis. Clearly defined policy targets in each TBL dimension interlinked and, if possible, quantified (Spangenberg, 2002).
The research for this project has identified that there is no uniform way to measure sustainability, no uniform agreement on indicators that could be used for measurement and even less agreement on which metrics should be used to quantify these indicators. This is best demonstrated that of the 72 triple bottom line frameworks, the indicator water occurred in 64 of these frameworks, although there appeared to be no standard metric identified to measure how water was measured. This is an endemic problem with sustainability measurement. This project has developed a Sustainability Scorecard, and in the course of doing so has collected measures which provide a baseline against which to measure change from this time, and to which other measures can be added to build the evidence base where there are currently gaps. While it is outside the scope of the agreed aims and outputs of the present project, we recommend further development of the Scorecard to enhance its utility. The current model was deliberately designed to be generic in perspective, equally balanced between farm, factory and market, as well as social, environment and economic perspectives. Future work could focus on building a set of models to examine outcomes from these different perspectives. The sustainability network and Sustainability Scorecard were designed to facilitate the evaluation of scenarios corresponding to current and projected benchmarks and targets. A more comprehensive evaluation would allow transparent and direct evaluation of multiple impacts. The information used to quantify the
46
sustainability network was obtained from a very wide range of sources, which could form the basis of an ongoing repository of data, reports and related literature. In future work, the sustainability model developed in this project could be employed to identify and prioritise capital investment and future research. The sustainability Bayesian network model was constructed using open source software and has been delivered as a software package. A future project could focus on making it easier for a wider range of relevant stakeholders to engage with the model. For example a graphical user interface to the model could be developed and then web-enabled so that stakeholders can readily interact with the model and run scenarios. In the course of developing and quantifying the Bayesian network for the dairy industry, it has become evident that there are areas for which inadequate data exist to make a comprehensive analysis of how dairy is performing in economic, environmental and social sustainability, within the contexts of farm, factory and market. While this book has provided a very important baseline measure across many areas of the dairy industry, an important next step would be to identify existing metrics which may fill the current gaps and/or identify where measures need to be developed. Based on sensitivity analyses (see Point 2, which follows below) the metrics to be developed for more comprehensive data collection could be prioritised, and development of these commenced. Future work could focus on examining the outcomes which could be expected within each of the economic, environmental and social domains if one or more management strategies for improved sustainability were implemented for a specific domain. For example, if a management strategy which is more focused on improving economic sustainability was of interest, then the economic nodes in the network could be analysed in more detail to predict sustainability outcomes for all key indicators, and the model could be updated to incorporate results from the implementation of the management actions. Should the economic domain turn out to be more important in affecting the triple bottom line, then the weights would be updated to reflect the economic aspect of the triple bottom line more strongly
Conclusion
47
than the environmental and social perspectives. The impact of this on the overall sustainability score, and on the scores at farm, factory and market levels, could also be evaluated. These impacts would then be reflected in the scores on the Sustainability Scorecard. This would provide a succinct summary of the outcomes, and allow for direct evaluation and comparison of sustainability from these different perspectives, taking into consideration the complex nature of sustainability in this industry. This could also include assessments of specific scenarios from these different perspectives. For example, what would be the impact of a mandate for a 20% reduction in CO2 from an economic perspective, or a social or environmental perspective, or from the market or farm perspective? Other potential scenarios might include: the impact of a 10% drop in the Australian dollar compared with the US dollar; a 10% increase in commodity prices, increase in milk yield per cow, increased public consumption of milk, etc. These evaluations would also provide insight into whether all of the measures in the current model are required, or whether a network with fewer critical measures can give the same results. If so, then it may be feasible to simplify the sustainability network by deleting superfluous nodes. This would simplify the corresponding Sustainability Scorecard and would also reduce the amount of information required to undertake the sustainability analysis. At the same time, it would also provide the sensitivity analysis to identify the current critical gaps in data. The Bayesian sustainability network and Sustainability Scorecard have been designed to facilitate the evaluation of scenarios corresponding to current and projected benchmarks and targets. While this capability has been illustrated in this book, a more comprehensive evaluation was outside the scope of the current project. Future work could deliver this evaluation. This would involve developing and comparing Scorecards that model the impacts which could be expected if the industry attempted to meet current, committed and best practice benchmarks and targets for environmental, economic and social sustainability in the contexts of farm, factory and market. By providing quantitative summaries of key aspects of sustainability, the Sustainability Scorecard provides transparent and direct evaluation of these impacts.
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Bayesian network models have been widely used as platforms for developing information repositories. The use of a Bayesian network (BN) approach does the following: brings together disparate knowledge; creates a conceptual map of the drivers that can be quantified with data, model outputs, expert knowledge, and other features; can include costs, benefits and utility; allows for the identification of key drivers and critical control points; allows for exploration scenarios of change (what if?); and allows for a better understanding of the impact of management and policy decisions. The information used to quantify the sustainability network was obtained from a very wide range of sources and forms a baseline measure of how sustainably the Australian dairy industry is functioning economically, environmentally and socially in farm, factory and market. If updated data is regularly collected and entered into the network, it is possible to track changes over time, and the BN becomes an ongoing repository of data, reports and related literature that can inform the dairy industry about agreed key factors that are integral to the monitoring and assessment of sustainability. The repository can be used to update the Sustainability Scorecard on a regular basis. It can also be used as a source for quantifying and verifying national and international indicators of sustainability. The Sustainability Scorecard could be employed to identify and prioritise future research. The sustainability Bayesian network and Sustainability Scorecard presented in this project were developed collaboratively with a wide range of stakeholders in the dairy industry. As indicated above, the quantitative information used to complete the model was obtained from a very wide range of sources. This book highlights instances in which information was insufficient or missing for some of the sustainability factors that had been identified as important by the stakeholders. If these gaps are addressed and more comprehensive data is collected, this could provide decision support for the prioritisation of future research. The process needs to be ongoing, with regular evaluation of information gaps based on the growing body of knowledge and emerging issues in sustainability and the impact of climate change on the industry.
Economic
Measure Economic 1.1.1 Measure Economic 1.2.1 Measure Economic 1.3.1 Measure Economic 2.1.1 Measure Economic 2.2.1 Measure Economic 3.2.1 Measure Economic 3.3.2 Measure Economic 4.1.1 Measure Economic 4.1.2 Measure Economic 4.1.3 Measure Economic 4.2.1 Measure Economic 4.2.2 Measure Economic 4.3.3 Measure Economic 5.1.1 Measure Economic 5.2.1 Measure Economic 5.3.1 Measure Economic 5.3.3 Farm Debt (Debt to Asset Ratio) Farm Assets (Debt to Equity Ratio) Farm Investment (Rate of Return on Farm Assets) Farm Profitability (Interest) Farm Profitability (Income) Productivity (Milk Produced) Management (Skills and Training) Commodity Prices (Farm Gate Milk Price) Commodity Prices (Export and Prices) Commodity Prices (Supermarket Price Wars) Supply (Milk Production) Supply (Volume of Milk Processed) Risks (AUD Exchange Rates) Efficiency (Milk Yield Per Cow) Cost of Water Fodder Costs Product Consumption
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Social
Measure Social 1.1.1 Measure Social 1.1.2 Measure Social 1.2.1 Measure Social 1.2.2 Measure Social 1.3.1a Measure Social 1.3.1b Measure Social 2.1.2 Measure Social 2.2.1 Measure Social 2.2.2 Measure Social 3.1.1 Measure Social 3.2.1 Measure Social 3.2.1 Measure Social 3.2.1 Measure Social 3.3.1 Measure Social 3.3.2 Measure Social 4.1.1 Measure Social 4.2.1 Measure Social 4.2.2 Measure Social 4.3.1 Measure Social 4.3.2 Measure Social 4.3.3 Measure Social 5.2.3 Labour (Work-life balance) Labour (Work-life balance) Training (VET Courses) Training (VET Courses) Management (Attitude to Future) Management (Age Composition) Discrimination (Labour Equity) Compliance (Regulations) Compliance (Regulations) Culture (Family Farming) Value (Residents Perceptions) Value (Wage contribution) Value (Childrens Understanding) Cohesion (Participation) Cohesion (Corporate Social Responsibility) Animal Welfare (Herd Health) Occupational (Farm Injuries) Occupational (Lost Time Injury Frequency) Consumer (Perceptions of Safety) Consumer (Product Recalls) Consumer (Foodborne Illness) Product Consumption
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Environment
Measure Environment 1.1.1 Measure Environment 1.1.2 Measure Environment 1.2.1 Measure Environment 1.2.2 Measure Environment 1.3.1 Measure Environment 2.1.1 Measure Environment 2.1.2 Measure Environment 2.2.2 Water (Consumption and Diversion from Environmental Flows) Water (Recycling) Energy and Emissions (GHG Emissions) Energy and Emissions (Consumption) Land and Soil (Nutrient Management) Water Waste (Fertiliser Use) Water Waste (Cleaning and Treatment) Solid Waste (Packaging)
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Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp
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Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
Score HIGH
Raonale Typically debt is comprised of land purchases and borrowings to fund working capital. A higher debt to asset rao can be an indicator of greater nancial risk and lower borrowing capacity. Higher debt levels will require a higher return on assets to service the debt. Trends over the past 20 years of data show a relavely low level of debt to asset balance and hence a high level of sustainability. Probability Distribuon High 99% Medium 1% Low 0%
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1990 1451465 1157 1450308 163803 1286505 13% 1991 1439022 1497 1437525 174130 1263395 14% 1992 1458334 1644 1456690 171842 1284848 13% 1993 1611332 1536 1609796 194740 1415056 14% 1994 1586720 1417 1585303 205767 1379536 15% 1995 1786001 1708 1784293 250192 1534101 16% 1996 1638548 1956 1636592 244301 1392291 18% 1997 1803236 1993 1801243 297779 1503464 20% 1998 1829248 3047 1826201 335939 1490262 23% 1999 1850406 3577 1846829 336276 1510553 22% 2000 1731955 3136 1728819 328905 1399914 23% 2001 1743914 3154 1740760 314872 1425888 22% 2002 2215422 2400 2213022 385121 1827901 21% 2003 2682561 2083 2680478 411360 2269118 18% 2004 2503264 2932 2500332 409225 2091107 20% 2005 2772158 3323 2768835 398944 2369891 17% 2006 3280547 3977 3276570 512461 2764109 19% 2007 3604807 2148 3602659 533391 3069268 17% 2008 3860552 2202 3858350 617614 3240736 19% 2009 3918313 2041 3916272 700127 3216145 22% 2010 3726406 2085 3724321 687990 3036331 23% 2011 3428701 1132 3427569 663825 2763744 24% Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp Calculation note: Farm Equity = Owned capital Farm business debt at 30 June. Owned Capital = Total closing capital Leasing charges. Farm Debt to Equity Ratio = Farm business debt at 30 June / Farm equity
Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp
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Based on the above thresholds, the summary data has been GREEN shaded for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Debt to Equity Ratio By State (per farm)
Year AUS NSW VIC QLD SA WA TAS 1990 13% 6% 15% 16% 13% 13% 15% 1991 14% 6% 17% 14% 16% 13% 16% 1992 13% 6% 16% 16% 12% 13% 16% 1993 14% 6% 17% 18% 13% 15% 11% 1994 15% 7% 18% 16% 15% 13% 21% 1995 16% 10% 19% 13% 19% 13% 24% 1996 18% 11% 21% 13% 18% 13% 26% 1997 20% 11% 24% 16% 19% 13% 27% 1998 23% 16% 27% 16% 16% 15% 28% 1999 22% 16% 25% 18% 25% 15% 29% 2000 23% 21% 26% 19% 27% 15% 26% 2001 22% 15% 27% 16% 26% 13% 18% 2002 21% 13% 25% 15% 26% 12% 20% 2003 18% 11% 22% 13% 19% 13% 18% 2004 20% 11% 23% 14% 22% 15% 33% 2005 17% 9% 20% 12% 17% 14% 28% 2006 19% 11% 21% 16% 25% 10% 21% 2007 17% 14% 19% 12% 27% 5% 30% 2008 19% 14% 22% 11% 24% 8% 24% 2009 22% 14% 26% 10% 22% 11% 29% 2010 23% 14% 26% 8% 23% 10% 41% 2011 24% 18% 25% 7% 32% 10% 58% Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp
Score HIGH
Rationale This ratio expresses the extent to which debt capital is combined with equity capital. It shows the inherent risk to creditors, but at the same time may reveal the farms potential for future growth if operating earnings exceed the fixed commitments associated with debt. Past and current trends suggest a strong equity balance and hence a HIGH sustainability level. Probability Distribution High 99% Medium 1% Low 0%
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Source: Australian Government, Dept of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp
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Based on the above thresholds, the summary data has been GREEN shaded for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Rate of Return on Farm Assets By State (per farm)
Year AUS NSW VIC QLD SA WA 1990 3% 2% 3% 3% 3% 5% 1991 3% 2% 3% 3% 3% 3% 1992 3% 2% 3% 3% 3% 2% 1993 3% 2% 3% 3% 3% 2% 1994 3% 3% 3% 3% 3% 2% 1995 3% 2% 3% 3% 3% 2% 1996 3% 3% 3% 3% 4% 2% 1997 2% 3% 2% 3% 3% 2% 1998 3% 2% 3% 2% 3% 2% 1999 3% 3% 3% 3% 4% 2% 2000 3% 3% 3% 4% 4% 2% 2001 3% 2% 3% 3% 3% 2% 2002 3% 2% 3% 2% 4% 2% 2003 2% 1% 1% 2% 3% 1% 2004 3% 2% 3% 3% 4% 3% 2005 2% 1% 2% 2% 2% 1% 2006 2% 1% 2% 2% 2% 1% 2008 2% 2% 2% 2% 3% 1% 2009 2% 3% 2% 2% 3% 2% 2010 2% 2% 2% 1% 2% 1% 2011 2% 2% 2% 0% 4% 1% Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp TAS 6% 7% 4% 4% 4% 2% 2% 3% 3% 3% 4% 3% 4% 1% 3% 2% 3% 2% 2% 2% 2%
Score LOW
Rationale Rate of return is defined as the ratio of money gained or lost (whether realised or unrealised) on an investment relative to the amount of money invested. Based on the above thresholds it was considered that this indicator had a Low sustainability level. Probability Distribution High 0% Medium 10% Low 90%
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Based on the above thresholds, the summary data has been GREEN shaded for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Interest Expense Ratio By State (per farm)
Year AUS NSW VIC QLD SA WA TAS 1990 10% 6% 10% 11% 8% 13% 10% 1991 10% 7% 11% 8% 8% 11% 9% 1992 8% 5% 9% 8% 8% 10% 6% 1993 7% 4% 8% 9% 6% 9% 4% 1994 6% 4% 7% 6% 6% 7% 5% 1995 7% 5% 8% 6% 7% 9% 8% 1996 8% 6% 8% 7% 7% 9% 8% 1997 8% 6% 9% 6% 7% 8% 9% 1998 7% 5% 8% 4% 7% 8% 9% 1999 7% 6% 8% 5% 7% 7% 8% 2000 7% 6% 7% 5% 7% 8% 6% 2001 7% 7% 7% 8% 8% 8% 6% 2002 6% 5% 6% 5% 6% 5% 4% 2003 7% 6% 8% 5% 7% 9% 7% 2004 8% 5% 9% 5% 7% 9% 9% 2005 7% 5% 8% 5% 7% 8% 10% 2006 8% 6% 8% 5% 8% 8% 9% 2007 8% 8% 8% 7% 11% 7% 12% 2008 7% 7% 7% 6% 8% 9% 9% 2009 8% 6% 9% 5% 7% 7% 10% 2010 9% 5% 11% 4% 7% 6% 16% 2011 9% 8% 9% 3% 10% 7% 19% Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp
Score MEDIUM
Rationale This ratio relates the interest expense to a farms ability to generate income. From the available data the trend has remained reasonably constant, but it is important to note that an upward trend will lead to eventual financial stress. Current levels show a medium level of sustainability. Probability Distribution High 5% Medium 88% Low 7%
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Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp
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Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Net Farm Income Ratio By State (per farm)
Year AUS NSW VIC QLD SA WA TAS 1990 23% 20% 25% 19% 15% 22% 28% 1991 21% 17% 22% 17% 20% 25% 23% 1992 22% 22% 24% 15% 18% 25% 23% 1993 27% 32% 28% 16% 25% 24% 29% 1994 27% 31% 28% 19% 20% 26% 34% 1995 17% 18% 17% 15% 14% 19% 19% 1996 25% 26% 27% 19% 20% 21% 22% 1997 18% 27% 15% 22% 16% 19% 14% 1998 17% 17% 14% 26% 18% 20% 15% 1999 22% 22% 21% 26% 23% 19% 21% 2000 20% 23% 18% 27% 18% 21% 21% 2001 22% 21% 25% 10% 15% 15% 27% 2002 29% 24% 32% 13% 25% 23% 28% 2003 0% 2% -4% 2% 9% 18% 18% 2004 11% 13% 11% 12% 12% 13% 11% 2005 19% 15% 21% 21% 16% 12% 17% 2006 17% 12% 18% 22% 6% 21% 18% 2007 1% 3% -3% 12% -6% 20% 10% 2008 20% 16% 19% 28% 17% 20% 22% 2009 9% 17% 3% 22% 17% 26% 14% 2010 12% 22% 9% 19% 12% 15% 1% 2011 22% 18% 26% 17% 18% 9% 21% Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp
Score MEDIUM
Rationale Financial efficiency ratios can be used to show how effectively your business uses assets to generate income. Past performance of the business could well indicate potential future accomplishments. It also answers the questions: Are you using every available asset to its full potential? What are the effects of production, pricing, financing and marketing decisions on gross income? Based on the above thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution High 39% Medium 51% Low 10%
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Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp
63
64
Threshold Rationale Australia's estimated resident population (ERP) reached 22.3 million at 30 June 2011, increasing by 2.9 million people, or 15%, since 30 June 2001.1 The thresholds have been set by expert opinion and were based on considering the year-on-year changes and the magnitude of these changes in the context of population growth rates. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score HIGH Rationale Over the past 20 years farmers have made significant changes to management practices and adopted a range of new technologies. Some of these changes include replacing or modifying dairy sheds, vats and milking machines. The adoption of new dairy shed technology has enabled dairy farmers to generally increase milk production, which in turn has directly impacted on the levels of profitability. Probability Distribution High 68% Medium 17% Low 15%
1
ABS (2011)3218.0 - Regional Population Growth, Australia, 2011. Accessed August 2012 from: http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/3218.0Main%20Features42011?opendocument&tabname=Summary&prodno= 3218.0&issue=2011&num=&view=
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Threshold Rationale This metric reflects the trend in enrolments in courses suitable for people interested in a career in manufacturing. The levels of the thresholds have been set by expert opinion and were based on considering the changing trends in actual enrolment numbers. Notably, there is uncertainty in this measurement as it reflects all enrolments in factory process workers. Availability of segregated data that shows direct involvement with the dairy industry would improve validity. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
YEAR Commencements 1 year rolling average 2000 14.1 2001 12.9 13.5 2002 14.8 13.9 2003 15.4 15.1 2004 13.7 14.6 2005 13.2 13.5 2006 12.6 12.9 2007 11.0 11.8 2008 11.2 11.1 2009 11.3 11.3 2010 13.3 12.3
Score MEDIUM
Based on the above thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution High 30% Medium 40% Low 30%
Sources: 1 NCVER (2010) Australian vocational education and training statistics: Apprentices and trainees. Accessed June 2012 from: http://www.ncver.edu.au/publications/2387.html
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Calculations are based on the data 2006 - 2011. Farmgate milk solids prices ($/kg)
AUS NSW VIC QLD SA 2006 4.5 4.8 4.4 5.0 4.5 2007 4.5 5.0 4.3 5.4 4.6 2008 6.7 6.7 6.7 7.1 6.8 2009 5.7 7.3 5.1 7.9 6.2 2010 5.0 6.7 4.5 7.6 4.7 2011 5.8 6.7 5.6 7.3 5.4 Source: Dairy Australia http://www.dairyaustralia.com.au/Statistics-and-markets/Prices/Farmgate-Prices.aspx Year WA 4.1 4.6 5.8 6.8 6.0 6.0 TAS 4.4 4.8 6.6 5.4 4.5 5.6
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Thresholds (level of sustainability) Milk cents/litre High More than $0.45 Medium $0.30 to $0.45 Low Less than $0.30
$/kg milk solids More than $6.00 $5.00 to $6.00 Less than $5.00
Threshold Rationale The thresholds have been set by expert judgement. A milk price of less than 30c per litre, and a price of milk solids of less than $5.00 per kilogram were deemed to be economically unsustainable. More than 45c per litre for fresh milk and more than $6.00 per kg for milk solids were considered to have a high level of economic sustainability. Prices in between were taken to have medium sustainability. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
Score MEDIUM
Based on the above thresholds it was considered that this indicator had a Medium sustainability level. The farmgate value is the net value of the product when it leaves the farm and is often understood as the price of the product at which it is sold by the farm (the farmgate price). This price does not include the costs incurred with shipping, handling, storage, marketing, and profit margins, and are therefore typically lower than the price paid by consumers. Milk prices have remained relatively stagnant over a prolonged period, although they significantly fluctuated upwards in the 2007/08 period. There has also been little growth in prices for much of the period, which should be considered as being negative to milk producers given the increase in the costs of production, such as electricity, fuel, rates, insurance and machinery costs. In calculating the probability distributions, both fresh milk and milk solids were given equal importance in their contribution to the economic sustainability of dairy farming. Probability Distribution High 18% Medium 44% Low 38%
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Threshold Rationale The assessment of the overall sustainability level for the value of dairy takes into account the changes over the data period. If the trend is generally increasing then the metric is considered to have a High level of sustainability, if it is largely unchanged then it is considered to have a Medium level of sustainability and if it is generally decreasing over time it is considered to have a Low level of sustainability. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Measure Milk production (million litres) Value at farmgate ($ billion) Export value ($ billion) % of world dairy trade % of milk production exported Domestic demand (million litres) Score LOW 2007/08 9582 3.2 2.5 12% 50% 4791 2008/09 9388 4.0 2.9 9% 45% 5163 2009/10 9023 3.4 2.4 10% 45% 4962 2010/11 9101 3.9 2.75 8% 43% 5187
Rationale Consumption and demand data has been used as an indicator of public acceptance of dairy and dairy products. Data indicating export value also gives insight into the relevance of the industry to the national economy. Based on the above thresholds it was considered that this indicator currently has a Low sustainability level. Probability Distribution High 44% Medium 6% Low 50%
Source: 1 Dairy Australia (2008,09,10,11). Dairy in Focus.
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Thresholds
High Medium Low Change Increase No change Decrease
Threshold Rationale This metric begins to create a picture of how the supermarket price war may affect the dairy industry. The levels of the thresholds have been set by expert opinion and were based on considering the year-on-year changes, the magnitude of the changes, and the actual farm gate milk prices over the six years of data. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
NSW VIC QLD SA WA TAS 2004-05 32.9 31.5 35.0 30.1 27.3 30.9 2005-06 34.3 32.9 36.6 32.0 29.1 33.6 2006-07 35.7 32.0 38.8 32.6 32.4 36.5 2007-08 48.6 50.0 51.8 48.6 41.4 50.2 2008-09 52.4 39.1 57.2 44.6 49.0 41.3 2009-10 48.7 33.9 55.8 34.6 42.4 34.6
Score HIGH
Rationale Price wars will squeeze out marginal players and change the composition of the market. Fewer competitors seek to enter an unattractive market that is dependent on low prices for success, whilst smaller competitors exit the market as a result of their inability to make a profit. This grab for market share by the two big supermarkets could have a devastating impact on dairy farmers and future sustainability. Based on the above thresholds it was considered that this indicator had a high sustainability level over the time period for which the data was gathered. However, the trend is clearly negative, which is reflected in the predicted probabilities for 2012/13, which has an expected Low sustainability level. Probability Distribution High 63% Medium 13% Low 24%
Note: The probability distribution for the years 2004 2010 indicates that the sustainability score is High (63%). However, taking into account the most current data (2009-10), it would suggest that the current score should be Low, as shown in the Score column on the left of this table. Sources: 1 Parliament of Australia (2011) Second Interim Report: The impacts of supermarket price decisions on the dairy industry. Accessed June 2012 from:http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=economics_ctte/dairy_industry_supermarket_2011/ second_interim_report/index.htm
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2006/07 21,017,200
2007/08 21,374,000
2008/09 21,874,900
2009/10 22,342,400
2010/11 22,620,600
Total Australian milk production as a percentage of the Australian population.2,3 AUSTRALIA 2005/06 0.050% 2006/07 0.046% 2007/08 0.043% 2008/09 0.043% 2009/10 0.040% 2010/11 0.040%
Threshold Rationale The thresholds have been set on the assumption that there are no fundamental reasons motivating a change in consumer behaviour regarding the consumption of milk products. The oldest available population and milk production data is dated 1979 (population = 14,418,2004 and milk production = 5,432 million litres). Thus, historically total milk production was approximately 0.038% of the total population. However, it was determined that a level of 0.040% was an acceptable target to aim for taking into consideration health advice about the intake of sufficient calcium, of which milk is an important source. Based on this value, the total milk production percentage is deemed to be at a medium level of sustainability if it can be rounded to 0.040%. Similarly, percentages more than this are considered to be at a high level of sustainability and percentages less than 0.040% as a low level of sustainability. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Total Australian milk production as a percentage of the Australian population.2,3 2005/06 2006/07 2007/08 2008/09 2009/10 AUSTRALIA 0.050% 0.046% 0.043% 0.043% 0.040% 2010/11 0.040%
Score HIGH
Rationale Australias population continues to grow due to natural increase (the number of births minus the number of deaths) and net overseas migration. While the annual population growth rate has tapered since its peak in 2008, projections suggest a steady ongoing growth.5,6 Considering dairy products contribute significantly to the nutritional intake of Australians, production levels increase at a sustainable rate inline with population changes. Based on the above thresholds it was considered that this indicator had a High sustainability level. Probability Distribution High 67% Medium 33% Low 0%
Sources: http://www.dairyaustralia.com.au/Dairy-food-and-recipes/Dairy-Products/Milk/Nutritional-Information.aspx http://www.dairyaustralia.com.au/Statistics-and-markets/Production-and-sales/Milk.aspx ABS. 3101.0 - Australian Demographic Statistics. Accessed May 2012 from:http://www.abs.gov.au/AUSSTATS/abs@.nsf/second+level +view?ReadForm&prodno=3101.0&viewtitle=Australian%20Demographic%20Statistics~Sep%202011~Latest~29/03/2012&&tabname=Past %20Future%20Issues&prodno=3101.0&issue=Sep%202011&num=&view=& 4 ABS (1979)3101.0 Australian Demographic Statistics Quarterly http://www.ausstats.abs.gov.au/ausstats/free.nsf/0/91CDBD7E3BC6A5F1CA2576EF0013178A/$File/31010_06_1979.pdf 5 ABS (2011)3101.0 - Australian Demographic Statistics, June 2011. Accessed May 2012 from:http://www.abs.gov.au/AUSSTATS/abs@.nsf/Previousproducts/3101.0Main%20Features3Jun%202011?opendocument&tabname=Summ ary&prodno=3101.0&issue=Jun%202011&num=&view= 6 ABS (2008)3222.0 Population Projections, Australia, 2006-2101. Accessed May 2012 from:http://www.abs.gov.au/Ausstats/abs@.nsf/mf/ 3222.0
1 2 3
71
2008/09 3,512
2009/10 3,104
2010/11 2,946
Total Australian milk production as a percentage of the Australian population.2,3 2005/06 2006/07 2007/08 2008/09 2009/10 AUSTRALIA 0.050% 0.046% 0.043% 0.043% 0.040% Thresholds (level of sustainability)
High Medium Low % Change relationship More than 0.0405% 0.0405% - 0.0395% Less than 0.0395%
2010/11 0.040%
Threshold Rationale The thresholds have been set on the assumption that there are no fundamental reasons motivating a change in consumer behaviour regarding the consumption of milk products. The oldest available population and milk production data is dated 1979 (population = 14,418,2004 and milk production = 5,432 million litres). Thus, historically total milk production was approximately 0.038% of the total population. However, it was determined that a level of 0.040% was an acceptable target to aim for taking into consideration health advice about the intake of sufficient calcium, of which milk is an important source. Based on this value, the total milk production percentage is deemed to be at a Medium level of sustainability if it can be rounded to 0.040%. Similarly, percentages more than this are considered to be at a High level of sustainability and percentages less than 0.040% as a Low level of sustainability. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score HIGH Rationale Murray Goulburn is a key representative example of part of the supply chain process. As a major player in both domestic and international markets, their impact within the dairy industry itself and the Australian economy is considerable. Despite slightly lower process figures in the year ending 2010/11, trends, along with steady ongoing population growth, suggest a sustained positive economic impact to continue. Based on the above thresholds it was considered that this indicator had a High sustainability level. Probability Distribution High 67% Medium 33% Low 0%
Sources: http://www.dairyaustralia.com.au/Dairy-food-and-recipes/Dairy-Products/Milk/Nutritional-Information.aspx http://www.dairyaustralia.com.au/Statistics-and-markets/Production-and-sales/Milk.aspx 3 ABS. 3101.0 - Australian Demographic Statistics. Accessed May 2012 from:http://www.abs.gov.au/AUSSTATS/abs@.nsf/second+level +view?ReadForm&prodno=3101.0&viewtitle=Australian%20Demographic%20Statistics~Sep%202011~Latest~29/03/2012&&tabname=Past %20Future%20Issues&prodno=3101.0&issue=Sep%202011&num=&view=& 4 ABS (1979)3101.0 Australian Demographic Statistics Quarterly http://www.ausstats.abs.gov.au/ausstats/free.nsf/0/91CDBD7E3BC6A5F1CA2576EF0013178A/$File/31010_06_1979.pdf 5 ABS (2011)3101.0 - Australian Demographic Statistics, June 2011.Accessed May 2012 from:http://www.abs.gov.au/AUSSTATS/abs@.nsf/Previousproducts/3101.0Main%20Features3Jun%202011?opendocument&tabname=Summ ary&prodno=3101.0&issue=Jun%202011&num=&view= 6 ABS (2008)3222.0 Population Projections, Australia, 2006-2101. Accessed May 2012 from:http://www.abs.gov.au/Ausstats/abs@.nsf/mf/ 3222.0
1 2
72
73
June 2001 0.5175 December 2001 0.5142 June 2002 0.5695 December 2002 0.5634 June 2003 0.6646 December 2003 0.7385 June 2004 0.6935 December 2004 0.7667 June 2005 0.7665 December 2005 0.7418 June 2006 0.7409 December 2006 0.7866 June 2007 0.8416 December 2007 0.8732 June 2008 0.9518 December 2008 0.6689 June 2009 0.8050 December 2009 0.9189 June 2010 0.8507 December 2010 0.9819 June 2011 1.0614 Source: Global View Historical Forex Data http://www.global-view.com/forex-trading-tools/forex-history/
Threshold Rationale Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score MEDIUM Rationale Currency rate fluctuations can return positive revenues, but can also be a serious threat to competitiveness. The majority of the dairy trade is denominated in US dollars, therefore the USD-Australia exchange rate is critical to dairy industry trading. With the US interest rates being held at close to 0% since the financial crisis, the AUD has appreciated dramatically and the revenues of Victorian farmers in particular have been significantly impacted given they are typically both the largest producers and exporters of dairy products Based on the above thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution High 19% Medium 43% Low 38%
74
Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp
75
Threshold Rationale Despite the availability of the technology resulting in increased milk yields, there are limiting factors affecting milk production. Two key factors likely to affect the average yield are the physical location of the farm and the breed of the cow. As is evident in the graph above, although there is a generally consistent upward trend across all States, there is a marked difference between some of them. Queensland cows tend to underperform, whereas South Australian cows fairly consistently outperform the other states. For this reason the thresholds set by expert judgement differ for some States, as shown in the Thresholds Table above. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Milk Yield per Cow (Litres/Cow) By State
Year AUS NSW VIC QLD SA WA TAS 1990 3778 3590 3768 3570 4067 4495 3961 1991 3839 3714 3779 3641 3997 4875 4128 1992 3935 3706 3885 3664 4457 4734 4144 1993 4025 4110 3839 4015 4721 5043 4120 1994 4296 4173 4222 4278 4878 5138 4303 1995 4099 4198 3915 4204 5329 4928 4211 1996 4174 4089 4068 4138 5171 5291 4340 1997 4091 4351 3860 4271 5031 5153 4357 1998 4249 4656 4031 4482 5289 5639 3897 1999 4661 4663 4689 4323 5276 5134 4366 2000 4880 4943 4898 4215 5849 5123 4513 2001 4772 4700 4866 3925 5703 5468 4090 2002 5048 4916 5084 4493 5817 5654 4715 2003 4839 5058 4872 3790 6159 5560 3854 2006 5175 5407 5078 4439 6506 6177 4930 2007 5222 5211 5174 4577 6265 5935 5238 2008 5288 5558 5245 4311 6312 5883 5211 2009 5696 5804 5682 4827 6600 6084 5567 2010 5578 5925 5446 4998 6902 5897 5371 2011 5505 5721 5440 5039 6544 6657 5065 Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp
Score
Raonale Combining this increase in yield per cow with a signicant increase in average herd size, the average milk producon per farm has increased from 250,000 litres to 1.32 million litres over 30 years. Probability Distribuon High 33% Medium 21% Low 46% Source: Dairy Australia
76
Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp
77
Threshold Rationale The thresholds have been set by expert opinion and were based on considering the year-on-year changes and the magnitude of these changes. The cost of water is considered to have a Medium level of sustainability if it has been increased by the inflation rate or lessened. If there has been a decrease of any magnitude it is deemed to be at a High level of sustainability, and a Low sustainability reflects any increase larger than the inflation rate. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
Inflation Rate 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 3.2% 1.0% 1.8% 1.9% 4.6% 2.6% 0.3% 0.9% 1.5% 4.5% 4.4% 3.0% 2.8% 2.3% 2.7% 3.5% 2.3% 4.4% 1.8% 2.8% 3.4%
Year
AUS 38.5% -1.4% -2.3% 20.6% 47.3% -19.0% 13.8% -1.6% 19.2% -10.7% 3.8% 9.1% 45.7% -21.4% -4.2% 1.7% -0.1% 7.8% 13.1% 21.4% -22.0%
NSW 82.5% -9.5% -9.2% 34.2% 45.4% 5.7% 11.0% -1.3% 11.4% 100.0% -29.9% -22.3% 176.9% -22.8% -18.3% -35.7% -6.4% 140.0% 84.5% 10.3% -40.6%
VIC 39.6% -5.5% -2.8% 20.6% 59.8% -23.0% 14.9% -2.6% 21.9% -22.6% 7.5% 11.7% 45.1% -26.8% -0.7% 4.0% -3.7% -1.7% 5.2% 27.5% -20.1%
QLD 57600% 36.6% -32.5% -4.1% -4.5% -35.0% 44.9% -42.1% 191.7% 53.3% 8.8% 0.3% -11.4% 47.2% -80.0% -82.5% 328.8% 285.8% 30.1% -34.2% 47.6%
SA -5.7% 13.7% 10.8% 23.5% -39.3% 59.2% -3.0% 37.5% -10.0% -4.9% 44.6% 1.9% -37.9% 54.7% 4.6% -34.2% 54.9% 41.5% 3.6% -22.9% -10.9%
WA -23.9% 49.3% 7.2% 17.6% 0.0% -20.1% 10.3% -6.5% -37.1% 14.4% 17.0% -0.1% -12.7% 27.8% -19.7% 70.2% 29.1% -17.7% -21.4% 38.6% 1.7%
TAS 209.3% -65.3% -41.7% 159.7% 0.0% 159.8% -68.4% -81.1% 4914.8% 41.0% -70.4% 153.7% -40.8% 10.5% 138.7% -96.7% -100.0% N/A -68.5% 155.1% 52.6%
Score
Rationale The rising cost of water has had a significant economic impact on dairy farming. Periods of drought and lower than average rainfall over the past decade have led to a decrease in the availability of water for irrigation. As such water scarcity has changed past patterns of feeding dairy cows, farmers have had to substitute water for bought-in feed and grain, which is costly in drought years and impacts directly on a farms profitability. Water is essentially a tradeable commodity and water scarcity will be reflected in increased water market prices. Probability Distribution High 44% Medium 5% Low 51%
78
Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp
79
Threshold Rationale Maintaining a cost ratio of less than 20% was deemed to indicate a High economic level of sustainability, 20% to 25% a Medium level of sustainability and more than 25% a Low level of sustainability. All States with the exception of Tasmania are currently in a sustained Low level of economic sustainability for this indicator. Fodder costs are becoming a large proportion of the total cash costs. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Fodder Costs to Total Cash Costs Ratio By State (per farm)
Year AUS NSW VIC QLD SA WA TAS 1990 14% 21% 10% 22% 14% 12% 11% 1991 15% 26% 10% 26% 15% 14% 11% 1992 18% 28% 12% 34% 15% 15% 12% 1993 17% 25% 11% 33% 17% 17% 10% 1994 18% 24% 13% 32% 22% 18% 8% 1995 22% 33% 15% 38% 27% 20% 14% 1996 23% 28% 21% 33% 26% 21% 15% 1997 25% 23% 24% 33% 27% 24% 16% 1998 24% 25% 22% 37% 24% 24% 11% 1999 23% 25% 22% 31% 25% 24% 11% 2000 24% 25% 24% 28% 24% 22% 12% 2001 24% 25% 24% 30% 27% 23% 13% 2002 28% 32% 28% 33% 30% 27% 14% 2003 34% 40% 33% 41% 38% 27% 16% 2004 30% 35% 28% 43% 37% 26% 15% 2005 26% 32% 24% 34% 34% 26% 16% 2006 28% 32% 26% 35% 33% 26% 19% 2007 36% 39% 37% 45% 36% 30% 23% 2008 37% 42% 38% 41% 41% 31% 25% 2009 35% 38% 35% 38% 38% 31% 23% 2010 30% 34% 29% 40% 34% 29% 20% 2011 27% 31% 26% 39% 28% 32% 20% Source: Australian Government, Department of Agriculture, Fisheries and Forestry ABARES AGsurf database (updated April 2012) http://abare.gov.au/ame/agsurf/agsurf.asp
Score LOW
Raonale The level of total costs will directly impact many aspects of dairy farming and levels of sustainability. Given that fodder costs account for a large proporon of total expenditure, any reducon in costs will likely have a posive eect on protability levels. Probability Distribuon High 25% Medium 23% Low 52%
80
Threshold Rationale The assessment of the overall sustainability level for each of the dairy products takes into account the general trend in consumption over time. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
Year Milk (l) Cheese (kg) Butter/Blends (kg) Yogurt (kg) 00/01 100.3 11.3 3.3 5.3 01/02 98.5 11.6 3.4 5.6 02/03 98.3 12.1 3.4 5.8 03/04 99.0 11.5 3.7 6.1 04/05 100.2 11.3 3.9 6.6 05/06 100.5 11.7 3.8 6.7 06/07 103.4 12.0 3.8 7.1 07/08 103.0 12.5 4.1 6.9 08/09 102.6 12.9 4.0 6.7 09/10 102.4 12.9 3.8 7.1 10/11 103.0 12.7 3.7 7.2
Score MEDIUM
Rationale While the per capita consumption figures for dairy products currently show a higher level of consumption across all products compared to consumption levels 10 years ago, there have been small decreases in levels of consumption in recent years, perhaps suggesting some instability in the marketing of dairy products. Based on the data above and the sustainability thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution High 33% Medium 60% Low 7% Source: 1 Australian Dairy Industry In Focus 2011; 2007 Table 11. Per capita consumption of major dairy products (litres/kg).
81
Average hours worked per week by owner managers in dairy cattle farming3 State NSW VIC QLD SA WA TAS 1996-97 64 65 69 63 61 59 1997-98 61 62 66 63 69 62 1998-99 57 63 67 64 63 64 1999-00 62 64 65 59 60 53 2000-01 63 65 61 62 63 51 2001-02 64 65 60 60 65 49
Thresholds
High Medium Low Average hours worked per week Up to 45 46 to 59 60 and over
Threshold Rationale The Australian Governments Fair Work Australia initiative stipulates that a full-time employee should work on average no more than 38 hours a week.4 While this recommendation was factored into the threshold, so too was the nature of the data survey of farmers who report on their hours worked. Lifestyle factors of famers were considered in the sense that farmers work in their home environment with potential leisure time activities, lunch breaks etc. incorporated into the work day but not necessarily considered in survey completion. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and REDfor a Low level of sustainability. State NSW VIC QLD SA WA TAS Score LOW 1996-97 64 65 69 63 61 59 1997-98 61 62 66 63 69 62 1998-99 57 63 67 64 63 64 1999-00 62 64 65 59 60 53 2000-01 63 65 61 62 63 51 2001-02 64 65 60 60 65 49
Rationale In order to achieve social sustainability the dairy industry needs to promote work-life balance. The data selected, while presenting issues of currency, highlights the long working hours of dairy farmers. Based on the above thresholds it was considered that this indicator currently has a Low sustainability level. Probability Distribution High 0% Medium 17% Low 83%
Sources: 1 Reed, K., Blunsdon, B., Blyton, P. and Dastmalchian, A. (2005) Introduction: Perspectives on work-life balance, Labour & Industry 16(2):514. 2 Dairy Australia (2011) Dairy People Factfinder, prepared by Dairy Australias The People in Dairy program, September2011. 3 Australian Farm Survey Report (1998; 1999; 2000; 2001; 2002; 2003) Accessed May 2012 from: http://www.daff.gov.au/abares/publications_remote_content/publication_series/farm_survey_results 4 Australian Government: Fair Work Ombudsman (2010)Conditions of Employment: Hours of work. Accessed May 2012from: http://www.fairwork.gov.au/employment/conditions-of-employment/pages/hours-of-work.aspx
82
Feb 2012
4.6 0.8 2.7 3.9 24.9 36.9 21.8 8.8 30.6 13.4 11.4 7.7 32.5 100
Threshold Rationale The Australian Governments Fair Work Australia initiative stipulates that a full-time employee should work on average no more than 38 hours a week.3 Thus, this measure was considered highly sustainable if the vast majority worked within these guidelines. The data source had 38-hour average within the interval 35-39, so the thresholds were adjusted to consider a High level of sustainability to be a working week, which is on average 39 hours or less. Based on the above thresholds, the Table above has been shaded GREEN for average hours worked which were assessed to have a High level of sustainability; ORANGE for Medium sustainability and RED for a Low level of sustainability. Score HIGH Rationale In order to achieve social sustainability, the dairy industry needs to promote work -life balance. The data selected, while presenting issues validity due to the broad scope (all manufacturing industries, not just sairy), highlights the long working hours of manufacturing employees. Based on the above thresholds it was considered that this indicator currently has a Low sustainability level. Probability Distribution High 41% Medium 28% Low 31%
Sources: 1 Reed, K., Blunsdon, B., Blyton, P. and Dastmalchian, A. (2005) Introduction: Perspectives on work - life balance,Labour & Industry 16 (2):514. 2 ABS (2012)6291.0.55.003 - Labour Force, Australia, Detailed, Quarterly, Feb 2012 Table 11: Employed Persons by Actual hours worked, Industry and Sex. Accessed June 2012 from:http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6291.0.55.003Feb%202012 3 Australian Government: Fair Work Ombudsman (2010) Conditions of Employment: Hours of work. Accessed May 2012 from: http://www.fairwork.gov.au/employment/conditions-of-employment/pages/hours-of-work.aspx
83
VET 100,800 99,600 1,888,700 83,700 4.13 Agriculture, Environmental and Related Studies 6,100 397,100 1.54 5,400 389,000 1.39 7,800 426,700 1.83 Apprentice Skilled Animal and Horticultural Workers *Includes all VET delivery by TAFE and other government providers, multi-sector higher education institutions, registered community providers, and publicly-funded delivery by private providers. Fee-for-service VET delivery by private providers has been excluded. School students undertaking VET in schools have also been excluded.
Threshold Rationale This metric reflects the trend in enrolments in courses suitable for people interested in a career in farming and sets this in the context of the total number of courses being offered by these educational institutions. The levels of the thresholds have been set by expert opinion and were based on considering the combination of trends in actual enrolment numbers as well as the proportion of the total enrolments at the institution. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
Course Enrolments 2003 Total Enrolments all courses 2,057,200 % of Total Enrolments 4.90 Enrolments 2005 Total Enrolments all courses 1,888,700 % of Total Enrolments 5.27 Enrolments 2008 Total Enrolments all courses 2,072,300 % of Total Enrolments 4.13
VET Agriculture, Environmental and Related Studies Apprentice Skilled Animal and Horticultural Workers
100,80 0
99,600
83,700
6,100
397,100
1.54
5,400
389,000
1.39
7,800
426,700
1.83
Score MEDIUM
Rationale Representing the third largest rural industry, dairy is an important industry to Australia and to rural communities.2 Thus, the sustainability of the dairy industry is directly connected to the sustainability of rural communities. In order to sustain the dairy industry, a steady flow of young farmers ready to commit to a viable dairy family business is vital. The data selected for this indicator provides details of the uptake of specific training opportunities within the agricultural sector. Opportunities such as VET courses and apprenticeships offer support to potential and future farmers, enabling them to equip themselves with the knowledge, connect with support networks, and consequently successfully run a farming business and engage in the local farming community. Although this data is not specific to the dairy industry, the assumption is that dairy farming is likely to behave in a similar manner to the rest of the agricultural sector, and therefore we can use this as an indicatorto reflect the trends for dairy farming. Based on the above thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution (expert judgement) High 20% Medium 60% Low 20%
Sources: ABS. Year Book Australia. Accessed May 2012, from: http://www.abs.gov.au/ausstats/abs@.nsf/7d12b0f6763c78caca257061001cc588/8E514B055741BBBFCA257236000320FB http://www.abs.gov.au/AUSSTATS/abs@.nsf/Previousproducts/3CEC19BC86237D8FCA256F7200832FFF http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/FBC2FEEBF38C6DD6CA25773700169C92 2 Dairy Australia (2007-2012) Australias Dairy Industry. Accessed May 2012 from:http://www.dairyaustralia.com.au/Education-andCareers/Primary-School-Resources/Australias-Dairy-Industry.aspx
1
84
Threshold Rationale This metric reflects the trend in enrolments in courses suitable for people interested in a career in manufacturing. The levels of the thresholds have been set by expert opinion and were based on considering the changing trends in actual enrolment numbers. Notably, there is uncertainty in this measurement as it reflects all enrolments in factory process workers. Availability of segregated data that shows direct involvement with the dairy industry would improve validity. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
YEAR Commencements 1 year rolling average 2000 14.1 2001 12.9 13.5 2002 14.8 13.9 2003 15.4 15.1 2004 13.7 14.6 2005 13.2 13.5 2006 12.6 12.9 2007 11.0 11.8 2008 11.2 11.1 2009 11.3 11.3 2010 13.3 12.3
Score MEDIUM
Based on the above thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution High 30% Medium 40% Low 30%
1
Sources: NCVER (2010) Australian vocational education and training statistics: Apprentices and trainees. Accessed June 2012 from: http://www.ncver.edu.au/publications/2387.html
85
Thresholds
High Medium Low Change in % +ve Increase Little Change (0-5%) Decrease Change in % -ve Decrease Little Change (0-5%) Increase
Threshold Rationale This metric reflects the perceptions of farmers towards the future of the dairy industry. The levels of the thresholds have been set by expert opinion and were based on considering the changes in attitudes over the two survey periods. The changes were considered year on year for each of the categories, in addition to overall movement in between negative and positive perceptions. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
REGION QLD and North Coast NSW Southern and Central NSW Northern VIC and Riverina Western VIC TAS WA SA Gippsland AUSTRALIA % very positive 2007200808 09 26 31 % fairly positive 2007200808 09 48 35 % neutral 2007200808 09 14 15 % fairly negative 2007200808 09 10 13 % very negative 2007200808 09 2 7 Sustainability assessment
24 19 31 21 30 26 11 22
13 0 6 2 19 0 2 7
52 62 50 48 31 51 60 55
45 31 18 36 29 17 81 41
10 17 15 2 22 22 26 17
38 11 35 30 22 32 2 18
0 2 14 0 2 1 0 3
3 19 26 14 5 30 5 15
0 0 4 29 15 0 3 4
2 39 15 18 26 21 10 19
Score LOW
Rationale While this calculation is based on survey data, thus providing only a sample of opinions, the data suggests that farmers are more concerned about the future. This measure indicates a general increase in negativity about the future, and further investigation is required to fully understand the changes within the industry that have led to these shifts in attitude and subsequently what actions are required in order to create more positive perceptions of the future. The trends observed are only between two time periods, 2007-08 and 2008-09, and additional years would better reflect sustained changes in trends. In ascertaining the levels of sustainability, both the nature of the change (increase / decrease) and the magnitude of the change are taken into account. The expert-adjusted probabilities take into account the lack of data. Based on the above thresholds it was considered that this indicator had a Low sustainability level. Probability Distribution (adjusted by expert judgement) High 5% Medium 35% Low 60%
1
Sources: Dharma, S. (2009) Australian Dairy 09.1 ABARE. Accessed June 2012 from:http://adl.brs.gov.au/data/warehouse/pe_abarebrs99014476/dairy_10_1.pdf Dharma, S. and Martin, P. (2010) Australian Dairy 10.1. ABARE.Accessed June 2012 from:http://adl.brs.gov.au/data/warehouse/pe_abarebrs99001653/ad09.1_dairy_report.pdf
86
65-74
Other+ (%) Difference (%) AFF* (%)
75+
Other+ (%) Difference (%)
Agriculture, Forestry and Fishing Includes all other industries (mining; manufacturing; electricity, gas, water and waste services; construction; wholesale trade; retail trade; accommodation and food services; transport, postal and warehousing; information media and telecommunications; financial and insurance services; rental, hiring and real estate services; professional, scientific and technical services; administrative and support services; public administration and safety; education and training; healthcare and social assistance; arts and recreation services; other services.
Thresholds
High Medium Low Difference Negative change in any age group Little Difference (0-5% for 55-74 age group, or 0-2% for 75+) More than 5% (55-74), or 2% (75 +) difference
Threshold Rationale This metric reflects the age of farmers, grouped with respect to retirement age. Currently the retirement age is 67 years for males and females. The Table above reflects pre-retirement (55 64), retirement (65 74) and postretirement (75+) age groups. The levels of the thresholds have been set by expert opinion and were based on considering the percentage of older workers in the agriculture, forestry and fishing sectors as compared to all other employment industries. Additionally, when assessing the differences, more emphasis was given to discrepancies in the higher age groups, since the expected employment percentages were much smaller. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score LOW Rationale Increasing the Australian working-age population, lifting labour force participation rates, and raising productivity have been identified by the Australian Treasury as critical in addressing the economic challenges posed by an ageing population (Australian Treasury 2010). While there is an economic incentive to lift labour force participation rates, there are also benefits to the individual. Labour force participation can lead to greater individual wellbeing in terms of financial security, self-esteem and social engagement.5 Although there is consensus about the benefits to Australia to keep people employed for longer to sustain an ageing population, having an ageing workforce on dairy farms may be a pre-cursor to an unsustainable dairy farming industry, which will have not only economic sustainability implications, but social implications for farming families and communities. Nonetheless the current characteristics of the age structure of the agricultural sector relative to the other industries (as shown in the Table above) give a good indication of how the overall structure varies across industries. While this calculation is based on broad data of the entire agriculture, forestry and fishing sectors, this measure indicates that dairy farmers falling into this category work until an older age than other industries. Further investigation is required to specifically analyse workers in the dairy industry in order to fully understand the sustainability of the dairy farm workforce. Based on the above thresholds it was considered that this indicator had a Low sustainability level. Probability Distribution High 9% Medium 29% Low 62%
Sources: Patrickson, M. and Ranzijn, R. (2005) Workforce ageing: The challenges for 21st century management,International Journal of Organisational Behaviour, 10(1): 729-739. Accessed August 2012 from: http://www.usq.edu.au/extrafiles/business/journals/HRMJournal/InternationalArticles/Volume10Ageing/PatricksonRanzijnVol10 -4.pdf 2 NSW Farmers Association (nd)Young farmers finance Scheme. Accessed August 2012 from: http://www.nswfarmers.org.au/__data/assets/pdf_file/0004/69628/YOUNG_FARMER_FINANCE_SCHEME_short_doc.pdf 3 Depczynski, J. and Fragar, L. (nd) Australian Farmers a high risk population for rural health. Accessed June 2012 from: http://farmsafewa.org/me dia/1285/Australian%20Farmers%20-%20A%20high%20risk%20population%20for%20rural%20health.pdf 4 ABS (2006) Census Tables Cat. No. 2068.0. Industry of Employment by Age by Sex (State) Based on Place of Usual Residence 5 ABS. 2012. Labour Force Survey. Accessed August 2012 from: http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/4125.0~Jan%202012~Main%20Features~Labour%20force~1110
1
87
Threshold Rationale The threshold levels have been chosen based on the percentage of women in the Australian labour force as reported by the 2006 census. To achieve labour equity, the theoretical percentage should be 50%; however it is deemed to be more realistic and sustainable to aim for 40%, and therefore percentages in the range 35% to 45% are considered to have Medium sustainability, and the percentages outside that range to be either Low or High levels of sustainability as outlined in the Table above. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. State NSW VIC QLD SA WA Tas Score LOW No. Males 84 188 38 17 34 7 Dairy No. % Females Males 41 67.2 69 73.2 66.7 19 10 63.0 22 60.7 3 70.0 % Females 32.8 26.8 33.3 37.0 39.3 30.0 No. Males 1,462 1,232 541 235 225 33 Food No. % Males Females 893 62.1 880 58.3 452 54.5 153 60.6 196 53.4 22 60.0 % Females 37.9 41.7 45.5 39.4 46.6 40.0
Rationale The ethical stance of an industry provides details of how socially important its contribution is. The data selected for this indicator provides details of the gender equity within the dairy workforce, specifically in factories. Data from the food manufacturing industry is included for a comparative overview of how equitable dairy is against a similar industry. Based on the above thresholds it was considered that this indicator had a Low sustainability level. Probability Distribution High 0% Medium 33% Low 67%
Sources: 1 Pocock, B. (2007) The regulation of womens employment in Australia: What lessons for China? Womens Labour Rights Workshop, Fujian Province 20-23 November 2007. 2 ABS Census (2006)2068.0 - Industry of Employment
88
TOTAL 3 5 4 5 4 6 5 6 5 5 4 3 3 4 3 4 4 73
Threshold Rationale The metric provides information on the regulatory framework which is in place for quality assurance and consistency in dairy farming, but does not contain detail on compliance with these regulations. Nonetheless, the existence and extent of these regulations are used as a proxy for the compliance sustainability indicator. The High, Medium, and Low thresholds are based on expert judgement. Based on the above thresholds, the summary data has been shaded GREEN for States having a High level of sustainability; ORANGE for Medium sustainability and RED for a Low level of sustainability. Based on the above thresholds it was considered that this indicator currently has a High sustainability level. Probability Distribuon (expert judgement) High 95% Medium 5% Low 0%
1
Score HIGH
Sources: Dairy Australia (2007-2012)Dairy Food Regulatory Framework,Accessed June 2012 from:hp://www.dairyaustralia.com.au/Industryoverview/Food-safety-and-regulaon/Regulatory-Framework.aspx
89
TOTAL 2 6 5 6 5 5 4 3 3 39
Threshold Rationale The metric provides information on the regulatory framework which is in place for quality assurance and consistency in dairy manufacturing, but does not contain detail on compliance with these regulations. Nonetheless, the existence and extent of these regulations are used as a proxy for the compliance sustainability indicator. The High, Medium and Low thresholds are based on expert judgement. Based on the above thresholds, the summary data has been shaded GREEN for States having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score HIGH Based on the above thresholds it was considered that this indicator currently has a High sustainability level. Probability Distribution (expert judgement) High 80% Medium 20% Low 0%
1
Sources: Dairy Australia (2007-2012) Dairy Food Regulatory Framework, Accessed June 2012 from: http://www.dairyaustralia.com.au/Industryoverview/Food-safety-and-regulation/Regulatory-Framework.aspx
90
Number of Farming Families1,2 Year 1986 Australia 145,000 Number of Farming Families by State2 State/Year 2001 NSW 32,802 VIC 27,972 QLD 23,062 SA 12,846 WA 12,059 TAS 3,442 NT 441 ACT 128 Thresholds
High Medium Low % Change More than 5.0 -5.0 to 5.0 Less than -5.0
1991 120,000
1996 114,700
2001 112,300
2006 102,600
Threshold Rationale The High, Medium and Low thresholds are based on expert judgement. Having sustainable dairy farming family businesses requires current family businesses to continue to operate in subsequent years. If there is no change (or minimal change, factoring in sample error) in the number of family businesses, this indicator is considered to be at a Medium level of sustainability. If more families are attracted into dairy farming (i.e. a percentage increase) then this is a highly sustainable indicator. Alternatively, any decrease in the number of farming families would indicate Low sustainability. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. State/Year NSW VIC QLD State/Year NSW VIC QLD SA WA TAS NT ACT 2001 32,802 27,972 23,062 2001 32,802 27,972 23,062 12,846 12,059 3,442 441 128 2006 30,216 25,658 20,045 2006 30,216 25,658 20,045 11,809 10,994 3,340 435 119 % Change -7.9 -8.3 -13.1 % Change -7.9 -8.3 -13.1 -8.1 -8.8 -3.0 -1.4 -7.0
91
Score LOW
Rationale Changes in the number of farming families can socially impact the broader community through outmigration and the decrease in rural and regional populations. The data selected for this indicator provides details of the changes experienced by State. Based on the above thresholds it was considered that this indicator had a Low sustainability level. Probability Distribution High 0% Medium 25% Low 75%
ABS (2003) 4102.0 Australian Social Trends, 2003. Accessed May 2012 from:http://abs.gov.au/AUSSTATS/abs@.nsf/7d12b0f6763c78caca257061001cc588/cdcd7dca1f3ddb21ca2570eb00835393!OpenDocument 2 ABS (2006)7104.0.55.001 Agriculture in Focus: Farming Families, Australia, 2006. Accessed May 2012 from:http://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/7104.0.55.001Main%20Features22006?opendocument&tabname=Summary &prodno=7104.0.55.001&issue=2006&num=&view= 3 Dairy Australia (2011)Dairy People Factfinder, Prepared by Dairy Australias The People in Dairy Program, September 2011.
1
92
Disagree (%) 12.6 9.1 6.8 0.7 0.0 0.0 8.0 7.6 5.5 5.4 1.5 4.1
Not sure (%) 13.9 13.6 10.8 3.3 3.0 1.4 11.3 12.1 11.0 14.1 13.6 6.8
Agree (%) 45.0 53.0 28.4 52.3 65.2 45.9 44.0 45.5 32.9 46.3 60.6 47.3
Strongly agree (%) 27.2 24.2 52.7 42.4 31.8 52.7 35.3 34.8 50.7 52.6 15.8 31.6
Threshold Rationale The data available for this metric was taken from a survey conducted in 2004 on residents in a specific geographic area in NSW, the Northern Rivers, with a total population of 296,677 (2012) covering an area of 20732.6 km. The limited scope and numbers in this survey increases the uncertainty of these results being representative of dairy farming regions in general. However, this metric combined with other metrics to inform the community indicator of social sustainability gives an insightful view into the perceptions of a specific region incorporating both farming communities and urban areas. From the Table above it is clear that similar views are held by the disparate communities (rural, village and urban), but the intensity of these opinions differs across the residential communities. The survey questions considered here cover the value attached to productive farming land, the contribution of farming to the region and the juxtaposition of farming and residential use. The thresholds are purposefully vague to capture some of the uncertainty in using this survey to represent sustainability for the community sub-indicator of social sustainability for dairy farms. Expert judgement was used in determining and applying the thresholds. A Medium level of sustainability was considered to be when the majority of the respondents across all residential locations had neither a positive nor a negative perception of the value of farming to calculate this, the not sure column is used supplemented with a proportion of the percentages on either side of the column. For a Low sustainability level, the general view ofthe respondents is that farming has no community value, and for High sustainability farming is highly valued. Based on the above thresholds, the table has been shaded GREEN for questions having a High level of sustainability; ORANGE for Medium sustainability and RED for a Low level of sustainability.
Question
There is too much urban development occurring on good agricultural land. Agriculture and related industries are important to the region. Rural residential development should not occur on good agricultural land. In agricultural areas farming practices undertaken responsibly should have precedence over residential uses. Score HIGH
Residential location of the respondent Town Village Rural Town Village Rural Town Village Rural Town Village Rural
Strongly disagree (%) 1.3 0.0 1.4 1.3 0.0 0.0 1.3 0.0 0.0 0.7 1.5 1.4
Disagree (%) 12.6 9.1 6.8 0.7 0.0 0.0 8.0 7.6 5.5 5.4 1.5 4.1
Not sure (%) 13.9 13.6 10.8 3.3 3.0 1.4 11.3 12.1 11.0 14.1 13.6 6.8
Agree (%) 45.0 53.0 28.4 52.3 65.2 45.9 44.0 45.5 32.9 46.3 60.6 47.3
Strongly agree (%) 27.2 24.2 52.7 42.4 31.8 52.7 35.3 34.8 50.7 52.6 15.8 31.6
Based on the above thresholds it was considered that this indicator had a High sustainability level. Probability Distribution High 85% Medium 12% Low 3%
1
Sources: Gibson, C., Dufty, R.and Drozdezewki, D. (2005) Resident Attitudes to Farmland Protection Measures in the Northern Rivers Region, New South Wales, Australian Geographer 36(3): 369-383.
93
2009 1181
2010 1219
2011 1266
Percentage change in average weekly full-time total earnings all manufacturing employees Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 %* 2.3 9.2 7.2 4.1 1.1 3.9 2.9 5.4 0.9 3.1
*Rounded to the nearest decimal
2011 3.7
Inflation rates for Australia2 Year 2001 2002 2003 %* 4.4 3.0 2.8
*Rounded to the nearest decimal
2004 2.3
2005 2.7
2006 3.5
2007 2.3
2008 4.4
2009 1.8
2010 2.8
2011 3.4
Thresholds
High Medium Low % Change Greater than inflation rate Same as inaon rate (within 0.5%) Less than inflation rate
Threshold Rationale The High, Medium and Low thresholds are based on expert judgement. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Year %* Score Based on the above thresholds it was considered that this indicator had a High sustainability level. HIGH Probability Distribution High 46% Medium 27% Low 27%
ABS(2012)6302.0 Average Weekly Earnings, Australia, Feb 2012 - Table 10I: Average Weekly Earnings, Industry, Australia (Dollars) Original Persons, Total Earnings. Accessed June 2012, from: http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6302.0Feb%202012?OpenDocument 2 Rate Inflation (2012) Australia Historical Inflation Rates. Accessed June 2012 from:http://www.rateinflation.com/inflation-rate/australiahistorical-inflation-rate.php?form=ausir
1
2001 2.3
2002 9.2
2003 7.2
2004 4.1
2005 1.1
2006 3.9
2007 2.9
2008 5.4
2009 0.9
2010 3.1
2011 3.7
94
87
80 -
13
Plant 51 27 N 28 64 65 66 N 70 0 16 100 2
Animal 139 73 % 14 33 33 20 % 37 9 53 1
39 13
Threshold Rationale The thresholds are based on the percentage of correct answers across both grades and questions. Not all questions were weighted equally. This data is from a single sample and any predictions based on such a small sample should be treated with caution. Nonetheless the detailed information obtained in such a survey is very valuable and gives an insight into commonly held beliefs by school children, which may be indicative of those held by other school children. Based on the above thresholds, the summary data has been shaded GREEN for high percentages of correct answers resulting in a High level of sustainability; ORANGE for Medium level of sustainability and RED for a Low level of sustainability. Survey Question N Farming is necessary to grow enough food. (T) Sustainable farming keeps the soil fertile. (T) Milk that is straight from the cow has no bacteria in it. (F) Homogenised milk has no bacteria in it (F) Is yoghurt a plant or animal product? Which breed is a type of cow grown in Australia to produce milk? Angora Fresian (T) Hereford Landrace Cheese can be made from.... Milk from cows Milk from sheep Milk from goats All of the above (T) None of the above Grade 6 Students True False % N % 90 72 36 131 20 64 255 Plant 81 N 96 174 211 66 13 10 539 39 Grade 10 Students True False % N % 87 80 395 61 Animal 525 87 % 18 32 39 12 13
177
Plant 51 27 N 28 64 65 66 N 70 0 16 100 2
Animal 139 73 % 14 33 33 20 % 37 9 53 1
95
Score HIGH
Rationale The Food, Fibre and the Future survey was developed by the Australian Council for Education Research in recognition that while primary industry plays a vital role in Australians economy and society...the gap between rural and urban communities is growing, contributing to a lack of understanding of where food and other basic necessities of life come from.1 This survey and the data presented in this measurement provide a representation of the understanding and misconceptions held by children about farming and dairy products. The restricted sample size (35 primary schools and 36 secondary schools participated in the survey), results in issues of validity and uncertainty inherent in the conclusions of the thresholds and performance of this indicator. While the questions used for this measure results in a High sustainability level the data suggests that there remains a disconnect between the community and the industries that sustain them,1 which warrants further investigation. Based on the above thresholds it was considered that this indicator had a High sustainability level. Probability Distribution High 40% Medium 35% Low 25%
1
Sources: Hillman, K. and Buckley S. (2011) Food, Fibre and the Future: Report on surveys of students and teachers knowledge and understanding of Primary Industries, Australian Council for Educational Research. Accessed May 2012 from: http://www.primaryindustrieseducation.com.au/resources/reports/foodfibrefuture.pdf
96
Threshold Rationale The assessment of the overall sustainability level for contributions towards Landcare is determined by the level of change in funding over periods of available data. Allowance is made for the fact that Landcare is just one of several initiatives being funded by the Department of Agriculture, Fisheries and Forestry (DAFF). Other important programs include Australias Farming Future and various Climate Change initiatives. Funding for Landcare 4 was pledged for 5 years. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score LOW Rationale The extent and duration of funding for initiatives such as Landcares Caring for our Country is a reflection of the success of the programs, as well as community interest and participation in these programs. Based on the above thresholds it was considered that this indicator had a Low sustainability level. The probabilities have a high degree of uncertainty due to the limited available data. This is evident in the probability distribution. Probability Distribution High 50% Medium 13% Low 37%
1
Sources: Landcare Australia: About. Accessed May 2012 from:http://www.landcareonline.com.au/?page_id=2 2 The Australian Landcare Council (2011)Operating environment in 2011 for volunteer Landcare and related groups in each of the states and territories across Australia. Accessed August 2012 from:http://www.daff.gov.au/__data/assets/pdf_file/0008/2108708/landcare2012.pdf 3 http://www.daff.gov.au/__data/assets/excel_doc/0005/1885163/grants-2009-2010.xls and http://www.daff.gov.au/__data/assets/excel_doc/0004/2172667/grants-2011-12.xls 4 Department of Regional Australia, Local Government, Arts and Sport. Accessed 8 August 2012 from:http://grants.myregion.gov.au/grant/caring-our-country-landcare
97
Threshold Rationale Striving for all dairy manufacturers to participate in community programs is the ultimate goal for this measure, but participation by the majority of manufacturers is a desirable outcome. Participation by 40% to 60% of Dairy manufacturers is considered to have a Medium sustainability level, less than 40% Low sustainability and more than 60% a High level of sustainability. The High, Medium and Low thresholds are based on expert judgement. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score MEDIUM The data available to assess the state of the dairy industry are based on only one count, which is the most recent information regarding support for community programs. It is therefore not possible to calculate a probability distribution over the various levels of sustainability. The current assessment was adjusted by expert opinion to provide an initial distribution across the levels, and this can be updated as more data becomes available. Based on the above thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution (expert judgement) High 25% Medium 50% Low 25%
1 http://www.dairyaustralia.com.au/Industry-overview/About-the-industry/Partners-in-the-Dairy-Industry/Dairy-Product-Manufacturers.aspx
98
Threshold Rationale: The High, Medium and Low thresholds are based on expert judgement. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
Year Farms which used a defined mastitis control program Heifers Farms Milkers vaccinating Dry cows against leptospirosis by stock types Occurrence of the Grass tetany following Milk fever diseases in the Clinical dairy herd (no.) mastitis 91/92 56% 52% 52% 47% 93/94 69% 55% 46% 45% 95/96 85% 60% 51% 50% 97/98 74% 60% 54% 52% 99/00 70% 72% 65% 62% 01/02 80% 72% 58% 57% 04/05 60% 72% 58% 57% 06/07 41% 71% 57% 57% 08/09 51% 86% 79% 75%
1 8 8
1 9 8
1 10 10
1 11 11
1 11 12
2 12 18
1 13 18
99
Score MEDIUM
Rationale The purpose of this indicator is to identify the measures of social responsibility the dairy industry has implemented in order to ensure herd health and subsequently safe dairy products. Most of the herd diseases (above) are confined to cattle and pose no risk to humans. While leptospirosis can have significant impacts on humans, the literature does not indicate whether it can be passed via dairy products. Although expert advice is necessary to establish the validity of assumptions for this indicator, ahead of this the underlying assumptions enable thresholds to be established that give meaning to the data. Validity may be enhanced through obtaining further data for 06/07 and 08/09 periods. Addionally, ABARE reports that the socially opmal level of disease control is determined by measuring the costs and benets against the risk/probability of disease, a plausible explanaon for the drop in disease control 2 measures for mass since 01/02. The Victorian State Government Department of Primary Industries reports that despite the success of the 1998 implemented mass management program Countdown Downunder, which resulted in declining cell counts...drought condions in 2003 forced farmers to reduce expenditure on mass management. Thus, valid predicted probability of this measurement is dicult. Based on the above thresholds it was considered that this indicator currently has a Medium sustainability level. Probability Distribution High 21% Medium 54% Low 25% In calculating the probability distribution for animal health using the data available for herd health, equal weight was assigned to each of the diseases reported and the preventative actions taken by dairy farmers to maintain the health of the herd.
Sources: Lubulwa, M. and Shafron, W. (2007) Australian Dairy Industry: Technology and Farm Management Practices , 2004-05, ABARE Research Report 07.9, prepared for Dairy Australia, Canberra, April 2007. Mackinnon, D., Oliver, M. and Ashton, D. (2010) Australian dairy industry: technology and management practices, 200809, ABAREBRS research report 10.11, Canberra, November 2010. 3 Abdalla, A., Rodrigues, G. and Heaney, A.(2000) The economic value of animal disease control measures in Australia. ABARE Animal Health in Australia Securing Our Future Conference, Canberra, 2-3 November 2000. 4 State Government Victoria DPI (2011) Innovation doubles milk production: A review of pre-farm gate RD&Es contribution 19802010. Retrieved May 2012 from:http://www.dpi.vic.gov.au/agriculture/dairy/dairy-science-and-research/dairy-megaevaluation/innovation-doubles-milk-production
1 2
100
Average no. of on-farm fatalities over two data periods and percentage change
State/Territory NSW VIC QLD SA WA TAS NT Mean 1989-1992 46.25 29.50 36.50 10.25 13.75 7.50 2.50 Mean 2003-2006 22.00 16.25 23.00 6.75 5.50 6.00 2.00 % Change -52.43 -44.92 -36.99 -34.15 -60.00 -20.00 -20.00
Thresholds
High Medium Low Fatalities Number of fatalities low and decreasing Number of fatalities relatively low and generally unchanged or decreasing slightly Number of fatalities are high and / or increasing
Threshold Rationale The High, Medium and Low thresholds are based on expert judgement and have been set to acknowledge a downward trend in fatalities to indicate that the level of sustainability is increasing, but also taking into account the actual numbers. In other words, although a decrease in fatalities is indicative of a High sustainability level, the actual number may still be unacceptably high. A zero fatality is the only real acceptable level, but the nature of the work in agriculture is known to be dangerous.1 Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
State/Territory NSW VIC QLD SA WA TAS NT Mean 1989-1992 46.25 29.50 36.50 10.25 13.75 7.50 2.50 Mean 2003-2006 22.00 16.25 23.00 6.75 5.50 6.00 2.00 % Change -52.43 -44.92 -36.99 -34.15 -60.00 -20.00 -20.00
Score MEDIUM
Rationale While Australian farming represents approximately 4 percent of the work force, injuries on farms account for around 20 percent of all work-related injuries.3 While elimination of all workplace injuries and fatalities remains the key goal, the data for this measurement, with the calculation based on the percentage change and actual numbers, identifies a continued reduction in the rates of deaths on farms, several states still have an unacceptably high number of fatalities. Thus, based on the above thresholds it was considered that this indicator currently has a Medium sustainability level. Probability Distribution High 7% Medium 57% Low 36%
Sources: Lavelle, P. (2003) Farm safety. Accessed May 2012 from:http://www.abc.net.au/health/library/stories/2003/04/17/1829466.html Franklin, R., Mitchell, R., Driscoll, T. and Fragar, L. (1999) Farm-related fatalities in Australia, 1989-1992. Accessed May 2012 from:http://www.aghealth.org.au/tinymce_fm/uploaded/Research%20Reports/farm_rel_fatalites_aus_89_92.pdf 3 Herde, E. and Lower, T. (2011)Farm injury related deaths in Australia, 2003-2006. Accessed May 2012 from:http://www.aghealth.org.au/tinymce_fm/uploaded/fs_docs/farm_injury_related_deaths_australia_200306.pdf
1 2
101
* Scope: All accepted workers' compensation claims with more than one week lost excluding travel to and from work. Frequency rates are expressed as a rate per million hours worked.
Thresholds (level of sustainability) Change in Frequency Rate Generally decreasing frequency rate over time High Frequency rate generally unchanged over time Medium Generally increasing frequency rate over time Low Threshold Rationale Because of the difficulties experienced in collecting consistent national data, Safe Work Australia generally reports on serious claims: accepted workers compensation claims involving one or more weeks off work, a permanent disability or fatality.1 In the absence of guidelines suggesting an acceptable LTIFR rate, the levels of the thresholds are purposely vague, based on the change in the frequency rate of lost time injuries for the period of data available rather than a set frequency rate. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Year Frequency+ 1 year rolling average Score MEDIUM 200001 16.6 200102 13.7 15.2 200203 11.4 12.6 200304 13.0 12.2 200405 10.8 11.9 200506 15.8 13.3 200607 14.5 15.2 200708 10.6 12.6 200809 12.3 11.5 200910 10.5 11.4
Based on the above thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution High 33% Medium 34% Low 33%
1
Sources: Safe Work Australia(2012)Lost time injury frequency rates (LTIFR. )Accessed June 2012 from:http://www.safeworkaustralia.gov.au/sites/SWA/AboutSafeWorkAustralia/WhatWeDo/Statistics/Pages/LostTimeInjuryFrequencyRates.aspx
102
Thresholds
Change High* Medium Low
Threshold Rationale The High, Medium and Low thresholds are based on expert judgement. Taking into account the fact that this is a common disease which is already present in many States, evidence that the disease is being curtailed is considered to enhance the consumers perception of safety in milk production on dairy farms. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
State NSW VIC QLD SA TAS WA 31 Mar 2010 117 964 60 16 0 30 Jun 2010 117 970 59 16 0 30 Sep 2010 115 937 57 16 0 31 Dec 2010 102 890 57 16 0 31 Mar 2011 105 894 1 60 16 0 30 Jun 2011 111 896 1 47 14 0 30 Sep 2011 115 911 2 60 14 0
Score HIGH
Rationale According to the Animal Health Surveillance reports issued quarterly,Johnes disease occurs primarily in dairy cattle and sheep, and to a lesser extent in beef cattle, goats, deer and camelids. Cattle strains are endemic in southeastern Australia, but surveillance programs have not identified infection to be endemic in Queensland, Western Australia or the Northern Territory, and active measures are taken to stamp out any incursions.3 Despite ongoing measures to eradicate this disease from Australian farms, the disease remains prevalent within Victorian and New South Wales herds. While this impacts animal welfare and on-farm economic loss, until research can confirm BJD does not transfer to humans via milk then the publics perception of dairy safety is at risk. Based on the above thresholds it was considered that this indicator currently has a High sustainability level. Probability Distribution High 43% Medium 24% Low 33% In calculating the existing probability distribution, the assumption is that the contribution of each State to customer perception of safety is equal, and that the magnitude of the changes are not as important as whether the trend is increasing or decreasing.
Sources: Dairy Australia (2008)Pathways to Progress with BJD for Veterinarians. Accessed June 2012 from:http://www.dairyaustralia.com.au/bjd Animal Health Australia (2000) An assessment of the risks of introducing bovine Johnes disease into cattle herds grazing pastures treated with recycled water, biosolids and other waste materials. Accessed June 2012 from:http://www.animalhealthaustralia.com.au/wpcontent/uploads/2011/04/bjd_effluentuse_0900.pdf 3 Animal Health Australia (2012) Animal Health Surveillance Quarterly Report. Accessed June 2012 from:http://www.animalhealthaustralia.com.au/programs/disease-surveillance/national-animal-health-information-system/animal-healthsurveillance-quarterly-report/
1 2
103
Threshold Rationale The levels of the thresholds have been set by expert opinion and were based on the change in the number of occurrences of product recalls of the period of data available (first Table), as well as the actual number of recalls in that year (second Table). The ultimate goal is to achieve zero recalls in all dairy products during a calendar year. From the data it is clear that a number of recalls (at least 4 occurrences) have been observed each year since 1999. Therefore, in assessing the sustainability levels for the various years, the actual number of recalls in a year for each of the products, the number of products that had recalls, and the general trend over time are taken into account. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
Product Milk Cheese Yoghurt Cream Ice Cream Custard Other TOTAL 1999 2 3 0 1 1 0 0 7 2000 2 2 1 0 1 0 0 6 2001 2 3 0 0 0 1 1 7 2002 0 6 0 0 0 0 0 6 2003 1 2 0 0 1 0 0 4 2004 0 1 1 1 0 1 0 4 2005 3 4 0 0 0 0 0 7 2006 1 3 0 1 0 0 0 5 2007 2 3 1 0 0 0 2 8 2008 1 3 1 0 0 0 0 5 2009 1 4 0 0 0 1 0 6 2010 0 3 1 1 0 0 0 5 2011 4 2 0 0 0 0 0 6 2012 2 2 0 0 0 0 0 4*
Score LOW
Based on the above thresholds it was considered that this indicator had a Low sustainability level. Probability Distribution High 15% Medium 31% Low 64%
1
NSW Food Authority (2009)Food Safety Risk Assessment of NSW Food Safety Schemes. Accessed June 2012 from:http://www.foodauthority.nsw.gov.au/_Documents/science/Food_Safety_Scheme_Risk_Assessment.pdf ACCC (2012) Product Safety Recalls Australia: Dairy & Eggs. Accessed June 2012 from:http://www.recalls.gov.au/content/index.phtml/itemId/952826/fromItemId/952823
104
Threshold Rationale The thresholds have been set by expert judgement, taking into account the total number affected, the severity of the outbreaks, and the year-to-year changes. Although zero illnesses is the desired level, the experts deemed that a level of five or fewer across all states would qualify for a high level of sustainability regarding foodborne illness outbreaks. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score LOW Rationale Although the data spansten years, current data is unavailable. Therefore, it is unknown whether the trends observed over time continued into 2012. This increases the uncertainty in probabilities calculated only from the available data and they have been adjusted by expert judgement. Based on the above thresholds it was considered that this indicator had a Low sustainabil ity level. Probability Distribution 18% High 36% Medium 46% Low
http://www.foodauthority.nsw.gov.au/_Documents/science/Food_Safety_Scheme_Risk_Assessment.pdf
105
Threshold Rationale The assessment of the overall sustainability level for each of the dairy products takes into account the general trend in consumption over time. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
Year Milk (l) Cheese (kg) Butter/Blends (kg) Yogurt (kg) 00/01 100.3 11.3 3.3 5.3 01/02 98.5 11.6 3.4 5.6 02/03 98.3 12.1 3.4 5.8 03/04 99.0 11.5 3.7 6.1 04/05 100.2 11.3 3.9 6.6 05/06 100.5 11.7 3.8 6.7 06/07 103.4 12.0 3.8 7.1 07/08 103.0 12.5 4.1 6.9 08/09 102.6 12.9 4.0 6.7 09/10 102.4 12.9 3.8 7.1 10/11 103.0 12.7 3.7 7.2
Score MEDIUM
Rationale While the per capita consumption figures for dairy products currently show a higher level of consumption across all products compared to consumption levels ten years ago, there have been small decreases in levels of consumption in recent years suggesting instability in the marketing of dairy products. Based on the data above and the sustainability thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution High 33% Medium 60% Low 7% Source:
1
Australian Dairy Industry In Focus 2011 (2007)Table 11. Per capita consumption of major dairy products (litres/kg).
106
43 774
40 400
35 244
44 826
41 787
39 637
39 940
40 816
Thresholds
High Medium Low Change in application rate Generally decreasing trend Generally unchanged Generally increasing trend
Threshold Rationale As Australia was drought stricken for much of the data collection period3 the threshold focuses on the reduction of water usage through changes in the application rate. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability.
2002-03 Application rate (ML/ha) 4.4 2003-04 4.3 2004-05 4.2 2005-06 4.2 2006-07 4.0 2007-08 3.4 2008-09 3.7 2009-10 3.6
107
Score HIGH
Rationale There are issues of validity with this measurement due to the broad scope of data, covering all agricultural establishments. The ABS provides limited data that specifically considers pasture for grazing (2005-06) and more specifically pasture for dairy cattle (2006-07). Further data collection is required in order to inform this measure on a comparative basis. Additionally, region-specific data is needed to cross-reference against average rainfall data in order to analyse the supply of water against the industrys consumption to ascertain overall sustainability of use. Based on the above thresholds it was considered that this indicator had a High sustainability level. Probability Distribution High 72% Medium 14% Low 14%
Sources: ABS (2011)4618.0 Water use on Australian farms 2009-10. Accessed June 2012 from:http://www.ausstats.abs.gov.au/Ausstats/subscriber.nsf/0/6C064B505C1AAEB4CA25788C001802C1/$File/461 80_2009-10.pdf 2 ABS (2011)4618.0 Water use on Australian farms 2004-05. Accessed June 2012 from:http://www.ausstats.abs.gov.au/ausstats/subscriber.nsf/0/22F0E63FEA4A8B63CA2571B500752B52/$File/4618 0_2004-05.pdf 3 Australian Government (2008)Natural disasters in Australia. Accessed June 2012 from:http://australia.gov.au/about-australia/australian-story/natural-disaster
1
108
Threshold Rationale The threshold levels were not set for one set of data. Instead, the experts were asked to assess the data collected and interpret the data in terms of level of sustainability with the assistance of the information contained in the Australian Dairy Manufacturing Industry Sustainability Report. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score MEDIUM Rationale The Australian Dairy Manufacturing Industry Sustainability Report conducted a site survey with dairy manufacturers. While the data collection period was limited, the participants represented 91% of milk production in Australia contributing to the validity of the data. Critically, advances in water recovery and recycling and water treatment have led to an increase in overall energy consumption, an impact that needs to be considered in order to assess the overall sustainability of water recycling.1 The paucity of data meant that the judgement of the data to be in accordance with the thresholds was challenging and subject to a high degree of uncertainty. This uncertainty is also reflected in the fairly flat probability distribution for this measurement. Based on the above thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution (expert judgement) High 20% Medium 45% Low 35%
1
Sources: Australian Dairy Manufacturing Industry Sustainability Report 92007/08). Accessed June 2012 from:http://dmsc.com.au/wp-content/uploads/2011/03/admsr0708.pdf
109
Total Agriculture Dairy Cattle Enteric Fermentation Dairy Cattle Manure Management
73.1 6.3
73.1 6.1
76.2 6.1
80.3 6.2
89.1 6.3
0.5
0.5
0.5
0.5
0.5
-0.40
0.19
0.24
0.05
Thresholds
High Medium Low Annual Emissions Decreasing trend (-0.20% or less) Generally unchanged (between -0.20% and 0.20%) Increasing trend (greater than 0.20%)
Threshold Rationale The thresholds have been set by expert opinion and are using the ABARES projected data for 2009 to 2030. If the expected growth rate is expected to remain largely unchanged (i.e. less than 0.2% change) then this is considered to be at a Medium level of sustainability. The challenge is to decrease the emissions from dairy cattle, and if a sustained decrease is projected (more than 0.2%) then this is taken to be at a High level of sustainability. A projected increase of more than 0.2% indicates a Low level of sustainability. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score MEDIUM Based on the above thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution High 25% Medium 50% Low 25%
Sources: DAFF(2012)Livestock Emissions. Accessed June 2012 from:http://www.daff.gov.au/climatechange/australias-farmingfuture/livestock-emissions 2 ABARE (2011)Reference case projections of Australian agricultural activity and greenhouse gas emissions: 2007-08 to 2029-30. Accessed June 2012 from:http://www.climatechange.gov.au/publications/projections/~/media/publications/projections/abares-agriculturemodelling-pdf.pdf
1
110
Threshold Rationale In assessing the sustainability of this metric, the levels need to be assessed in terms of actual energy usage as well as the share of the overall energy consumption. These two percentages determine whether the energy consumption for the dairy industry is generally increasing, decreasing or in the main unchanged. These trends were assessed using expert judgement. Based on the above thresholds, the summary data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for a Low level of sustainability. Score MEDIUM Rationale The broad scope of data representation in this measure presents significant issues of validity. Additional data, separation of the two distinct sectors of manufacturing and construction, and dividing manufacturing by industry will enable industries to better assess their energy consumption status and trends. The probability distribution reflects this lack of information with the probabilities spread fairly evenly across the three levels of sustainability. Based on the above thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution High 30% Medium 40% Low 30%
Sources: Australian Government (2012) Clean Energy Future. Accessed June 2012 from:http://www.cleanenergyfuture.gov.au/australian-manufacturing-moving-to-a-cleaner-future/ 2 ABARE (2011)Energy update 2011. Accessed June 2012 from:http://adl.brs.gov.au/data/warehouse/pe_abares99010610/EnergyUpdate_2011_REPORT.pdf
1
111
$213,961,916
$219,319,168
$208,937,520
$205,412,220
$288,330,420
$267,300,000
$227,674,200
Threshold Rationale From an environmental perspective, assuming the cost of fertiliser is fixed, the less spent on fertiliser means the less fertiliser applied to dairy pastures, thus reducing the risk of environmental damage. The thresholds were set to capture the general trends of fertiliser costs over time, which should provide a reasonable proxy for the use of fertilisers on dairy farms. Based on the above thresholds, the data has been shaded GREEN for years having a High level of sustainability; ORANGE for Medium sustainability years and RED for years having a Low level of sustainability.
2003/04 Total fertiliser cost % change $213,961,916 2004/05 $219,319,168 2.5 2005/06 $208,937,520 -4.7 2006/07 $205,412,220 -1.7 2007/08 $288,330,420 40.4 2008/09 $267,300,000 -7.3 2009/10 $227,674,200 -10.8
Score MEDIUM
Rationale The data used for this does not take into account fluctuations in price and would need to be checked against other data to provide greater insight into quantities and types of commodities used in the dairy farming process which impact on the environment. Information on quantities of fertiliser used on dairy farms, rather than cost, would have provided a better insight into temporal trends of fertiliser use. While the thresholds show a decrease in cost, the substantial increase in expenditure over the 2007/08 period must be taken into account, the data explicitly showing that fertiliser purchases have increased in recent years and subsequently so too has the risk of environmental impacts. Based on the above thresholds it was considered that this indicator had a Medium sustainability level. Probability Distribution (adjusted with expert opinion) High 15% Medium 55% Low 35%
Source 1 State Governement of Victoria DPI (2012)Nitrogenous Fertiliser. Accessed June 2012 from:http://www.dpi.vic.gov.au/agriculture/dairy/pastures-management/fertilising-dairy-pastures/chapter-12 2 ABARE: Australian Dairy: 04.1; 05.1; 06.1; 07.2; 08.1; 09.1; 10.1. Australian Bureau of Agricultural and Resource Economics and Sciences: Australian Dairy: Financial performance of dairy producing farms 2008-09 to 2010-11.
112
2007/08 (tonnes) 40 37 26 21 19
Threshold Rationale The threshold levels were not set explicitly, but rather the data, which showed a marked increase from the 2004/05 to 2007/08 reporting periods, were assessed by experts in the context of existing programs being put in place to reduce chemical usage and other factors that would have an influence on the need to increase chemical usage, for example the installation of waste water systems. Score Low Rationale The Australian Dairy Manufacturing Industry Sustainability Report conducted a site survey with dairy manufacturers. While the data collection periods were limited, the participants represented 91% of milk production in Australia contributing to the validity of the data. Despite this, the report recognises that few co nclusions can be drawn with certainty from these findings. Some manufacturers were unsure of how to correctly report chemical usage, while a number of sites were unable to report all of their chemical consumption. Thus, further data collection is required. Moreover the interpretation of this measurement needs take into account initiatives by some of the major stakeholders to reduce chemical usage, and the fact that changes to production volumes, product lines and cleaning regimes will also be reflected in the overall cleaning chemical usage reported above. Based on the above thresholds it was considered that this indicator had a Low sustainability level. Probability Distribution High 5% Medium 30% Low 65%
1
Sources: Australian Dairy Manufacturing Industry Sustainability Report (2007/08) Accessed June 2012 from:http://dmsc.com.au/wp-content/uploads/2011/03/admsr0708.pdf
113
Threshold Rationale The threshold levels were chosen based on expert opinion regarding the perception of the degree of participation and commitment to the reduction of packaging based on the limited information available. This perception is motivated by the percentage of surveyed companies being signatories to the voluntary National Packaging Covenant and awareness of packaging reduction initiatives. Based on the above thresholds, the probability distribution has been calculated for this metric, taking into account the uncertainty in the quality and quantity data available. Rationale The Australian Dairy Manufacturing Industry Sustainability Report conducted a site survey which found that twenty-one sites, representing 55% of milk production had packaging reduction initiatives in use at their site. From the limited data available, the most successful initiatives appeared to be moving to bulk units for packaging and changes in supply chain relationships. While this data is informative, it is collected via survey and is thus not representative of the actions of all manufacturers. Probability Distribution High 25% Medium 55% Low 20%
Source: 1 Australian Dairy Manufacturing Industry Sustainability Report (2007/08) Accessed June 2012 from: http://dmsc.com.au/wpcontent/uploads/2011/03/admsr0708.pdf 2 Australian Packaging Covenant. Accessed June 2012 from:http://www.packagingcovenant.org.au/search.php
Score MEDIUM
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