Enhancing Decision-Making in Agriculture with the RiskWise Project
The agricultural landscape is fraught with uncertainties and risks, and making informed decisions is crucial for optimising outcomes. Recognising this, the Grains Research and Development Corporation (GRDC) has launched a five-year national project, RiskWi$e, to improve grower decision-making processes to increase the probability of more favourable outcomes.
Understanding Risk in Agriculture
What constitutes a risky decision in farming can vary significantly depending on several factors, including the farm’s location, the type of crops being grown, and the personal risk tolerance of the farmer. The RiskWi$e project team recently engaged with The Liebe Group R&D Committee to discuss their decision-making processes and gain insights into how different growers approach risk.
Case Study: Decision-Making in Western Australia
Consider the following scenario that illustrates the complexity of decision-making in farming:
- Initial Conditions: Last year experienced Decile 1 rainfall, and there was no summer rain, leaving the soil without moisture. Long-term weather models indicated that rainfall was “likely to be average.” At this time, the prices were $750/t for canola and $550/t for urea. It’s late March, and a cyclone could potentially bring significant early rainfall.
- Grower 1: Sees the opportunity in the early rainfall and decides to sow as much canola as possible.
- Grower 2: Is uncertain about the rainfall and opts to wait, sceptical of the weather forecasts.
As April passes without significant rainfall, the situations evolve:
- Grower 1: Despite patchy establishment, continues to sow canola, trusting the prices and previous experiences.
- Grower 2: Concerned about the establishment risks, decides to reduce the canola program and waits.
When May arrives without rain for the first two weeks, but a break is “likely” later in the month:
- Grower 1: Chooses to finish seeding canola, influenced by traditional advice and agronomist recommendations.
- Grower 2: Considers it too late for canola and shifts focus to wheat, which is perceived as less risky.
Analysing the Decisions
This simplified example highlights the different approaches to decision-making among growers in Western Australia. Both Grower 1 and Grower 2 used logical frameworks, yet their decisions varied due to individual risk tolerance, experience, and other influencing factors. Recency bias, particularly following a poor season, can lead to more conservative decisions.
The Role of the RiskWi$e Project
The RiskWi$e project is dedicated to investigating these factors that influence risky decisions in agriculture. By collaborating with the Grower Group Alliance, RiskWi$e is helping eight grower groups across Western Australia explore their decision-making processes, focusing on critical areas such as nitrogen application, sowing strategies, and machinery investment decisions.
Get Involved
Interested in being a part of this transformative initiative? Learn more about the RiskWi$e project and how you can contribute by visiting the following links:
Join us in enhancing the decision-making framework in agriculture, ensuring more resilient and productive farming practices.