Do Synergies Exist in Australian Sheep Production?

Abstract

Farmers in Australia have used diversification among enterprises and activities as a way to spread risk. A potential drawback of this strategy has been that it might reduce overall productivity on the farm. We examine synergies between wool and lamb activities to assess the effects of diversification on productivity in the sheep enterprise. Diversification economies (diseconomies) are used as a measure of synergies (dyssynergies) between these two activities using data on farms in an Eastern Australian benchmarking group. Results indicate that synergies are present between wool and lamb production within the sheep enterprise. These synergies are likely to have been strengthened by outputs from activities undertaken by research organizations, particularly genetic improvements, and better livestock and pasture management strategies. The provision of extension advice to the benchmarking group on relevant advances appears to have assisted in the exploitation of the synergies in a commercial situation.