Case Study: University of Melbourne achieves clear carbon‑tax impact forecasts and identifies higher‑profit forage system with Palisade @RISK

University of Melbourne - Customer Case Study

The University of Melbourne engaged Palisade’s @RISK to quantify how a proposed carbon tax would affect Australian dairy farms using two feeding systems — a traditional ryegrass pasture system and a complementary forage‑based system. The challenge was to model uncertainty in inputs like pasture consumption, milk and feed prices, and carbon price to forecast annual operating profits under a range of carbon‑price scenarios.

Using Palisade’s @RISK, Dr. Seyda Özkan built stochastic models with appropriate distributions, specified correlations, and ran 10,000 Monte Carlo iterations plus sensitivity analysis. Results showed the carbon price reduced operating profits by about $49,000 for the ryegrass system and $50,000 for the complementary forage system; the complementary system delivered higher expected operating profit but greater volatility (higher risk) and a higher chance of achieving a $200,000 operating profit (37.1% vs 30.5%). Sensitivity analysis with @RISK identified milk price as the dominant driver of profit variance, followed by feed costs.

University of Melbourne

Şeyda Özkan

Department of Animal and Aquacultural Sciences