In assessing the economics of nitrogen in a farming system, there is a need to assess the full economic costs and benefits of each potential source of nitrogen. In this paper, the basis for measuring and comparing the full economic costs of fertiliser and legume nitrogen is explored. The relative costs of different forms of nitrogen for the South-West Slopes of New South Wales are examined, to identify the least-cost forms of nitrogen. The results indicate that legume nitrogen can be cheaper or more costly than fertiliser nitrogen, depending on the legume used and that different outcomes can be obtained when different time horizons are used in assessing the cost of the nitrogen. Therefore, farmers need to make those comparisons for their particular situation before they can make informed decisions on the farm. Farmers need to be aware of these issues if they are to make fully informed decisions about their nitrogen use.

An economic assessment is made of the rice-breeding program at Yanco, New South Wales. The achievements of the breeding program over the past 30 years are identified and quantified. The economic assessment considers current investment in the breeding program and analyses the likelihood of the program achieving sufficient gains through breeding to justify that investment on economic grounds. We estimate the rate of improvement in yield and quality that would give the required increase in the industry's value of production. Based on the contribution of new varieties to past gains, the future gains needed through breeding to accomplish satisfactory economic returns are achievable. However, the analysis highlights the need for focused breeding efforts to maximise the returns from the breeding program.

This chapter outlines the current Australian rural research and development (R&D) funding system, and examines its key features. The levy system that supports the network of research and development corporations is then considered in detail. Recent trends in research funding are discussed, and lessons are drawn from Australia's experiences in rural R&D funding.

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