In face of climate change and other environmental challenges, one strategy for incremental improvement within existing farming systems is the inclusion of perennial forage shrubs. In Australian agricultural systems, this has the potential to deliver multiple benefits: increased whole-farm profitability and improved natural resource management. The profitability of shrubs was investigated using Model of an Integrated Dryland Agricultural System (MIDAS), a bio-economic model of a mixed crop/livestock farming system. The modelling indicated that including forage shrubs had the potential to increase farm profitability by an average of 24% for an optimal 10% of farm area used for shrubs under standard assumptions. The impact of shrubs on whole-farm profit accrues primarily through the provision of a predictable supply of 'out-of-season' feed, thereby reducing supplementary feed costs, and through deferment of use of other feed sources on the farm, allowing a higher stocking rate and improved animal production. The benefits for natural resource management and the environment include improved water use through summer-active, deep-rooted plants, and carbon storage. Forage shrubs also allow for the productive use of marginal soils. Finally, we discuss other, less obvious, benefits of shrubs such as potential benefits on livestock health. The principles revealed by the MIDAS modelling have wide application beyond the region, although these need to be adapted on farm and widely disseminated before potential contribution to Australian agriculture can be realized.