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Farm performance: broadacre and dairy farms, 2014–15 to 2016–17

​​Peter Martin, Walter Shafron and Paul Phillips

Summary

  • In 2016–17 farm cash income for broadacre farms nationally is projected to average $216,000 per farm, the highest recorded in the past 20 years.
  • Record winter grain production in most regions, high prices for beef cattle and good sheep, lamb and wool prices have driven expected record broadacre farm cash incomes in 2016–17.
  • Average farm cash income is projected to increase for broadacre farms in all states except Tasmania in 2016–17.
  • Farm cash income for dairy farms is projected to decline by 16 per cent nationally to an average of $105,000 per farm in 2016–17, reflecting lower milk production and continued low farmgate milk prices.
Figure 1 Financial performance, all broadacre industries, Australia, 1996–97 to 2016–17
average per farm
Shows farm cash income and farm business profit trends in 2016–17 dollars from 1996–97 to 2016–17. Farm cash income has been consistently positive and above farm business profit.

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Farm costs and receipts

In 2016–17 favourable seasonal conditions resulted in record winter crop yields and increased pasture production for grazing beef cattle and sheep throughout most of Australia’s agricultural regions. Record winter crop production and high prices for beef cattle, sheep, lamb and wool are projected to result in the highest average farm cash incomes for broadacre farms in the 20 years since 1996–97. Average farm cash income for broadacre farms nationally is projected to increase from $182,500 per farm in 2015–16 to $216,000 per farm in 2016–17 (Farm survey methodology).

Broadacre farms grow grains, oilseeds or pulses or run beef cattle or sheep (Definitions of industries) and are located in all regions across Australia. In aggregate, broadacre farms accounted for 65 per cent of Australian farm businesses and an estimated 60 per cent of the total gross value of Australian agricultural production in 2015–16.

Expected higher average farm cash income (Definitions of terms) for broadacre farms in 2016–17 follows increases in 2014–15 and 2015–16. These increases were mainly driven by higher prices for beef cattle combined with high beef cattle turn-off, partly in response to dry seasonal conditions in northern Australia in 2014–15 and 2015–16 and in parts of New South Wales, Victoria, South Australia and Tasmania in 2015–16. Beef cattle production is by far the most common and widely dispersed agricultural activity in Australia, with around 57 per cent of all Australian farms carrying beef cattle. Increases in average farm cash income in 2014–15 and 2015–16 were also supported by high overall winter crop production; strong oilseed and pulse prices; higher sheep, lamb and wool prices; a relatively small increase in farm input costs; and lower interest rates on farm borrowing.

Farm cash receipts

High beef cattle turn-off for the three years ending 2015–16 resulted in a reduction in average herd size in most regions of Australia. Better seasonal conditions in 2016–17 are expected to result in lower turn-off of cattle for slaughter, higher calf branding rates and a small increase in the size of beef cattle herds in most regions. Competition between farms to purchase cattle to restock contributed to the maintenance of high cattle prices in 2016–17.

Nationally in 2016–17, receipts from beef cattle are projected to increase slightly compared with 2015–16 due to a forecast increase in cattle prices but to decline for farms undertaking significant herd rebuilding as they reduce cattle sales.

Increased winter grain, oilseed and pulse production in 2016–17 is projected to result in higher average crop receipts compared with those recorded in 2015–16. Higher wheat and barley production together with higher pulse prices are projected to more than offset lower prices for wheat, barley and oilseeds and a reduction in grain sorghum production. A large increase is projected in receipts for Victorian grain-producing farms. Record winter crop production is expected in 2016–17 after dry seasonal conditions reduced production in 2014–15 and 2015–16.

Average farm cash receipts in all states are also projected to be boosted by higher prices for sheep, lambs and wool.

In 2016–17 average farmgate milk prices are forecast to remain low in southern dairy regions. Dairy cow numbers and farm inputs are projected to decrease in response to lower prices, resulting in reduced milk production and milk receipts.

Farm costs

Average farm cash costs for broadacre farms are projected to increase nationally by around 7 per cent in 2016–17. Higher farm cash costs are partly a result of higher prices paid for store and breeding cattle and sheep, and fertiliser and crop chemicals. Grain freight, handling and marketing costs are projected to increase with the harvest of a larger winter grain crop in 2016–17. Improved crop and pasture production is projected to result in reduced use of purchased fodder and in combination with lower fodder prices to result in a reduction of around 15 per cent in expenditure on purchased fodder. Average interest rates paid on farm debt are forecast to be around 2 per cent lower in 2016–17.

For dairy farms, expenditure on purchased fodder increased in 2015–16 as a result of dry seasonal conditions and reduced availability of irrigation water in Victoria, South Australia and Tasmania. Lower hay and feed grain prices—together with favourable seasonal conditions in spring and early summer, increased availability of irrigation water and reduced dairy cow numbers—are projected to result in lower average farm cash costs in most dairy-farming regions in 2016–17.

Farm income and profit

Nationally, average farm cash income for broadacre farms has been high in recent years compared with incomes recorded historically. Farm cash income increased from $159,640 in 2014–15 to $182,500 in 2015–16. In 2016–17 farm cash income is projected to increase further to average $216,000 per farm (Table 1), just over double the 10-year average to 2015–16 of $104,000 in real terms. If achieved, it would be the highest average farm cash income for broadacre farms in over 20 years (Figure 1).

In 2016–17 average broadacre farm cash incomes are projected to increase in all states except Tasmania and in all industries compared with those recorded historically. However, average farm cash incomes differ significantly across industries, states and regions.

Farm cash income is a measure of cash funds generated by the farm business for farm investment and consumption after paying all costs incurred in production. This includes interest payments but excludes depreciation and payments to family workers. It is a measure of short-term farm performance because it does not take into account depreciation or changes in farm inventories. A measure of longer-term profitability is farm business profit, because it takes into account capital depreciation and changes in inventories of livestock, fodder, grain and wool.

In 2016–17 increases in beef cattle and sheep numbers and increases in on-farm grain stocks in most states will increase farm inventory values and result in a larger increase in farm business profit compared with that for farm cash income. Farm business profit for Australian broadacre farms is expected to average $112,000 per farm in 2016–17. If achieved, this would be the highest farm business profit for broadacre farms in the 20 years since 1996–97.

Table 1 Financial performance, all broadacre industries, Australia, 2014–15 to 2016–17
average per farm
Financial performance measureUnit2014–152015–16p2016–17y
Total cash receipts$505,800548,500(13)594,000
Total cash costs$346,150366,000(16)377,000
Farm cash income$159,640182,500(8)216,000
Farms with negative farm cash income%1414(10)13
Farm business profit$24,30068,600(24)112,000
Profit at full equity
– excl. cap. appreciation$65,040110,000(16)152,000
– incl. cap. appreciation$195,050398,500(17)na
Farm capital at 30 June a$4,451,6504,976,300(3)na
Net capital additions$58,58062,500(45)na
Farm debt at 30 June b$536,450560,500(5)571,000
Change in debt - 1 July to 30 June b%57(25)1
Equity at 30 June bc$3,698,8403,977,700(3)na
Equity ratio bd%8788(1)na
Farm liquid assets at 30 June b$194,190209,300(8)na
Farm management deposits (FMDs) at 30 June b$58,91066,000(10)na
Share of farms with FMDs at 30 June b%2627(7)na
Rate of return e
– excl. cap. Appreciation%1.52.4(15)3.1
– incl. cap. Appreciation%4.58.6(16)na
Off-farm income of owner manager and partner b$36,86036,200(11)na

a Excludes leased plant and equipment. b Average per responding farm. c Farm capital minus farm debt. d Equity expressed as a percentage of farm capital. e Rate of return to farm capital at 1 July. p Preliminary estimates. y Provisional estimates. na Not available.
Note: Figures in parentheses are standard errors expressed as a percentage of the estimate provided.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Rates of return

The average rate of return to total farm capital, including capital appreciation, for broadacre farms was high between 2000–01 and 2006–07 but declined after 2007–08 (Figure 2). Strong demand for rural land during most of the 2000s resulted in a sharp increase in land values in most agricultural regions. This raised the total capital value of farms. Rapidly rising farm capital values resulted in high rates of return, including capital appreciation. However, from 2007–08 land values generally did not increase and reported land values declined in several regions in the five years to 2013–14. The reduction in reported land values during this period resulted in lower estimates of average rate of return to total farm capital, including capital appreciation for broadacre and dairy farms.

In 2014–15 and 2015–16 a slight rise in land values was recorded in some high rainfall and pastoral zone regions. The value of beef and dairy cattle also increased significantly. This resulted in an increase in average farm capital value and added around 3.0 per cent to the average rate of return, including capital appreciation, for broadacre farms in 2014–15 and around 6.2 per cent in 2015–16 (Table 2).

Increases in total farm capital values resulting from the general increase in land values during the 2000s also acted to reduce rates of return, excluding capital appreciation.

Figure 2 Return on capital, average all broadacre industries, Australia, 1996–97 to 2016–17
average per farm
Shows trends in rate of return including capital appreciation and excluding capital appreciation for broadacre industry farms from 1996–97 to 2016–17. The rate of return including capital appreciation was consistently higher than the rate of return excluding capital appreciation until 2009–10. This figure is discussed in the previous three paragraphs and following paragraph.

The average rate of return, excluding capital appreciation, for Australian broadacre farms is estimated to have been 2.4 per cent in 2015–16 and is expected to increase in 2016–17 to average 3.1 per cent as profit increases for many farms.

In 2016–17 rates of return, excluding capital appreciation, are expected to be positive across all states. The Northern Territory is projected to have the highest average rate of return, excluding capital appreciation, at 9.5 per cent.

The projected average rate of return, excluding capital appreciation, is highest in the wheat and other crops industry, at 4.3 per cent. Since 2013–14 rates of return for the beef, sheep and sheep–beef industries have increased.

The dairy industry is the lowest ranked industry for 2016–17, with a projected average rate of return, excluding capital appreciation, of 0.3 per cent compared with 1.3 per cent in 2015–16. In 2016–17 the average rate of return is expected to be highest in Western Australia (2.7 per cent), similar in Queensland (2.2 per cent) and lowest in Victoria (–0.4 per cent).

Generally, larger farms generate higher rates of return as a result of increasing returns to scale, greater access to superior technologies and greater management skill (Jackson & Martin 2014).

Large wheat and other crops industry farms (Box 1) generated an average rate of return, excluding capital appreciation, of 5.7 per cent over the five years ending 2014–15, compared with 3.2 per cent for medium-sized wheat and other crops industry farms and –0.5 per cent for small farms (Table 3). In 2015–16 the average rate of return for large wheat and other crops industry farms increased to 6.0 per cent and is expected to increase to 6.8 per cent in 2016–17. Large sheep industry farms generated an average rate of return of 4.9 per cent over the five years ending 2014–15 and 4.1 per cent in 2015–16. This is expected to increase to 7.0 per cent in 2016–17.

The largest increase in rate of return, excluding capital appreciation, in recent years was for large beef industry farms. Rates of return increased from an average of 2.0 per cent for the five years ending 2014–15 to a projected 7.6 per cent in 2016–17.

For additional information on farm financial performance by farm size, see Disaggregating farm performance statistics by size in the Agricultural commodities: March quarter 2017.

Box 1 Farm sizes

Small farms: farms with a total value of sales of less than $450,000. Small farms account for 70 per cent of Australian broadacre and dairy farms and around 24 per cent of the total value of sales (receipts) from broadacre and dairy farms. Small farms are mostly family owned and operated, typically with a total capital value of less than $5 million. Off-farm income from wages, salaries, investments and other non-farm businesses often accounts for more than 50 per cent of the disposable cash income of farm operators.

Medium farms: farms with a total value of sales of between $450,000 and $1 million. Medium farms account for 20 per cent of Australian broadacre and dairy farms and around 27 per cent of the total value of sales from broadacre and dairy farms. Medium farms are mostly family owned and operated, typically with a total capital value of between $5 million and $9 million. Off-farm income generally accounts for less than 50 per cent of the disposable cash income of farm operators.

Large farms: farms with a total value of sales exceeding $1 million. Large farms account for 10 per cent of Australian broadacre and dairy farms and for around 49 per cent of the total value of sales from broadacre and dairy farms. The majority of large farms are family owned and operated, but complex ownership and operating arrangements are more common among large farms. Typically, the total capital invested in large farms exceeds $10 million. Off-farm income usually accounts for only a small proportion of the disposable cash income of farm operators.

Table 3 Rate of return to total capital (excluding capital appreciation) by industry and farm size, Australia, 2010–11 to 2016–17
average per farm
IndustryBusiness sizeFive years to 2014–152015–16p2016–17p
%%RSE%
Wheat and other cropsSmall–0.5–0.5(147)1.1
Medium3.22.1(22)4.9
Large5.76.0(7)6.8
Mixed livestock–cropsSmall–0.4–0.3(116)1.5
Medium2.81.8(23)4.2
Large4.53.7(15)4.8
SheepSmall–0.3–0.9(50)0.5
Medium2.91.8(40)4.5
Large4.94.1(15)7
BeefSmall–0.90.0(168)1
Medium1.62.4(16)4
Large2.04.0(10)7.6
Sheep–beefSmall–0.10.7(68)3.2
Medium2.12.3(29)4.4
Large3.54.6(11)6.7
All broadacre farms1.82.4(5)3.2
DairySmall0.5–0.9(147)–2.5
Medium2.80.3(234)0.2
Large4.82.9(11)1.5
All dairy farms3.71.3(33)0.3

p Preliminary estimates. y Provisional estimates.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Performance, by state

Projected farm financial performance in 2016–17, and its rank in historical terms, varies markedly across states and regions (Table 4 and Table 5).

New South Wales

Average farm cash incomes were high in New South Wales in 2014–15 and increased further in almost all regions in 2015–16 as a result of higher prices for beef cattle and increased crop production, particularly in the North West Slopes and Plains region (Table 4 and Map).

In 2016–17 average farm cash incomes are projected to increase further in all regions of New South Wales as a result of record winter crop production and higher prices for beef cattle, sheep, lambs and wool. In the Riverina region, increased rice production as a result of increased availability of irrigation water in 2016–17 is also projected to contribute to the increase in average farm receipts.

Average broadacre farm cash income in New South Wales is projected to increase to average $203,000 per farm in 2016–17. If achieved, this would be more than 150 per cent above the 10-year average to 2015–16 of $79,000 and the highest average farm cash income recorded in New South Wales in the 20 years since 1996–97 (Figure 3).

Figure 3 Farm cash income, all broadacre farms, New South Wales and Queensland, 1996–97 to 2016–17
average per farm
Shows trends in farm cash income in 2016–17 dollars for New South Wales and Queensland broadacre industry farms from 1996–97 to 2016–17. Farm cash income was consistently positive in all years for both states.

Queensland

Farm cash incomes increased in all Queensland regions in 2014–15 and again in 2015–16. This was achieved partly through a reduction in cattle herds as cattle turn-off increased in response to dry seasonal conditions and higher cattle prices.

Further small increases in average farm cash income are projected for some Queensland regions, with higher cattle prices offsetting reductions in cattle turn-off in 2016–17. A larger increase is expected in the Cape York and Gulf region, where a greater increase in turn-off is projected. In West and South West Queensland, South Queensland Coastal and Eastern Darling Downs, average farm cash income is projected to decline due to reduced beef cattle turn-off as herd rebuilding commences.

Farm cash incomes are projected to increase slightly for the Darling Downs and Central Highlands as a result of increased winter crop production mostly offsetting the decline in wheat and barley prices combined with a small increase in beef cattle receipts. Nevertheless, overall crop receipts are projected to decline for some farms as a result of lower yields from winter crops and an expected reduction in grain sorghum plantings in 2016–17.

Overall, for Queensland broadacre farms average total farm cash receipts are projected to increase by 8 per cent. Average total cash costs are projected to increase by around 7 per cent in 2016–17, mainly as a result of a projected increase in beef cattle purchase expenditure in some regions.

Average broadacre farm cash income in Queensland is projected to increase to $222,000 per farm in 2016–17. If achieved, this would be around 140 per cent above the 10-year average to 2015–16 and the highest recorded for Queensland in the 20 years since 1996–97 (Figure 3).

Victoria

In 2014–15 and 2015–16 farm cash incomes for Victorian broadacre grain farms were reduced as a result of low winter grain, oilseed and pulse yields due to prolonged dry seasonal conditions, particularly in the Wimmera region.

In 2016–17 a large increase in production of wheat and barley due to record yields, together with increased production of pulse crops, is expected to more than offset lower wheat and barley prices and result in crop receipts increasing by over 60 per cent compared with 2015–16. Reduced turn-off of beef cattle in 2016–17 is projected to result in a small reduction in receipts from beef cattle, despite an increase in beef cattle prices. Overall, much higher crop receipts together with increased receipts from sheep, lambs and wool are expected to result in higher farm cash incomes for broadacre farms in all Victorian regions (Table 4). Average farm cash income for broadacre farms in Victoria is projected to increase to $135,000 per farm in 2016–17. If achieved, this would be around 65 per cent above the 10-year average to 2015–16 (Figure 4).

Figure 4 Farm cash income, all broadacre farms, Victoria and Tasmania, 1996–97 to 2016–17
average per farm
Shows trends in farm cash income in 2016–17 dollars for Victorian and Tasmanian broadacre industry farms from 1996–97 to 2016–17. Farm cash income was consistently positive in all years for both states.

Tasmania

In 2015–16 average farm cash income for Tasmanian broadacre farms was similar to that recorded in 2014–15. Dry seasonal conditions throughout 2015 resulted in reduced crop and wool production and a further increase in beef cattle turn-off, following an increase in 2014–15. Crop, sheep and wool receipts declined and beef cattle receipts increased due to higher turn-off and higher beef cattle prices.

In 2016–17 average farm cash incomes are projected to decrease in Tasmania as beef cattle and sheep turn-off is reduced and farms rebuild beef cattle herds and sheep flocks in response to improved seasonal conditions. Overall, crop receipts are also expected to be lower as a result of lower grain prices.

On average, farm cash income for broadacre farms in Tasmania is projected to decline to $103,000 per farm in 2016–17 (Figure 4). This would be lower than the average recorded in 2015–16 but still around 27 per cent above the 10-year average to 2015–16.

South Australia

Average broadacre farm cash income was high in 2014–15 and declined only a little in 2015–16, as a result of slightly lower grain yields and reduced wheat and barley prices (Figure 5).

In 2016–17 broadacre farm cash incomes are projected to increase to average $258,000 per farm. This would be around 80 per cent above the 10-year average to 2015–16.

Increased winter crop production in 2016–17 is expected to result from record yields and an increase in planted area. This is projected to result in an increase in crop receipts despite lower wheat and barley prices. Higher crop receipts together with an increase in receipts from beef cattle, sheep, lambs and wool (due to higher prices) are projected to result in average farm cash income increasing in all regions in 2016–17.

Higher receipts from lentils also contributed to higher average farm cash incomes for farms in the Murray Lands and Yorke Peninsula region in 2015–16 and 2016–17. Adverse spring weather events including frost, wind and heavy rain reduced grain yields and incomes for some farms.

Figure 5 Farm cash income, all broadacre farms, South Australia and Western Australia, 1996–97 to 2016–17
average per farm
Shows trends in farm cash income in 2016–17 dollars for South Australian and Western Australian broadacre industry farms from 1996–97 to 2016–17. Farm cash income was consistently positive in all years for both states.

Western Australia

In 2015–16 a decline in wheat and barley yields and lower grain prices, partly due to lower grain quality, resulted in a decrease in average broadacre receipts in Western Australia and a small decline in average broadacre farm cash income. The impact of lower grain receipts on farm cash income was partly offset by increased beef cattle and wool receipts resulting from higher beef cattle and wool prices in 2015–16.

In 2016–17 lower prices for wheat and barley are projected to largely offset the effect of increased wheat and canola production on average crop receipts. In the east of the Central and South Wheat Belt, severe frost in spring reduced grain yields and farm receipts. Pool payments received in 2016–17 for grain delivered in 2015–16 are expected to partially offset the decrease in wheat and barley receipts. As a result, only a small decrease in average broadacre crop receipts is expected.

Receipts from beef cattle, sheep and lambs are projected to increase as a result of higher cattle, sheep and wool prices. This is expected to result in higher farm cash incomes for farms with livestock, including mixed livestock–crops farms.

In the Kimberley region, higher beef cattle prices are projected to increase farm receipts and raise average farm cash income. In the Pilbara and Southern Rangelands, higher beef cattle turn-off in addition to higher cattle prices is expected to contribute to higher average farm cash income (Table 4).

Overall, broadacre farm cash income in Western Australia is projected to increase from an average of $312,700 per farm in 2015–16 to $340,000 per farm in 2016–17. If achieved, this would be around 90 per cent above the 10-year average to 2015–16.

Northern Territory

Many farm businesses in the upper Northern Territory derive a large share of their total cash receipts from selling cattle for live export, particularly to Indonesia. The expansion of the live export trade between 2013–14 and 2015–16 resulted in cattle being sourced from a much expanded area of northern Australia.

In 2015–16 beef cattle receipts increased by 50 per cent, as a result of a 40 per cent increase in the average price received for beef cattle and a 10 per cent increase in the number of beef cattle sold. Average total cash costs increased by 15 per cent, partly offsetting higher farm receipts. Expenditure was higher on beef cattle purchases, hired labour, contracts, freight and livestock selling costs. The value of cattle transferred onto stations by businesses with properties interstate also increased.

Further increases in beef cattle prices are projected to result in a small increase in average farm cash income for the Northern Territory in 2016–17. Average farm cash income is projected to decrease in the Victoria River District – Katherine region due to reduced cattle turn-off. Overall farm cash incomes in the Northern Territory are projected to increase slightly to average $2,098,000 per farm in 2016–17, compared with the 10-year average to 2015–16 of $418,000 per farm (Figure 6).

In 2016–17 an increase in cattle numbers is expected due to favourable seasonal conditions and higher branding rates, increased purchases and transfers onto corporate properties. This is expected to result in an increase in the value of inventories and a larger increase in farm business profit.

Figure 6 Farm cash income, all broadacre farms, Northern Territory, 1996–97 to 2016–17
average per farm
Shows trends in farm cash income in 2016–17 dollars for Northern Territory broadacre industry farms from 1996–97 to 2016–17. Farm cash income was consistently positive in all years.

Performance, by industry

Farm financial performance in 2015–16, projected performance in 2016–17 and historical ranking vary markedly across industries (Table 6 and Table 7).

Wheat and other crops industry

Average farm cash income for the wheat and other crops industry decreased slightly in 2014–15 and 2015–16, mainly as a result of lower grain and oilseed prices. The decline in total grain receipts was partly offset by increased receipts for pulses, particularly in 2015–16. Average farm cash costs did not increase in these two years. In 2015–16 farm cash income for wheat and other crops industry farms averaged $318,900 per farm.
In 2016–17 farm cash income for the wheat and other crops industry is projected to increase to average $398,000 per farm. This is the result of increased winter crop production in all the major grain-producing states in 2016–17 offsetting lower prices for grains and oilseeds and increased total cash costs. If realised, farm cash income will be around 70 per cent higher than the 10-year average to 2016–17 and the highest recorded in the past 20 years (Figure 7).

Wheat and other crops industry farms recorded the highest average rate of return excluding capital appreciation (4.3 per cent) of industries surveyed in 2015–16 and 2016–17.

Figure 7 Farm cash income, grains industries, Australia, 1996–97 to 2016–17
average per farm
Shows trends in farm cash income for wheat and other crop industry farms and mixed livestock-crops farms from 1996–97 to 2016–17. Farm cash income was consistently positive in all years for both industries. Wheat and other crop industry farms had consistently higher farm cash incomes than mixed livestock-crops farm cash incomes.

Mixed livestock–crops industry

Average farm cash income for the mixed livestock–crops industry decreased in 2015–16 to $131,100 per farm, mainly as a result of lower grain prices and reduced crop production in Victoria due to dry seasonal conditions. Increases in receipts for beef cattle, lambs and wool were not sufficient to offset lower crop receipts. Total cash costs decreased, driven by reductions in expenditure on crop planting and harvesting. This was the result of reduced area and production of crops in Victoria, together with lower interest rates on farm debt.

In 2016–17 crop receipts are projected to increase due to increased winter crop production and higher receipts from beef cattle, sheep, lambs and wool. This is expected to result in an overall increase in total farm cash receipts of around 17 per cent.

Total cash costs are projected to increase by around 7 per cent, because of increased expenditure on harvesting and marketing the larger 2016–17 winter crop and despite reduced expenditure on interest and fodder.
Average farm cash income for mixed livestock–crops industry farms is projected to increase to $184,000 per farm in 2016–17, around 35 per cent above the 10-year average to 2015–16.

Sheep industry

In 2014–15 higher prices for lambs, adult sheep and wool, together with increased sales of sheep and lambs, resulted in an increase in average farm cash income for the sheep industry (Figure 8).

In 2015–16 farm cash income for sheep industry farms declined slightly due to reduced wool production to average $105,000 per farm.

In 2016–17 farm cash income for the sheep industry is projected to increase to average $133,000 per farm as a result of higher wool, lamb and sheep prices. Farm cash income will be around 70 per cent higher than the 10-year average to 2015–16 and the highest recorded in the 20 years since 1996–97 (Figure 8).

Figure 8 Farm cash income, sheep industries, Australia, 1996–97 to 2016–17
average per farm
Shows trends in farm cash income for sheep-beef industry farms and sheep farms from 1996–97 to 2016–17. Farm cash income was consistently positive in all years for both industries.

Sheep–beef industry

In 2015–16 a large increase in receipts from the sale of beef cattle, together with smaller increases in receipts from the sale of sheep, lambs and wool, resulted from higher prices for beef cattle, lambs, adult sheep and wool and despite a reduction in beef cattle turn-off. In 2014–15 beef cattle turn-off increased, particularly in regions with drier seasonal conditions in Queensland, northern New South Wales, Victoria, South Australia and Tasmania. Farm cash income for sheep–beef industry farms increased to average $182,200 per farm.

In 2016–17 farm cash income for sheep–beef industry farms is projected to increase further to average $202,000 per farm as a result of higher prices for wool, lamb, sheep and beef cattle and despite a reduction in beef cattle turn-off. If achieved, this would be around 130 per cent above the 10-year average to 2015–16 and the highest average farm cash income for sheep–beef farms in the 20 years since 1996–97.

Beef industry

Beef industry farm cash incomes increased strongly in 2014–15 as a result of increased cattle prices and the highest beef cattle turn-off in 36 years, partly as a result of dry seasonal conditions. Average farm cash income for beef industry farms is estimated to have increased from $56,000 per farm in 2013–14 to $93,490 in 2014–15 (Figure 9).

Turn-off of beef cattle for slaughter declined sharply in 2015–16 as a result of reduced numbers of saleable cattle and as some farmers commenced herd rebuilding in response to improved seasonal conditions in regions previously affected by dry seasonal conditions. Despite reduced turn-off for slaughter, further increases in saleyard prices for beef cattle (partly driven by demand from farmers restocking) resulted in increases in beef cattle receipts and total farm receipts of around 30 per cent in 2015–16. Farm cash income for beef industry farms increased to average $159,300 per farm in 2015–16.

In 2016–17 farm cash income for beef industry farms is projected to increase only slightly and average $163,000 per farm. Turn-off of beef cattle for slaughter and live export is forecast to be further reduced and offset by a small increase in beef cattle prices.

Favourable seasonal conditions in 2016–17 are expected to result in an increase in cattle numbers through higher branding rates and reduced turn-off rates, resulting in an increase in the value of inventories and a relatively larger increase in farm business profit in 2016–17 (Table 5).

Figure 9 Farm cash income, beef industry, Australia, 1996–97 to 2016–17
average per farm
Shows trends in farm cash income for beef industry farms from 1996–97 to 2016–17. Farm cash income was consistently positive in all years for beef industry farms.

Dairy industry

In 2015–16 average farm cash incomes declined in Victoria, Tasmania and South Australia, driven by a decline in average farmgate milk prices and a small reduction in milk production in Victoria and Tasmania (Table 8). Dry seasonal conditions resulted in increased fodder costs and higher milk production costs in Victoria and Tasmania. Farm cash income for Victorian dairy farms declined from an average of $152,080 per farm in 2014–15 to $105,400 in 2015–16 (Figure 10). In contrast, in Western Australia higher milk prices and an increase in milk production resulted in a rise in average farm cash income for dairy farms (Figure 11). In Queensland, higher average milk prices and a small reduction in average farm cash costs (mainly due to the exit of higher cost producers) resulted in an increase in average farm cash income. Average farm cash income increased in New South Wales as result of a slight increase in average farmgate milk prices in northern and central New South Wales.

Figure 10 Farm cash income, dairy industry farms, New South Wales and Victoria, 1996–97 to 2016–17
average per farm
Shows trends in farm cash income for New South Wales and Victorian dairy industry farms from 1996–97 to 2016–17. Farm cash income was consistently positive in all years for both states.

In 2016–17 average farmgate milk prices are forecast to increase slightly in southern dairy regions from 2015–16. However, average farm cash incomes are projected to decline further in New South Wales, Victoria and South Australia compared with 2015–16 as a result of lower milk prices paid by some processors and reduced milk production per farm. Farms are continuing to adjust to lower than expected prices compared with 2013–14 and 2014–15. Cold, wet conditions in early spring also contributed to lower milk production in southern regions.

Figure 11 Farm cash income, dairy industry farms, Western Australia and Tasmania, 1996–97 to 2016–17
average per farm
Shows trends in farm cash income for Western Australian and Tasmanian dairy industry farms from 1996–97 to 2016–17. Farm cash income was consistently positive in all years for both states.

Farm cash income for Victorian dairy farms is projected to decline to an average of $75,000 per farm in 2016–17. Average farm cash incomes in northern New South Wales, Queensland and Western Australia are projected to remain similar to those for 2015–16.

In 2016–17 farm cash receipts in all states have been boosted by sales of cull dairy cows and high prices for other dairy and beef cattle. This has partially offset lower milk receipts.

Lower fodder and feed grain prices, together with favourable seasonal conditions in spring and early summer and increased availability of irrigation water, are projected to result in lower average cash costs for dairy farms in most regions. In Tasmania, the reduction in farm cash costs is projected to be sufficient to result in a small improvement in average farm cash income for dairy farms from $133,900 per farm in 2015–16 to $140,000 per farm in 2016–17.

Overall, average farm cash income for Australian dairy farms is projected to decrease to average $105,000 per farm in 2016–17, around 12 per cent below the 10-year average to 2015–16.

References

Jackson, T & Martin, P 2014, ‘Trends in the size of Australian farms’, in Agricultural commodities: September quarter 2014, Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra.

Data and other resources

DocumentPagesFile typeFile size
Farm performance, 2014–15 to 2016–17 – TablesExcel140 KB

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Broadacre and dairy industries data
AgSurf provides a large selection of ABARES farm survey data on the broadacre and dairy industries

Beef, lamb and sheep industries data
A large selection of ABARES farm survey data on the beef, slaughter lambs and sheep industries

Farm surveys definitions and methods
Further information about our survey definitions and methods.

Previous reports
See our publications page for previous versions of the report Australian farms surveys results.

About my region
ABARES has produced a series of individual profiles of the agricultural, forestry and fisheries industries in your region. Each regional profile presents an overview of the agriculture, fisheries and forestry sectors in the region, and the recent financial performance of the broadacre and, where relevant, dairy, vegetable, and sugarcane industries.

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Last reviewed:
11 Oct 2017