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Grain farms

​​​​​​​​​​​​Industry overview

The grains industry makes an important contribution to the Australian economy. In 2015–16 production of grains, oilseeds and pulse crops accounted for around 23 per cent ($13 billion) of the total gross value of farm production (GVP) and around 24 per cent of the total value of farm export income.

Around 30 per cent of all Australian farms produced grains, oilse​eds and pulses in 2015–16 (ABS 2016).  Wheat is the most important individual crop by tonnage and value. In 2015–16 the GVP for wheat was $6.2 billion, almost half of total GVP for the grains industry. Total production of wheat in 2015–16 was around 22.3 million tonnes or 56 per cent of total grains industry tonnage.

The results below are for farms included in the Australian Agricultural and Grazing Industries (AAGIS) survey that grew at least 40 hectares of grain, oilseed or pulse crops. 

The AAGIS is funded by the Department of Agriculture and Water Resources, Meat & Livestock Australia and the Grains Research and Development Corporation (GRDC). GRDC commissioned and funded the analysis of grains industry farm performance. Data are provided at national and regional scales, with regions based on those used by GRDC—the Northern, Southern and Western regions (Map 1).

GRDC grain regions

A map showing the three Grains Research and Development Corporation regions—the Western region (south-west Western Australia); Southern region (Victoria, Tasmania and southern South Australia) and Northern region (Queensland and New South Wales).
Source: Grains Research and Development Corporation

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Farm financial performance

Authors: Aruni Weragoda and Dale Ashton

Summary

  • In 2016–17 farm cash income of grain farms is projected to be the highest in over 20 years in real terms.
  • Favourable seasonal conditions resulted in record winter crop yields and increased winter grain, oilseed and pulse production throughout most of Australia’s cropping regions.
  • Higher wheat and barley production and higher pulse prices are projected to more than offset lower prices for wheat, barley and oilseeds. This will result in slightly higher average crop receipts for grain farms.
  • Increases in major farm input costs are projected to contribute to a rise in total farm cash costs in 2016–17.
  • A projected increase in average incomes in 2016–17 follows a fall in farm cash income in 2015–16. This was driven by reduced crop production resulting from dry seasonal conditions in many parts of the Northern and Southern grain-producing regions.

​Farm cash income and profit

Grain farms are defined as farms that have at least 40 hectares of grain, oilseed or pulse crops. Average farm cash income of Australian grain industry farms fell by an estimated 4 per cent in 2015–16 to average $227,700 per farm (Table 1). Lower crop production resulted in reduced total crop receipts. This was partly offset by an increase in livestock receipts as a result of higher prices for beef cattle and lambs.

Table 1 Farm financial performance, grain farms, 2014‒15 to 2016‒17
average per farm
Performance measureUnit2014–152015–16p2016–17y
Grain farms
Total cash receipts$770,670758,700851,000
Total cash costs$532,770531,000561,000
Farm cash income$237,900227,700290,000
Farm business profit$78,570105,600139,000
Rate of return (excl. capital appreciation)%2.83.23.6
Specialist farms
Total cash receipts$981,260980,3001,083,000
Total cash costs$674,360688,600718,000
Farm cash income$306,900291,700365,000
Farm business profit$121,130158,200180,000
Rate of return (excl. capital appreciation)%3.73.94.1
Non-specialist farms
Total cash receipts$450,020488,400488,000
Total cash costs$317,180338,700363,000
Farm cash income$132,840149,700197,000
Farm business profit$13,77041,50089,000
Rate of return (excl. capital appreciation)%1.21.82.7

p Preliminary estimate. y Provisional estimate.
Note: Specialist growers are grain farms that obtained more than 50 per cent of total cash receipts from crop receipts. Non-specialist growers are grain farms that obtained less than 50 per cent of total cash receipts from crop receipts.
Source: ABARES Australian Agricultural and Grazing Industries Survey

In 2016–17 average farm cash income is projected to increase by around 27 per cent to $290,000 per farm. In real terms, the estimated average farm income for 2016–17 will be the highest in over 20 years (Figure 1).

Figure 1 Farm cash income, grain farms, Australia, 1989–90 to 2016–17
average per farm
Add alt text
y Provisional estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Farm business profit is a measure of long-term profitability. It accounts for capital depreciation, payments for family labour and changes in inventories of livestock, fodder and grain held on a farm.

In 2016–17 an increase in on-farm grain stocks in most states is expected to increase the value of farm inventories. This will result in a larger proportional increase in farm business profit than in farm cash income. Farm business profit of grain farms is projected to increase by 32 per cent to average $139,000 per farm in 2016–17 (Table 1).

As a result of strong financial performance at the national level in 2016–17, the proportion of farms recording negative farm business profit is projected to fall to 42 per cent (Figure 2). Negative farm business profit means a farm has not covered the costs of unpaid family labour or set aside funds to replace depreciating farm assets. Many farms occasionally record negative farm business profits as their incomes fluctuate. However, ongoing low or negative profits affect long-term viability because farms have reduced capacity to invest in newer and more efficient technologies. Over the 10 years to 2015–16, the proportion of grain farms recording negative farm business profits averaged 56 per cent a year.

Figure 2 Proportion of grain farms with negative farm business profit, Australia, 2000–01 to 2016–17
percentage of farms
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p Preliminary estimate. y Provisional estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Total cash receipts

In 2015–16 average total cash receipts for grain farms declined by 2 per cent to around $758,700 per farm (Table 1). This was largely driven by reduced crop production resulting from dry seasonal conditions, particularly in Victoria. A large rise in cattle and sheep prices led to increased livestock receipts, which partly offset the decline in total cash receipts.

Average total cash receipts at the national level are projected to increase in 2016–17 to around $851,000 per farm, largely driven by increased wheat, barley and oilseed production and higher pulse prices. Total crop receipts are projected to increase by around 20 per cent in the Northern region, around 36 per cent in the Southern region and around 5 per cent in the Western region.

Total cash costs

Average total cash costs of Australian grain farms are projected to increase by 6 per cent in 2016–17 (Table 1). Reduced expenditure on interest, repairs and maintenance, and hired labour is expected to partly offset increased expenditure on fertiliser, crop and pasture chemicals, and contracts paid. This will result in an increase in total farm cash costs.

When averaged over 2001–02 to 2015–16 fertiliser, crop and pasture chemicals, and repairs and maintenance were the three items accounting for the largest shares of total cash costs at the national level.

Performance of specialist and non-specialist grain growers

In 2016–17 strong increases in incomes are projected for non-specialist grain growers and specialist grain growers. Non-specialist grain growers are defined as grain farms obtaining less than 50 per cent of their total cash receipts from crop sales. Specialist grain growers are defined as grain farms obtaining more than 50 per cent of their total cash receipts from crops sale proceeds.

Average farm cash income for non-specialist grain growers is projected to increase by 31 per cent in 2016–17 (Figure 3). This includes increased cash receipts as a result of higher receipts for crops and livestock (particularly beef and lambs). Average farm cash income for specialist farms is projected to increase by around 25 per cent in 2016–17 as a result of an increase in crop receipts, particularly wheat and oilseed receipts.

Despite differences in absolute amounts, farm cash income trends from 2000–01 to 2016–17 were similar for specialist and non-specialist grain growers. Between 2000–01 and 2006–07 average incomes for specialist and non-specialist grain growers mostly declined before trending generally upward.

Figure 3 Farm cash income, by group, Australia, 2000–01 to 2016–17
average per farm
Add alt text
p Preliminary estimate. y Provisional estimate.
Note: Specialist grain growers are grain farms that obtained more than 50 per cent of total cash receipts from crop receipts. Non-specialist grain growers are grain farms that obtained less than 50 per cent of total cash receipts from crop receipts.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Performance by region

Average farm cash income rose in all three regions in 2016–17 because of higher receipts from increased crop production and livestock sales. In the Southern region, average farm cash income is projected to increase by around 57 per cent in 2016–17 to $253,000 per farm (Table 2) as a result of increased crop receipts.

Table 2 Farm financial performance, grain farms, by region, 2014‒15 to 2016‒17
average per farm
Performance measureUnit2014–152015–16p2016–17y
Northern region
Farm cash income$189,520 241,300292,000
Farm business profit$55,780 147,700151,000
Rate of return (excl. capital appreciation)%2.44.03.6
Southern region
Farm cash income$217,470 160,700253,000
Farm business profit$54,800 12,900116,000
Rate of return (excl. capital appreciation)%2.41.33.5
Western region
Farm cash income$404,730 345,500374,000
Farm business profit$186,150 203,500165,000
Rate of return (excl. capital appreciation)%4.34.53.4

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

Figure 4 shows average farm cash income for specialist and non-specialist grain growers by region. In almost all years, specialist grain growers recorded higher average farm cash incomes than non-specialist growers. Average farm cash income of specialist grain farms and non-specialist grain farms in all three regions is projected to increase in 2016–17. This is largely as a result of the rise in crop receipts resulting from increased winter grain production.

Figure 4 Farm cash income by group, by region, 2000–01 to 2016–17
average per farm
Add alt text
y Provisional estimate.
Note: Specialist grain growers are grain farms that obtained more than 50 per cent of total cash receipts from crop receipts. Non-specialist grain growers are grain farms that obtained less than 50 per cent of total cash receipts from crop receipts.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Total cash receipts

From 2000–01 to 2016–17 wheat receipts made the largest contribution to total cash receipts in the Western region (Figure 5). On average, wheat accounted for 43 per cent of total cash receipts, ranging from 31 per cent to 49 per cent over the period. Livestock enterprises (including beef cattle, sheep, lambs and wool) made the second-highest contribution at 23 per cent. However, the relative importance of livestock in the Western region has declined since 2000–01, partly due to a decline in the share of receipts from sheep and wool production. On average, barley receipts accounted for 12 per cent and oilseeds 10 per cent of total cash receipts. The oilseeds share has trended upwards, from around 4 per cent in 2000–01 to an estimated 18 per cent in 2016–17.

In the Southern region, important contributors to total receipts included wheat (30 per cent) and livestock (28 per cent) (Figure 5). Barley receipts were also significant in this region, averaging 14 per cent of total receipts. Receipts from pulses and oilseeds accounted for a further 10 per cent of total cash receipts.

Livestock receipts were the most important contributor to total cash receipts in the Northern region, averaging 38 per cent between 2000–01 and 2016–17 (Figure 5). The livestock share of total cash receipts has generally trended downwards. Wheat receipts were the second most important contributor to total receipts with an average of 24 per cent. Receipts from barley, pulses, oilseeds and grain sorghum collectively accounted for 16 per cent of total receipts.

Figure 5 Shares of total receipts, by region, 2000–01 to 2016–17
average per farm
Add alt text
y Provisional estimate.
Note: Livestock receipts include beef cattle, sheep, lambs and wool.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Total cash costs

Interest, repairs and maintenance, and fertiliser accounted for the largest shares of total cash costs in the Northern region between 2000–01 and 2015–16 (Figure 6). The other items accounting for more than 5 per cent of total cash costs in the Northern region were hired labour, contracts, crop and pasture chemicals, and fuel, oil and lubricants.

Fertiliser, crop and pasture chemicals, and repairs and maintenance accounted for the largest shares of total cash costs in the Southern region from 2000–01 to 2015–16 (Figure 6). Interest, hired labour, and fuel, oil and lubricants, each accounted for more than 5 per cent of total cash costs.

In the Western region, fertiliser was the largest cost item at 20 per cent of total cash costs, followed by crop and pasture chemicals, and interest—each accounting for about 10 per cent of total cash costs. Other items accounting for more than 5 per cent of costs were repairs and maintenance, hired labour, fuel and freight.

Figure 6 Components of total costs, grain farms, by region, 2000–01 to 2015–16
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Source: ABARES Australian Agricultural and Grazing Industries Survey

Rate of return

The average rate of return (excluding capital appreciation) for grain farms increased from 3.2per cent in 2015–16 to 3.5 per cent in 2016–17 (Figure 7). Average rate of return for specialist grain growers rose from 3.9 per cent in 2015–16 to 4.1 per cent in 2016–17. For non-specialist grain growers, the average rate of return increased from 1.8 per cent in 2015–16 to 2.7 per cent in 2016–17 (Table 1).

Figure 7 Rate of return, grain farms, Australia, 2000–01 to 2016–17
average per farm
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p Preliminary estimate. y Provisional estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Figure 8 shows that the performance of grain farms varied widely in 2015–16. In 2015–16 around 20 per cent of grain farms recorded a rate of return (excluding capital appreciation) of between –2.5 per cent and 0, while nearly one-quarter had a rate of return of between 0 and 2.5 per cent. In 2015–16, 38 per cent of grain farms had a rate of return (excluding capital appreciation) in excess of 2.5 per cent, with 8 per cent having returns of 10 per cent or more.

Figure 8 Distribution of grain farms, by rate of return, 2015–16
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Source: ABARES Australian Agricultural and Grazing Industries Survey

Variation in rates of return

The long-term performance of farm businesses is determined by the level and variability of profits. Figure 9 shows the variation in the average farm rate of return to capital (excluding capital appreciation) between 2000–01 and 2015–16. The variation in returns reflects changes over time in average seasonal conditions, commodity prices and the cost of farm inputs recorded in each region. Individual farms are likely to have experienced different variation in returns over the period, depending on seasonal conditions and commodity prices that were realised and other farm-specific factors such as enterprise mix and the skill of the manager.

The annual average rate of return for Australian grain growers was positive from 2000–01 to 2016–17 except in 2006–07, when growers were affected by widespread drought. However, average rates of return by region have been more varied between 2000–01 and 2016–17.

Figure 9 shows that grain growers in the Southern region recorded the greatest overall variation in returns between 2000–01 and 2015–16. However, very low and negative rates of return occurred no more often than in the other regions.

Figure 9 Rate of return variability, by region, 2000–01 to 2015–16
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Note: Boxes represent 50 per cent of years. Vertical lines represent the 25 per cent best and worst years. Horizontal line in each box is the median.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Farm debt and equity

Authors: Aruni Weragoda and Dale Ashton

Trends in average debt per farm

Debt is an important source of funds for farm investment and ongoing working capital for many grain farms. At the national level, from 2000–01 to 2016–17 the average debt of grain farms trended upwards in real terms, mainly resulting from an increase in average farm size rather than changes in debt composition. The increase in average debt per farm was modest relative to the increase in average cash receipts per farm (Figure 10). Since 2010–11 the annual rate of increase in average farm debt has slowed. In 2015–16 average debt of grain farms increased by 2 per cent to around $853,000 (in 2016–17 dollars). Average debt of grain farms for 2016–17 is projected to increase by a further 3 per cent.

Figure 10 Total farm debt at 30 June and total farm cash receipts, grain farms, 2000–01 to 2016–17
average per farm
Add alt text
p Preliminary estimate. y Provisional estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

In ABARES farm surveys, debt is recorded by its main purpose. However, because some loans cover a range of purposes, estimates of debt by main purpose provide a guide only.

From 2000–01 to 2015–16 borrowing to fund ongoing working capital and land purchases were the main components of average grain farm debt. Increased borrowing for ongoing working capital was a result of several factors, including increases in average farm size, more intensive cropping, changes in grain payment methods and greater use of purchased inputs to finance more intensive production technologies (Martin 2016).

Over the 3 years to 2015–16 working capital debt accounted for around 40 per cent of total farm debt and land purchases accounted for 38 per cent (Figure 11).

Figure 11 Main purpose of farm debt, grain farms, Australia, 2013–14 to 2015–16
average proportion per farm
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Source: ABARES Australian Agricultural and Grazing Industries Survey

Equity ratio

Increases in average total debt of grain farms have been largely matched by equivalent changes in total farm equity. This is a result of increases in land values and average farm area operated. As a consequence, from 2000–01 and 2015–16 the average equity ratio of grain farms fluctuated around an average of 85 per cent.

Around 53 per cent of grain farms had an equity ratio greater than 90 per cent in 2015–16. On average, these farms are relatively small and more diverse. Only 55 per cent of their total receipts are from selling grains. A further 33 per cent of grain farms had an equity ratio of 70 to 90 per cent in 2015–16. Only 14 per cent of grain farms had an equity ratio less than 70 per cent. On average, these were relatively large grain-producing farms that obtained around 72 per cent of total cash receipts from crop receipts (Table 3).

Table 3 Farm performance, by equity ratio, grain farms, Australia, 2015–16
average per farm
Equity ratioUnitMore than 90%70 to 90%Less than 70%
Proportion of farms%533314
Total area operatedha1,6812,8043,907
Total area sown to cropsha6161,1391,694
Crop receipts$292,000534,000856,000
Total cash receipts$530,000828,0001,196,000
Crop receipts as a proportion of total receipts%556472

Source: ABARES Australian Agricultural and Grazing Industries Survey

Debt-servicing capacity

The long-term viability of a farm is affected by its capacity to service debt. The servicing of debt consists of making interest payments and paying down the principal. The proportion of farm receipts spent on interest payments is a useful indicator of short-term capacity to service debt.

From 2001–02 to 2006–07 the proportion of farm receipts needed to fund interest payments rose substantially because prolonged drought conditions led to increased farm debt and reduced receipts. Since 2006–07 the ability of grain farms to service their debts has improved as a result of higher cash receipts and reduced interest rates. Over the 10 years to 2015–16 the proportion of receipts needed to pay interest averaged around 9 per cent. The proportion of farm receipts needed to fund interest payments is projected to continue to fall in 2016–17 to just under 6 per cent (Figure 12).

Figure 12 Ratio of interest paid to total cash receipts, grain farms, Australia, 2000–01 to 2016–17
average per farm
Add alt text
p Preliminary estimate. y Provisional estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

At the national level, around 39 per cent of grain farms reduced their total debt in 2015–16 (Figure 13). An estimated 38 per cent of grain farms increased their debt on average in 2015–16, and 3 per cent of farms had no change in debt. The remaining 19 per cent of farms had no debt at 1 July 2015 and 30 June 2016.

Figure 13 Distribution of farms, by change in debt, grain farms, Australia, 2015–16
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Note: Change in debt from 1 July 2015 to 30 June 2016.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Debt and equity, by region

Debt and equity of grain farms varied significantly by region, reflecting the different scale of farms, the nature of production systems and relative changes in seasonal conditions.

Figure 14 shows the average debt of grain farms in the Northern, Southern and Western regions increased at similar rates from 2000–01 to 2008–09. From 2008–09 to 2011–12 average debt in the Western region increased because of expansion in average farm sizes and greater use of working capital debt to purchase inputs such as fertiliser and chemicals.

Average debt in the Northern region fell from 2008–09 to 2012–13 as improved seasonal conditions following drought allowed farms to pay off some of their debt. In subsequent years to 2016–17 average debt per farm increased, largely as a result of increased working capital debt.

Figure 14 Total farm debt, grain farms, by region, 2000–01 to 2016–17
average per farm
Add alt text
p Preliminary estimate. y Provisional estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

From 2000–01 to 2015–16 increases in average farm debt in the Western region outweighed increases in the total value of farm capital. As a consequence, the average equity ratio trended downwards from 2000–01 to 2015–16. The equity ratio fluctuated around an average of 84 per cent for Northern region grain farms, 88 per cent for Southern region grain farms and 81 per cent for Western region grain farms (Figure 15).

Figure 15 Equity ratio, grain farms, by region, 2000–01 to 2015–16
average per farm
Add alt text
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Debt and equity, by specialist and non-specialist growers

From 2001–02 to 2016–17 the average debt of specialist grain growers increased at a faster rate than for non-specialists (Figure 16). Working capital debt represented the largest share of debt of specialist grain growers, accounting for 42 per cent of average debt. Land purchases debt represented the largest share of debt of non-specialist grain growers, accounting for 46 per cent of average debt in 2015–16.

Figure 16 Total farm debt, grain farms, by group, 2000–01 to 2016–17
average per farm
Add alt text
p Preliminary estimate. y Provisional estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Average equity ratios were lower for specialist grain growers, fluctuating around 83 per cent from 2000–01 to 2015–16. This is because specialist grain growers require increased working capital debt to service greater intensity of input use. The average equity ratio of non-specialists was steady, fluctuating around an average of 88 per cent from 2000–01 to 2015–16 (Figure 17).

Figure 17 Farm debt and equity, grain farms, by group, 2000–01 to 2015–16
average per farm
Add alt text
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Distribution of grain farms, by debt and equity

Table 4 shows the distribution of grain farms by debt and equity ratio at 30 June 2016. An estimated 22 per cent of grain farms in Australia had no debt at 30 June. A further 11 per cent held less than $100,000 in debt. An estimated 27 per cent of farms had debt in excess of $1 million. Around 53 per cent of grain farms had an equity ratio of more than 90 per cent.

Table 4 Distribution of farms, by farm business debt and equity ratio, grain farms, Australia, 30 June 2016
percentage
Equity ratio No debtLess than $100,000$100,000 to less than $250,000$250,000 to less than $500,000$500,000 to less than $1m$1m to less than $2mMore than $2mTotal
More than 90%22118641053
80 to less than 90%004454119
70 to less than 80%000135313
60 to less than 70%00002338
Less than 60%00001236
Total22111312151611100

Note: Row and column totals may not sum to 100 due to rounding.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Farm capital and investment

Authors: Aruni Weragoda and Dale Ashton

Total farm capital

From 2000–01 to 2015–16 the gross value of Australian grain production increased by around 5 per cent in real terms to an estimated $13.4 billion. Over the same period the number of grain farms declined by 26 per cent and, consequently, the gross value of production per farm increased.

Investment in farm capital is important for the ongoing development of the Australian grain industry. New and more efficient technologies are important for farm productivity, and investments in land, fixed improvements, and plant and equipment are key drivers of grain farmers’ capacity to generate farm outputs.

The total value of capital for Australian grain farms increased by 77 per cent in real terms from 2000–01 to 2015–16, although the number of grain farms declined (Figure 18). On a per farm basis, total capital more than doubled to around $5.9 million per farm in 2015–16, largely as a result of increasing average farm sizes and appreciation in land values.

Figure 18 Total value of capital and number of farms, grain farms, Australia, 2000–01 to 2015–16
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Land accounted for an average of 80 per cent of total capital per farm from 2011–12 to 2015–16 (Figure 19). Plant and equipment accounted for 13 per cent of total capital, and livestock accounted for a further 5 per cent.

Figure 19 Components of capital, grain farms, Australia, 2011–12 to 2015–16
average per farm
a The value of all inventories including herd, flock, stocks of wool, fruit and grains held on the farm at 30 June.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Return on land

ABARES uses two rates of return to farm capital—rate of return excluding capital appreciation and rate of return including capital appreciation. Rate of return is defined as farm profit expressed as a percentage of total capital. Because land is the largest component of total farm capital it plays a key role in determining changes to total farm rates of return over the medium to longer term.

Figure 20 shows the average value of land and fixed improvements per hectare. In real terms, the average value for grain farms doubled from 2000–01 to 2015–16, with an average annual return from land appreciation of 5.2 per cent. From 1990–91 to 1999–2000 the average annual return from land appreciation was 1.9 per cent before stronger demand for farmland led to sharp increases in land values. From 2000–01 to 2008–09 the average annual return from land appreciation was 9.3 per cent before declining to an average of 0.1 per cent for 2009–10 to 2015–16.

Figure 20 Value of land and fixed improvements per hectare, grain farms, Australia, 1989–90 to 2015–16
average per farm
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

New farm investment

Most farmers make new investments each year to add to the existing capital stock or to replace capital items that have reached the end of their useful life. Farm investments are usually made with longer-term outcomes in mind and based on expected returns over the life of the investment.

On average, 62 per cent of grain farms each year made additions to their total capital over the 10 years to 2015–16 (Figure 21). The average value invested each year by those making capital additions fluctuated around an average of $299,000, broadly in line with movements in farm cash incomes.

In 2015–16 an estimated 66 per cent of grain farms made capital additions at an average of $294,000 per farm.

Figure 21 Total capital additions, grain farms, Australia, 2000–01 to 2015–16
proportion of farms and average per farm
p Preliminary estimate.
Note: Total capital additions is the average of those farms making capital additions.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Figure 22 shows the proportion of grain producers that made capital additions each year from 2011–12 to 2015–16 and the average capital addition in three categories—land purchases, plant and equipment, and buildings and structures. Land is the biggest component of capital additions each year, although only 7 per cent of grain producers bought land each year on average from 2011–12 to 2015–16. Average expenditure on land for those making purchases was around $1.1 million per farm.

Around 59 per cent of all grain producers made additions to plant and equipment on average each year over the period, at an average of around $141,000 per farm. Around 7 per cent of grain producers made additions to buildings and structures. Expenditure on these capital additions averaged around $74,000 per farm.

Figure 22 Components of capital additions, grain farms, Australia, 2011–12 to 2015–16
proportion of farms and average per farm in category
Source: ABARES Australian Agricultural and Grazing Industries Survey

Farm management deposits

ABARES farm surveys record the total holdings of farm management deposits (FMDs) held by partners in the farm business (individuals sharing the farm business’s profits) at 1 July and at 30 June. Figure 23 shows the proportion of grain farms holding FMDs and the average value of FMDs held per farm. In real terms the value of FMD holdings per farm increased rapidly from 2000–01 to 2003–04 after the FMD scheme began and then remained relatively steady until 2011–12. Average value of FMD holdings per farm increased by 54 per cent from 2011–12 to 2015–16. In 2015–16 an estimated 33 per cent of grain farms held FMDs at an average value of around $300,000 per farm.

Figure 23 Farm management deposits, grain farms, Australia, 2000–01 to 2015–16
proportion of farms and average per farm
p Preliminary estimate.
Note: Value of FMDs held is the average of those farms holding FMDs.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Expressing FMDs as a percentage of total farm cash receipts or relative to total cash costs provides an indication of the capacity of FMD holdings to buffer downturns in farm income. The ratio of FMDs to total cash costs increased from 2000–01 to 2015–16, indicating increasing capacity of farms to soften short-term downturns in farm income. In 2015–16 grain farms held FMDs representing 54 per cent of their total cash costs and 34 per cent of average total cash receipts for those holding FMDs.

Farm capital and investment by region

In each grain region, trends in the total value of farm capital followed the national trend from 2000–01 to 2015–16—the total value of capital increased and the number of farms decreased.

The Northern region has more farms and higher total capital than the Southern or Western regions. From 2000–01 to 2015–16 the total value of capital of grain farms in the Northern region increased by 73 per cent (Figure 24). The region accounted for around 44 per cent of the total capital value of grain farms in 2015–16. The number of grain farms in the Northern region declined by 23 per cent from 2000–01 to 2015–16 (Figure 25).

The total capital value of grain farms in the Southern region rose by 103 per cent in real terms from 2000–01 to 2015–16. The region accounted for 36 per cent of the total capital value of Australian grain farms in 2015–16. The number of grain farms in the Southern region declined by 26 per cent from 2000–01 to 2015–16.

The number of grain farms in the Western region fell by 36 per cent but the total capital value grew by 52 per cent in real terms from 2000–01 to 2015–16. In 2015–16 the Western region accounted for 20 per cent of the total capital value of Australian grain farms.

Figure 24 Total value of capital, grain farms, by region, 2000–01 to 2015–16
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey
Figure 25 Number of grain farms, by region, 2000–01 to 2015–16
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

The average proportions of the components of capital in each region are similar to the national proportions. Land is the biggest component of total capital in all regions. Livestock is a higher proportion of total capital in the Northern region (7 per cent) (Figure 26). The Northern region has a relatively higher proportion of farms with mixed farming enterprises and fewer specialist grain growers than the Southern and Western regions.

Figure 26 Components of capital, grain farms, by region, 2011–12 to 2015–16
average per farm
a The value of all inventories including herd, flock, stocks of wool, fruit and grains held on the farm at 30 June.
Source: ABARES Australian Agricultural and Grazing Industries Survey

The average value of land for grain farms increased in all regions from 2000–01 to 2008–09. Land values in the Southern and Western regions declined from 2009–10 to 2013–14 and then increased until 2015–16. Average land values in the Northern region were relatively steady compared with other regions (Figure 27).

Figure 27 Value of land and fixed improvements per hectare, grain farms, by region, 2011–12 to 2015–16​
average per farm
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Around 5 per cent of grain farms in the Northern region purchased land on average over the 5 years ending 2015–16 (Figure 28). The average level of investment for those farms making land additions was the largest among the regions at around $1.3 million per farm. Around 9 per cent of Northern region grain farms added buildings and structures and 58 per cent added plant and equipment over the 5 years ending 2015–16.

In the Southern region around 9 per cent of grain farms on average added land, 9 per cent added buildings and structures and 60 per cent added new plant and equipment over the 5 years ending 2015–16.

An average of 9 per cent of grain farms in the Western region purchased land and 6 per cent added to buildings and structures. Around 58 per cent of grain farms invested in new plant and equipment. Average additions to plant and equipment in the Western region was $257,000, which was around double the value of the other regions. This reflects larger farm sizes in the Western region.

Figure 28 Components of capital addition, grain farms, by region, 2011–12 to 2015–16
proportion of farms and average per farm
Source: ABARES Australian Agricultural and Grazing Industries Survey

In 2015–16 an estimated 29 per cent of grain farms in the Northern region held FMDs. The average value of FMDs held per farm in the region was $283,000. Around 39 per cent of grain farms in the Southern region held FMDs in 2015–16 at an average value of $290,000 per farm. In the Western region 33 per cent of grain farms held FMDs in 2015–16 at an average of $369,000 per farm.

Farm capital and investment by specialist and non-specialist growers

Trends in farm capital are comparable between the specialist and non-specialist grain growers and both groups follow the national trend. However, some differences exist as a result of the different mix of livestock and cropping enterprises of these two groups.

The number of specialist grain growers declined by 35 per cent from 2000–01 to 2015–16 (Figure 29). Total capital value of specialist growers rose by 90 per cent and accounted for 63 per cent of total grain farm capital in 2015–16 (Figure 30). Average total capital per specialist grain farm was $6.8 million in 2015–16.

Figure 29 Number of grain farms, by group, 2000–01 to 2015–16
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

The number of non-specialist grain growers declined by 13 per cent from 2000–01 to 2015–16 (Figure 29). The total capital value of non-specialist grain growers increased by 60 per cent (Figure 30) to account for 36 per cent of total grain farm capital in 2015–16. The total value of capital of non-specialist grain growers declined from 2008–09 to 2013–14 because of lower land values, before rising in 2014–15 and 2015–16 when land values increased in response to stronger demand for farmland.

Figure 30 Total value of capital, grain farms, by group, 2000–01 to 2015–16
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Land accounted for 80 per cent of total capital of specialist grain growers from 2011–12 to 2015–16 (Figure 31). Plant and equipment accounted for a further 15 per cent of total capital and livestock accounted for 3 per cent. For non-specialist grain growers, land also accounted for 80 per cent of total capital, plant and equipment accounted for 9 per cent and livestock accounted for 10 per cent.

Figure 31 Components of capital, grain farms, by group, 2011–12 to 2015–16
average per farm
a The value of all inventories including herd, flock, stocks of wool, fruit and grains held on the farm at 30 June.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Over the 5 years to 2015–16 an estimated 64 per cent of specialist grain growers each year made new additions to capital at an average of $346,000 per farm. On average 60 per cent of non-specialist grain growers each year made capital additions from 2011–12 to 2015–16. This increased to 68 per cent in 2015–16. Those non-specialist grain growers making new additions to capital spent on average $155,000 per farm each year from 2011–12 to 2015–16.

Average spending on land was significantly greater for specialist grain growers than non-specialist growers at $1.2 million per farm from 2000–01 to 2015–16. This was a result of larger areas of land purchased on average by specialist grain growers and greater average value of land per hectare purchased (Figure 32).

Figure 32 Components of capital addition, grain farms, by group, 2011–12 to 2015–16
proportion of farms and average per farm in category
Source: ABARES Australian Agricultural and Grazing Industries Survey

Physical characteristics

Authors: Aruni Weragoda, James Frilay and Dale Ashton

In 2015–16 an estimated 25,000 Australian farms had at least 40 hectares sown to grains, oilseeds or pulses. Around 46 per cent of these farms were in the Northern region, 38 per cent in the Southern region and 16 per cent in the Western region (Map 1). From 2000–01 to 2015–16 the total number of Australian grain farms fell by around 27 per cent. In the Northern region the number of grain farms fell by 23 per cent, in the Southern region by 26 per cent and in the Western region by 36 per cent (Figure 33).

Figure 33 Number of grain farms, by region, 2000–01 to 2015–16
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Australian grain production is characterised by production of predominantly winter cereals, produced across a wide geographic area with differing climate, soil characteristics and management requirements. From 2000–01 to 2015–16 wheat accounted for 56 per cent of the area planted to grains, oilseeds and pulses, on average, followed by barley (18 per cent). In 2015–16 the share of area planted to wheat was 53 per cent and the area planted to barley was 20 per cent (Table 5).

From 2000–01 to 2015–16 the share of area planted to oilseeds trended upwards. In 2015–16 oilseeds accounted for 11 per cent of total area planted to grains, oilseeds and pulses. During the same period, the share of area sown to pulses declined overall. However, from 2014–15 the proportion of area planted to pulses increased as a result of favourable pulse prices. In 2015–16 pulses accounted for an estimated 9 per cent of total area planted.

Table 5 Physical performance, grain farms, Australia, 2015–16
average per farm

Indicator
Unit 2015–16p
Area operatedha2,450
Area sown to grains, oilseeds and pulsesha887
Number of sheep at 30 Juneno.1,700
Number of beef cattle at 30 Juneno.133
Proportion of area sown to grain crops
Wheat%53
Oats%4
Barley%20
Grain sorghum%2
Pulses%9
Oilseeds%11
Other grain crops%1
Total grain, oilseeds and pulses%100

p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Trends in physical characteristics, by region

Northern region

The Northern region includes grain farms in New South Wales and Queensland. These farms typically produce a mix of grain crops and livestock. In 2015–16 around 42 per cent of Northern region grain farms were specialist grain growers. Over the 3 years to 2015–16 around 71 per cent of Northern region grain farms planted less than 600 hectares and 5 per cent planted more than 2,400 hectares (Figure 34).

Wheat is the main crop grown by Northern region grain farms. From 2000–01 to 2015–16 wheat accounted for around 55 per cent of total grain production in the region each year. In 2015–16 these farms accounted for 38 per cent of Australian grain, oilseed and pulse production—down from 42 per cent in 2000–01. In contrast, total grain production in the Northern region in 2015–16 increased by 8 per cent (Figure 35).

Southern region

The Southern region includes grain farms in Victoria, South Australia and Tasmania. These farms typically produce a mix of grain crops and livestock. In 2015–16 around 63 per cent of Southern region grain farms were specialist grain growers. Over the 3 years to 2015–16 around 58 per cent of Southern region grain farms planted less than 600 hectares and 7 per cent planted more than 2,400 hectares.

From 2000–01 to 2015–16, on average, wheat accounted for 53 per cent of total grain production each year on Southern region grain farms and barley accounted for 31 per cent. In 2015–16 these farms accounted for 28 per cent of Australian grain, oilseed and pulse production—down from 37 per cent in 2000–01. Total grain production in the Southern region in 2015–16 decreased by 11 per cent.

Western region

The Western region includes grain farms in Western Australia. This region has fewer grain farms than the other regions, but a much higher proportion of Western region grain farms plant large areas of crops. In 2015–16 around 73 per cent of these farms were specialist grain growers. Over the 3 years to 2015–16 around 31 per cent of Western region grain farms planted more than 2,400 hectares and 33 per cent planted less than 600 hectares.

From 2000–01 to 2015–16, on average, wheat accounted for 62 per cent of total grain production on Western region grain farms each year and barley accounted for 20 per cent. From 2006–07 production of oilseeds increased, accounting for 10 per cent of total production in 2015–16. Grain farms in the Western region accounted for around 34 per cent of Australian grain, oilseed and pulse production in 2015–16—up from 21 per cent in 2000–01. Total grain production in the Western region in 2015–16 increased by 92 per cent.

Figure 34 Proportion of grain farms by area of crop, by region, average of 2013–04 to 2015–16
Source: ABARES Australian Agricultural and Grazing Industries Survey
Figure 35 Total grain, oilseed and pulse production, by region, 2000–01 to 2015–16
average per farm
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Variability in crop yields, by region

Crop yields in the Northern region are generally high because of high inherent soil fertility. However, yields vary as a result of relatively high variability in seasonal rainfall. Crop yields in the Southern region are also highly variable because the region’s soil has lower water storage capacity, making producers more dependent on seasonal rainfall. Crop yields are lower and less variable in the Western region as a result of low soil fertility and less variable seasonal rainfall.

From 2000–01 and 2015–16 the Western region recorded the lowest overall variation in wheat yields (Figure 36).

Figure 36 Variability in yield, by region, 2000–01 to 2015–16
Note: Boxes represent 50 per cent of years. Vertical lines represent the 25 per cent best and worst years. Horizontal line in each box is the median.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Over the 5 years to 2015–16 the average wheat yield per hectare was 2.2 tonnes in the Northern region, 2.1 tonnes in the Southern region and 1.7 tonnes in the Western region (Figure 37).

Figure 37 Average wheat yield, grain farms, by region, 2000–01 to 2015–16
average per farm
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

From 2000–01 to 2015–16 average grain, oilseed and pulse yields increased (Figure 38). However, the Millennium Drought had a depressing effect on average yields over the period. Average wheat yields in 2015–16 are estimated to have been 2 tonnes per hectare and barley yields 2.3 tonnes per hectare.

Figure 38 Grain, oilseed and pulses yields, grain farms, Australia, 2000–01 to 2015–16
average per farm
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Grain stocks

The level of grain stock held on farms varies with grain prices, requirements for seed and livestock feeding, marketing arrangements and timing of harvest. From 2000–01 to 2015–16 the average stock of grains, oilseeds and pulses on hand at 30 June trended upwards (Figure 39). The average stock of grain on hand per farm at 30 June 2016 was around 274 tonnes, up 51 per cent from 30 June 2015 mainly as a result of increased grain production. Of this total grain stock per farm, wheat accounted for 46 per cent and barley 31 per cent (Table 6).

Figure 39 Grain stocks at 30 June, grain farms, Australia, 2000–01 to 2015–16
average per farm
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey
Table 6 Grain stocks at 30 June, grain farms, Australia, 2014–15 to 2015–16
average per farm
Crop Unit 2014–15 2015–16p
Pulsest1215
Oilseedst68
Wheatt100127
Oatst1213
Barleyt2985
Grain sorghumt1419
All grainst182274

p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Physical characteristics by scale of grain production

From 2000–01 to 2015–16 the number of grain farms planting more than 1,200 hectares of grains trended upwards and the number of farms planting less than 1,200 hectares trended downwards (Figure 40). Larger farms are increasingly dominating total output of grains, pulses and oilseeds.

From 2000–01 to 2015–16 large grain farms significantly increased their share of production. From 2013–14 to 2015–16 around 10 per cent of grain farms, planted more than 2,400 hectares. These farms accounted for 46 per cent of production and the 60 per cent of farms planting less than 600 hectares accounted for only 15 per cent (Table 7).

Table 7 Proportion of grain farms and production, by size, 2013–14 to 2015–16
Area planted to grains, oilseeds or pulses

Proportion of farms (%)

Proportion of production (%)

Less than 600 hectares

60

15

600 to 1,200 hectares

17

17

1,200 to 2,400 hectares

13

22

More than 2,400 hectares

10

46

Source: ABARES Australian Agricultural and Grazing Industries Survey

From 2000–01 to 2015–16 the number of farms planting more than 2,400 hectares of grain increased by 108 per cent. On average, around 95 per cent of grain farms each year remained in this category from one year to the next. An estimated average of 5 per cent of farms each year increased their area planted from between 1,200 and 2,400 hectares to more than 2,400 hectares.

Figure 40 Number of grain farms, by area planted, 2000–01 to 2015–16
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Productivity

Agricultural productivity estimates are available for the cropping industry.

References

Martin, P 2016, ‘Farm performance: broadacre and dairy farms, 2013–14 to 2015–16’, Agricultural commodities: March quarter 2016, Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra.

Data and other resources

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

Previous reports
See our publications page for previous versions of the report Australian grains: financial performance of grain farms.

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

Farm performance: broadacre and dairy farms
This web report provides a detailed profile of the financial performance of farm businesses in the grains, livestock and dairy industries in the years 2014–15 to 2016–17.

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Last reviewed:
09 Nov 2017