The most recent survey of farm cash income for broadacre farms nationally has shown an average of $216,000 per farm, the highest recorded in the past 20 years.
Much of this has been due to record winter grain production in most regions, but add to these high prices for beef cattle and good sheep, lamb and wool prices. All drivers of the perfect factors behind the record broadacre farm cash incomes result for the 2016–2017 season.
For broadacre farms higher average farm cash income from last season 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 NSW, Vic, SA and Tas in 2015–16.
However on the flip side farm cash income for dairy farms has declined by 16 per cent nationally. The average is now only $105,000 per farm in 2016–2017, reflecting lower milk production and continued low farm gate milk prices.
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.
When you look at just who fared best, first prize goes to Wheat and other crops. Growers recorded the highest average rate of return excluding capital appreciation in 2016–17 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. Farm cash income for Growers is around 70 per cent higher than the 10-year average to 2016–17 and the highest recorded in the past 20 years.
Compare this to the average farm cash income for mixed livestock and cropping farms. In 2016–17 with crop receipts increased due to higher winter crop production and higher receipts from beef cattle, sheep, lambs and wool. Together this result is an overall increase in total farm cash receipts of around 17 per cent for mixed livestock and cropping farms.
Mark the average farm cash income for mixed livestock and cropping farms at $184,000 per farm in 2016–17, around 35 per cent above the 10-year average to 2015–16.
For the sheep industry, in 2015–16 farm cash income declined slightly due to reduced wool production to average $105,000 per farm.
But for season 2016–17 farm cash income for the sheep industry increased 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.
Farm cash income for sheep–beef industry farms was already healthy in 2015–16 with 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 2016–17 farm cash income for sheep–beef industry farms increased 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. This is 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 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 in 2014–15 was $93,490.
And 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 2016–17 farm cash income for beef industry farms continued this increase, albeit only slightly to average $163,000 per farm. But add to this favourable seasonal conditions in 2016–17 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 still to come.
The hardest working farmers in Australia, Dairy farmers, took a caning in 2015–16 when 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.
Dry seasonal conditions also 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.
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. 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.
In 2016–17 average farmgate milk prices increased slightly in southern dairy regions from 2015–16. However, average farm cash incomes declined 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.
Farm cash income for Victorian dairy farms declined to an average of $75,000 per farm in 2016–17. Average farm cash incomes in northern New South Wales, Queensland and Western Australia 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 has decreased to average $105,000 per farm in 2016–17, around 11 per cent below the 10-year average to 2015–16.