Beef farm income reaches 20-year high
13 June 2018
In 2016–17 and 2017–18, farm cash incomes for Australian beef producers are estimated to be the highest in over two decades (in real terms).
The average farm cash income in 2016–17 was estimated to have increased 4% year-on-year, to $188,800 per farm, according to data collected from the ABARES Australian Agricultural and Grazing Industries Survey (AAGIS). Cash receipts for beef farms were up 7% over the same period – to be the highest average for beef farmers since 2006-07 (in real terms), underpinned by high livestock prices and above-average crop production. However, increased receipts were somewhat offset by an increase in costs, associated mostly with greater expenditure on hired labour and livestock purchases.
For 2017–18, the average farm cash income is projected to rise 3%, to be the highest in more than 20 years, as total cash costs are anticipated to decrease by a greater extent than cash receipts. Even though more cattle were turned off, lower cattle prices have seen total cash receipts reduce. ABARES is projecting the drop to be 11% in 2017–18, down to $461,000 per farm.
After rising to record highs in 2016–17, farm business profit is projected to decrease by 3% in 2017–18, as cattle prices decline and the value of livestock on hand follows suit. Despite the decline, it is still predicted to be the second highest year in the past two decades (in real terms), at an average of $113,000 per farm. In 2017–18, beef farms recording negative business profits is projected to average 44%, well down on the ten-year average of 61%.
North vs South
The average farm cash income varies greatly between northern and southern Australia, and by scale operation (herd size). Increases in financial performance have been more prevalent in northern regions as, on average, the larger average farm size has allowed producers to make the most of price rises.
In 2016-17, the average farm cash income for beef farms in the northern region was $248,500 and $163,000 per farm in the southern region. In 2017-18, late seasonal rain gave the northern sector a boost ahead of their southern counterparts. The southern region has experienced the more severe of the weather conditions with farm cash income projected to fall by 4% in 2017-18, to $157,000 – still 60% higher than the average farm income since 2001 (in real terms).
While the Eastern Young Cattle Indicator (EYCI) has reached its lowest point since 2015, it is still higher than anything prior to that. There is, however, no great outlook for conditions to improve with long range climatic outlooks forecasting higher than average temperatures combined with less than a 50% chance of above average rainfall for most of the country with the exception of Tasmania.
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