Burgeoning bottom-lines

18 May 2017

Average farm cash incomes for Australian beef producers in 2016-17 were $204,000 per farm – the highest in over 20 years in real terms, and likely the best ever.

The latest results are according to the annual ABARES Australian Agricultural and Grazing Industries Survey, released today.

The phenomenal 2016-17 incomes were in fact a 12% rise from 2015-16, which itself was up 48% from the previous year, at an estimated $168,300 per farm.

The primary reason for the back-to-back years of exceptionally strong performance was indeed higher beef cattle prices contributing to strong increases in cash receipts.

North verses south

Segregating the southern region, average farm cash incomes ($169,000) in 2016-17 were up 90% compared to the 10 years to 2015-16 average of $89,000. The significantly lower returns during that period were largely the result of extended drought conditions.

Rising by an even greater magnitude, northern Australia’s 2016-17 cash income was up 117% from the 10 year average, at $262,000 per farm.

Business profit

Taking into account the overall business operating costs, including capital depreciation, payments for family labour and changes in inventories of livestock, fodder and grain held on farm, the results are even better. ABARES estimate that in 2016-17 a small rise in beef herds and rise in their value has resulted in farm business profit projected to be larger than the rise in farm cash income. In fact, farm business profit is estimated to be up 72% year-on-year, at $125,000 per farm.

These results actually mean that the 10 year average proportion of farms in negative profit to 2015-16 dropped from 64%, to 40%. In other words, the proportion of Australian beef producers operating in positive territory improved significantly.

Rate of Return

The improved business profit meant that average rate of return rose to 2.9%, up from 2.1% the year before, and from only 0.6% in 2014-15.

Interestingly, the northern Australia average rate of return for 2016-17 was 3.6%, compared to 2.4% in southern Australia. Highlighting the greater variability in the north, just two years earlier (2014-15), the northern rate of return was -0.1%, while southern Australia was 1%.

Full report

To view the full report on Farm Financial Performance of beef-producing farms, please click here.

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