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Beef farms

Industry overview

The beef cattle industry makes an important contribution to the Australian economy. In 2016–17 it accounted for around 20 per cent ($12.1 billion) of the total gross value of farm production and around 22 per cent of the total value of farm export income.

Around 49 per cent of all Australian farms carry beef cattle (ABS 2018), making this the most common and widely dispersed agricultural activity in Australia. Beef cattle farms are an important part of the rural economy in almost all regions of Australia. Farms running beef cattle manage more than 75 per cent of the total area of agricultural land in Australia.

The results below are for farms included in the Australian Agricultural and Grazing Industries (AAGIS) survey that had at least 100 head of beef cattle on hand at 30 June. Farm businesses with fewer than 100 head of cattle represent just 2 per cent of the national beef herd and contribute around 3 per cent to the total value of beef cattle sales.

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

MLA beef regions

Note: Northern Australia is defined as Northern Territory, Queensland and Western Australia north of the Tropic of Capricorn.
The map excludes areas of Nature conservation, Managed resource protection, Production native forests and Plantation forests based on the Land use of Australia 2010-11.

Key drivers of farm income

Farm financial performance

  • Average farm cash income of Australian beef farms increased by an estimated 5 per cent in 2017–18 to around $190,900 per farm. Increased cattle sales in 2017–18 contributed to strong increases in cash receipts of Australian beef-producing farms despite slightly lower beef cattle prices.
  • In 2018–19, average farm cash income is projected to decrease by 20 per cent because of lower beef cattle prices resulting from continuing high turn-off and increased competition in export markets.
  • Average farm cash income of beef farms in 2018–19 is projected to be the fifth highest since 1989–90 in real terms.

Detailed farm financial performance findings

Frederick Litchfield, James Frilay and Dale Ashton

Farm cash income and profit

Average farm cash income of Australian beef farms increased by an estimated 5 per cent in 2017–18 to around $190,900 per farm (Table 1). Total cash receipts rose as a result of increased cattle sales despite slightly lower prices per head. Increased receipts were partly offset by an increase in total cash costs.

In 2018–19, average farm cash income is projected to decrease by 20 per cent because of a decline in total cash receipts (Figure 1). Total cash receipts are projected to decline because of lower beef cattle prices resulting from continuing high turn off and increased competition in export markets.

Table 1 Farm financial performance, beef farms, 2016–17 to 2018–19
average per farm
Performance measure Unit 2016–17 2017–18p 2018–19y
Australia
Total cash receipts $ 502,400 565,000 521,000
Total cash costs $ 320,500 374,100 369,000
Farm cash income $ 181,900 190,900 152,000
Farm business profit $ 113,580 70,700 16,000
Rate of return a % 2.7 1.7 0.8
Northern region
Total cash receipts $ 659,900 679,100 619,000
Total cash costs $ 410,390 454,300 433,000
Farm cash income $ 249,510 224,800 186,000
Farm business profit $ 156,550 114,000 35,000
Rate of return a % 2.9 2.0 1.1
Southern region
Total cash receipts $ 433,960 510,600 462,000
Total cash costs $ 281,440 335,800 330,000
Farm cash income $ 152,530 174,800 132,000
Farm business profit $ 94,910 50,000 5,000
Rate of return a % 2.6 1.5 0.6

p Preliminary estimate. y Provisional estimate. a Excluding capital appreciation.
Source: ABARES Australian Agricultural and Grazing Industries Survey


Farm cash income in 2018–19 is projected to be 85 per cent higher than the median since 1989–90 in real terms. Despite drought conditions in parts of the Northern and Southern regions, farm cash income in 2018–19 is projected to be in the best 25 per cent of years (Figure 2).


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 farms.

In 2018–19, farm business profit is projected to decrease by 77 per cent as a result of a fall in prices for beef cattle, a rundown in the number of cattle on hand and consequent reductions in the value of livestock held per farm. Farm business profit of beef farms is projected to average $16,000 per farm in 2018–19.

Over the 10 years to 2017–18, the proportion of beef farms recording negative farm business profit averaged around 59 per cent a year (Figure 3). In 2017–18, around 50 per cent of beef farms recorded a negative farm business profit. This proportion is projected to increase to around 60 per cent in 2018–19.

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 profit when their income fluctuates. However, ongoing low or negative profit affects long-term viability because farms have reduced capacity to invest in newer and more efficient technologies.

Since 1989–90, the proportion of beef farms recording negative farm business profit was less than 50 per cent in only 2015–16 and 2016–17. On average 14 per cent of beef farms recording negative farm business profit in any given year from 2000–01 to 2017–18 have recorded a positive profit in the following year.


Total cash receipts

In 2017–18, average total cash receipts for beef farms increased by 12 per cent to around $565,000 per farm as a result of increased cash receipts for beef cattle, wool, sheep and lambs (Table 1). In 2017–18, beef cattle accounted for around 59 per cent of total cash receipts, followed by crops (around 13 per cent) and wool and sheep (each less than 10 per cent).

In 2018–19, total cash receipts are projected to decrease by around 8 per cent to $521,000 per farm as a result of lower beef cattle prices and decreased receipts from crops. Receipts from wool and sheep are projected to remain relatively unchanged because of high prices, despite reduced production. Beef cattle turn-off is projected to increase in 2018–19 as a result of continuing dry conditions in many areas. Increased turn-off will partly offset the decline in cash receipts from lower cattle prices.

Total cash costs

In 2017–18, average total cash costs of Australian beef farms increased by 17 per cent to around $374,100 per farm, mainly as a result of increased expenditure on fodder, livestock purchases and hired labour (Table 1). In 2018–19, average total cash costs are projected to fall slightly by around 1 per cent despite a projected increase in spending on fodder.

Performance by region and herd size

The financial performance of beef farms in 2018–19 varies between regions reflecting differences in exposure to drought (Figure 4). For the Northern region, when 2018–19 is compared to 2017–18 there has been a slight deterioration in seasonal conditions, reflected in the increasing proportion of farms reporting drought or below average seasonal conditions. In the Southern region, reported seasonal conditions have deteriorated compared to 2017–18, with 81 per cent of beef farms reporting below average or drought conditions in 2018–19.


Average farm cash income varies significantly between the Northern and Southern regions and by scale of operations. In 2017–18, average farm cash income decreased by 10 per cent in the Northern region to $224,800 per farm, but increased by 15 per cent in the Southern region to $174,800 per farm (Figure 5).

In the Northern region, farm cash income is projected to decrease by 17 per cent to $186,000 per farm in 2018–19. In real terms, farm cash income in the region is estimated to have averaged around $141,000 per farm from 2000–01 to 2017–18. Despite the projected fall in incomes in 2018–19 average farm cash income is expected to be the fifth highest since 1989–90.

In the Southern region, farm cash income is projected to fall by 24 per cent in 2018–19 to an average of $132,000 per farm. In real terms, average farm cash income in the region is estimated to have been around $101,000 per farm from 2000–01 to 2017–18. The lowest recorded average farm cash income over the 18 years to 2017–18 was in 2006–07 because of extended drought conditions.


Farm cash income of beef farms across all size groups–except large beef farms (1,600 to 5,400 head)—increased in 2017–18. Despite higher farm cash incomes, farm business profit is estimated to have declined for all size groups in 2017–18 (Table 2). This is because of a rundown in the number of beef cattle on hand during the year as dry seasonal conditions began to impact many beef farms.

In 2018–19, farm cash income is projected to decrease for all size groups, except for large beef farms where it is projected to increase slightly. Despite the year-on-year changes, average farm cash income for all size groups is significantly higher than the average since 2000–01 in real terms.

On average, farm cash income of very large beef farms (more than 5,400 head) increased by around 10 per cent in 2017–18, mainly as a result of increased cash receipts from sales of beef cattle, but is projected to decrease by 13 per cent in 2018–19 (Figure 6). Income of large beef farms (1,600 to 5,400 head) fell by around 25 per cent in 2017–18, mainly as a result of lower beef cattle receipts, but is projected to increase by around 6 per cent in 2018–19. Farm cash income of medium beef farms (400 to 1,600 head) remained relatively stable in 2017–18, but is projected to decrease by around 29 per cent in 2018–19 mainly as a result of higher total cash costs. Farm cash income of small beef farms increased by 13 per cent in 2017–18, as a result of increased receipts from sheep and wool, but is projected to fall by around 19 per cent in 2018–19 mainly because of lower cropping receipts.

Table 2 Farm financial performance, beef farms, by herd size, 2016–17 to 2018–19
average per farm
Performance measure Unit 2016–17 2017–18p 2018–19y
Small
(100 to 400 head)
Farm cash income $ 90,000 101,500 82,000
Farm business profit $ 22,880 –8,400 –39,000
Rate of return a % 1.2 0.3 –0.5
Medium
(400 to 1,600 head)
Farm cash income $ 208,690 211,600 151,000
Farm business profit $ 137,160 70,500 13,000
Rate of return a % 3.0 1.7 0.8
Large
(1,600 to 5,400 head)
Farm cash income $ 546,000 407,900 431,000
Farm business profit $ 404,340 328,000 205,000
Rate of return a % 3.7 2.8 1.8
Very large
(more than 5,400 head)
Farm cash income $ 1,680,580 1,852,700 1,611,000
Farm business profit $ 1,970,210 1,590,200 1,359,000
Rate of return a % 5.6 4.1 3.4

p Preliminary estimate. y Provisional estimate. a Excluding capital appreciation.
Source: ABARES Australian Agricultural and Grazing Industries Survey


Total cash receipts

In the Northern region, total cash receipts increased by around 3 per cent to $679,100 per farm in 2017–18. In the Southern region, total cash receipts increased by around 18 per cent to an estimated $510,600 per farm in 2017–18. In 2018–19, total cash receipts are projected to fall by around 9 per cent in the Northern region and around 10 per cent in the Southern region.

Both regions differ in their mix of beef cattle and other enterprises. In the Northern region, beef cattle receipts accounted for an average of 73 per cent of total receipts from 2000–01 to 2018–19. In the Southern region, beef cattle receipts accounted for an average of 45 per cent of total receipts from 2000–01 to 2018–19 (Figure 7).

In 2018–19, receipts for beef cattle and crops are projected to fall in both regions because of lower cattle prices and as drought impacts many farms (Figure 8). However, receipts from sheep and wool are projected to increase slightly because of strong prices and will provide some support to cash incomes.




Total cash costs

From 2000–01 to 2018–19 cattle purchases, interest paid, and repairs and maintenance accounted for the largest share of total cash costs in both the Northern and Southern regions (Figure 9). The major difference in average cost structure between the two regions is greater expenditure on fodder in the Northern region and greater expenditure on fertiliser in the Southern region.

In the Northern region, total cash costs rose by 11 per cent in 2017–18 and are projected to fall by around 5 per cent in 2018–19. In the Southern region, total cash costs rose by 19 per cent in 2017–18 and are projected to fall by around 2 per cent in 2018–19, despite increased expenditure on fodder and freight. Total average expenditure on crop and pasture chemicals, seed and fertiliser is projected to decrease slightly, as a result of ongoing drought conditions in parts of the Southern region.


Rate of return

The average rate of return (excluding capital appreciation) of Australian beef farms fell from 2.7 per cent in 2016–17 to 1.7 per cent in 2017–18 (Figure 10). The average rate of return is projected to decline to 0.8 per cent in 2018–19 as incomes fall because of lower beef prices and reduced crop production.


The performance of beef farms varied widely in 2017–18 and 2018–19 (Figure 11). In 2017–18, around 68 per cent of beef farms recorded a rate of return (excluding capital appreciation) greater than zero. Around 14 per cent of beef farms recorded rates of return greater than 5 per cent.

In 2018–19, 56 per cent of beef farms are projected to have a rate of return greater than zero. Around 10 per cent of beef farms are expected to have rates of return greater than 5 per cent. On average, larger beef farms had higher rates of return than smaller beef farms.


Variation in rate of return

The long-term performance of farm businesses is determined by the level and variability of profits. Variations in the rate of return reflect 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 variations in the rate of return over the period. These are a result of farm-specific factors such as seasonal conditions, prices received, enterprise mix and the skills of the manager.

Beef producers in the Northern region have generally performed better than their counterparts in the Southern region, recording higher average rates of return with similar volatility in the averages (Figure 12).

The projected rate of return in 2018–19 for both regions is within the middle 50 per cent of years.

Farm debt and equity

  • Average farm debt of Australian beef farms increased by around 16 per cent to $629,700 in 2017–18 (in real terms) and is projected to increase by a further 11 per cent in 2018–19.
  • The average equity ratio of beef farms remained steady at around 90 per cent from 2000–01 to 2017–18.

Detailed debt and equity findings

Frederick Litchfield, James Frilay 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 beef farms. At the national level, from 2000–01 to 2009–10 average debt of beef farms at 30 June rose significantly in real terms before falling in the years to 2014–15 (Figure 13). From 2016–17 to 2017–18 average debt per farm increased by around 16 per cent to $629,700, in real terms. This can largely be attributed to increased debt due to land purchases. Average debt of beef farms is projected to increase again in 2018–19 to an estimated $699,000 per farm.

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.

Over the 3 years to 2017–18, land purchases accounted for the largest proportion of total farm debt, at 51 per cent on average (Figure 14). A further 30 per cent of debt was for working capital. The remaining debt was for a range of purposes such as vehicles, machinery, buildings and structures.

Equity ratio

Changes in average debt per farm over the medium to longer term were largely matched by changes in total farm capital. As a consequence, the average equity ratio of beef farms at the national level remained steady from 2000–01 to 2017–18 at around 90 per cent.

An estimated 73 per cent of beef farms had an equity ratio greater than 90 per cent in 2017–18 (Table 3). On average, these farms were relatively small and most were in the Southern region. They focused primarily on beef cattle production, receiving a relatively high proportion of total cash receipts from sales of beef cattle. Those farms with an equity ratio of less than 70 per cent make up 5 per cent of all beef farms. These farms are relatively large and more diversified than the higher-equity farms.

Table 3 Farm performance, by equity ratio, beef farms, Australia, 2017–18
average per farm
Measure Equity ratio
Units More than 90% 70% to 90% Less than 70%
Proportion of farms % 73 21 5
Total area operated ha 5,645 11,566 13,205
Total cash receipts $ 341,600 800,200 1,180,900
Beef receipts as a proportion of total receipts % 69 50 50
Total cash costs $ 200,700 556,800 988,600
Farm cash income $ 141,000 243,400 192,400
Northern region proportion of farms % 65 27 8
Southern region proportion of farms % 77 19 4

Note: Based on preliminary estimates. Row and column totals may not sum to 100 due to rounding.
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. National short and long term interest rate data is available in the following table Australian main macroeconomic indicators.

The proportion of farm receipts needed to fund interest payments was around 6 per cent in 2017–18, below the 10–year average to 2016–17 of 9 per cent (Figure 15). In 2018–19, interest paid is projected to be around 7 per cent of total cash receipts.

At the national level, around 32 per cent of beef farms reduced their total debt in 2017–18 (Figure 16). An estimated 27 per cent of beef farms increased debt, and around 3 per cent of beef farms had no change in debt. The remaining 37 per cent of beef farms had no debt at 1 July 2017 and 30 June 2018.

Around 40 per cent of beef farms in the Northern region reduced their total debt in 2017–18, while 26 per cent increased debt. In the Southern region, 29 per cent of farms reduced debt and around 28 per cent of farms increased their total debt in 2017–18.

Nationally, there was no significant difference in the size of farms reducing debt compared with those that increased debt (Table 4). However, cash incomes were around 51 per cent higher for those reducing debt.

Table 4 Farm performance, by change in debt, beef farms, Australia, 2017–18
average per farm
Unit Reducing debt Increasing debt
Proportion of farms % 32 27
Total area operated ha 9,700 9,300
Beef receipts as a proportion of total receipts % 57 55
Total cash receipts $ 664,500 613,200
Total cash costs $ 420,700 451,500
Farm cash income $ 243,900 161,800
Equity ratio % 89 84

Note: Based on preliminary estimates.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Debt and equity, by region

Debt and equity of beef farms varied significantly by region and scale of cattle production. Beef farms in the Northern region had higher average debt and lower farm equity ratios than those in the Southern region, mainly because the Northern region had a higher proportion of large farms. Despite differences in average debt per farm, from 2000–01 to 2018–19 trends in farm debt were similar in both regions (Figure 17).

From 2000–01 to 2017–18, the average equity ratio of beef farms was similar in both regions at around 90 per cent.

Debt and equity, by size

Large farms tend to have lower equity ratios than smaller farms. This is because larger farms usually have higher turnover and are better able to service debt. Larger beef farms also often have access to non-farm equity, whereas smaller farms are mostly family-owned businesses that rely heavily on the farmer’s own capital.

From 2000–01 to 2017–18, the average debt of all size groups generally trended upwards. In 2017–18, the average debt of large (1,600 to 5,400 head) and very large (more than 5,400 head) beef farms decreased slightly (Table 5). The average debt of small (100 to 400 head) and medium (400 to 1,600 head) beef farms increased by 36 per cent and 13 per cent in 2017–18, respectively.

From 2000–01 to 2015–16, equity ratios for very large beef farms declined from 88 per cent to 79 per cent, while equity ratios for other size groups remained steady. From 2015–16 to 2017–18 however, equity ratios of very large beef farms increased back to 86 per cent. This increase in equity ratios is the result of high turn-off causing some farms to change size categories.

Table 5 Equity ratio and total farm debt, beef farms, by size, 2015–16 to 2017–18
average per farm
Size Equity ratio (%) Farm debt at 30 June ($)
2015–16 2016–17 2017–18p 2015–16 2016–17 2017–18p
Small (100 to 400 head) 92 92 91 220,510 241,920 330,000
Medium (400 to 1,600 head) 89 89 89 634,370 658,690 746,500
Large (1,600 to 5,400 head) 89 86 88 1,389,870 1,919,960 1,851,400
Very large (more than 5,400 head) 79 81 86 5,260,230 5,462,850 5,062,000

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

Distribution of farms, by debt and equity

From 2000–01 to 2018–19, small and medium beef farms accounted for most of the change in national average beef farm debt. Combined, these farms accounted for a projected 71 per cent of total beef farm debt in 2017–18.

Table 6 shows the distribution of beef farms by debt and equity ratio at 30 June 2018. An estimated 42 per cent of beef farms held no debt at 30 June 2018. A further 12 per cent of farms held less than $100,000 in debt. An estimated 15 per cent of farms had debt in excess of $1 million.

Table 6 Distribution of farms, by farm business debt and equity ratio, beef farms, Australia, 30 June 2018
Equity ratio No debt Less 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 $2m More than $2m Total
Greater than or equal to 90% 42 12 9 5 4 1 0 73
80% to less than 90% 0 0 1 3 4 2 2 13
70% to less than 80% 0 0 0 2 2 2 3 8
60% to less than 70% 0 0 0 0 0 1 1 3
Less than 60% 0 0 0 0 0 1 1 2
Total 42 12 10 10 10 7 8 100

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

Farm capital and investment

  • The total value of capital for Australian beef farms increased by around 61 per cent in real terms from 2000–01 to 2016–17, although the number of beef farms declined.
  • On average, 52 per cent of beef farms each year made additions to their total capital over the 10 years to 2016–17.

Detailed farm capital and investment findings

James Frilay and Dale Ashton

Total farm capital

From 2000–01 to 2016–17 the gross value of Australian cattle and calf production increased by around 24 per cent in real terms to an estimated $12 billion. Over the same period the number of beef farms declined by 25 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 beef 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 beef farmers’ capacity to generate farm outputs.

The total value of capital for Australian beef farms increased by around 61 per cent in real terms from 2000–01 to 2016–17, although the number of beef farms declined (Figure 18). On a per farm basis, total capital increased by 114 per cent to an estimated $6 million per farm in 2016–17, largely as a result of appreciation in land values.

Figure 18 Total value of capital and number of farms, beef farms, Australia, 2000–01 to 2016–17
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Land accounted for an average of 79 per cent of total capital per farm between 2012–13 and 2016–17 (Figure 19). Livestock accounted for a further 15 per cent of total capital, and plant and equipment accounted for about 6 per cent. From 2014–15 higher beef prices have raised the value of livestock on hand. The resulting increase in the capital value of livestock has been partly offset by falling herd sizes on average as beef producers sold cattle in response to higher prices and dry conditions in some areas.

Figure 19 Components of capital, beef farms, Australia, 2012–13 to 2016–17
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 returns over the medium to longer term.

Figure 20 shows the average value of land and fixed improvements per hectare. The average annual return from land appreciation from 2000–01 to 2016–17 was 4.9 per cent per year. From 1990–91 to 1999–2000 the average annual return from land appreciation was negative, at –0.5 per cent per year before stronger demand for farm land led to sharp increases in land values. From 2000–01 to 2006–07 the average annual return from land appreciation was 12.6 per cent per year before declining to an average of –0.5 per cent per year for 2007–08 to 2016–17.

Figure 20 Value of land and fixed improvements per hectare, beef farms, Australia, 1989–90 to 2016–17
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, 52 per cent of beef farms each year made additions to their total capital over the 10 years to 2016–17 (Figure 21). The average amount invested each year by those making capital additions fluctuated around an average of $176,000, broadly in line with movements in farm cash incomes.

In 2016–17 an estimated 59 per cent of beef farms made capital additions at an average of $210,000 per farm.

Figure 21 Total capital additions, beef farms, Australia, 2000–01 to 2016–17
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 average proportion of beef producers that made capital additions each year from 2012–13 to 2016–17 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 5 per cent of beef producers bought land each year on average between 2012–13 and 2016–17. Average expenditure on land for those making purchases was around $1.3 million per farm.

Around 52 per cent of all beef producers made additions to plant and equipment on average each year over the period, at an average of around $61,000 per farm. Around 7 per cent of beef producers made additions to buildings and structures. Expenditure on these capital additions averaged around $54,000 per farm.

Figure 22 Components of capital additions, beef farms, Australia, 2012–13 to 2016–17
proportion of farms and average per farm in category
Note: Total capital additions is the average of those farms making capital additions.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Capital and investment by region

Trends in the total value of farm capital were similar in the Northern and Southern regions from 2000–01 to 2016–17. In each region, the total value of capital increased and the number of farms decreased.

The Northern region has fewer farms but larger land area and higher capital per farm than the Southern region. In the Northern region, the total value of capital of all beef farms increased by 67 per cent in real terms from 2000–01 to 2016–17. The number of farms declined by around 15 per cent and the average capital per farm increased by 96 per cent. The Northern region accounted for 37 per cent of total Australian beef farm capital in 2000–01 and 38 per cent in 2016–17.

In the Southern region, the total value of capital of all beef farms increased by 58 per cent in real terms from 2000–01 to 2016–17. The number of farms declined by an estimated 28 per cent and average capital per farm increased by 119 per cent. The Southern region accounted for 63 per cent of total beef farm capital in 2000–01 and 62 per cent in 2016–17.

From 2012–13 to 2016–17 beef farms in the Southern region had a higher proportion of farm capital in land (81 per cent) (Figure 23). This is partly attributable to the higher average unit value of land in the Southern region, which is more than double the per hectare value in the Northern region (Figure 24), despite farms in the Northern region operating larger areas on average.

Because of the mixed nature of many beef farms in the Southern region, livestock accounted for a smaller proportion of total capital in that region than in the Northern region.

Figure 23 Components of capital additions, beef farms, by region, 2012–13 to 2016–17
average per farm
a The value of all inventories including stocks of wool and grains held on farm at 30 June.
Source: ABARES Australian Agricultural and Grazing Industries Survey
Figure 24 Value of land and fixed improvements per hectare, beef farms, by region, 2000–01 to 2016–17
average per farm
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

The proportion of beef farms making additions to total capital varies in each region from year to year depending on farm incomes, although the average over the 10 years to 2016–17 was similar in both regions.

In most years the proportion of beef farms purchasing land is higher in the Southern region than in the Northern region (Figure 25). However, average land expenditure of those making land additions in the Northern region is around double that in the Southern region as a result of the significantly larger average farm size in the Northern region.

Figure 25 Proportion of farms making land additions, beef farms, by region, 2000–01 to 2016–17
proportion of farm
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Capital and investment by farm size

Beef farms in all size groups became more capital intensive between 2000–01 and 2016–17. The average amount of labour used per farm declined over the period, which resulted in an increase in the proportion of non-land capital used per unit of labour.

Small beef farms (100–400 head) owned the largest proportion of national beef farm capital in 2016–17 (34 per cent) and made up 60 per cent of beef farms. From 2000–01 to 2016–17 the aggregate value of small beef farms rose by around 33 per cent despite a 30 per cent decline in the number of small beef farms.

Figure 26 Components of capital, beef farms, by size, 2012–13 to 2016–17
average per farm
p The value of all inventories including stocks of wool and grains held on farm at 30 June.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Medium beef farms (400–1,600 head) owned about 33 per cent of Australian beef farm capital stock in 2016–17 and made up 30 per cent of the number of beef farms. The aggregate value of capital of medium-sized beef farms rose around 55 per cent between 2000–01 and 2016–17, despite the number of farms decreasing by about 19 per cent.

The aggregate value of capital of large beef farms (1,600–5,400 head) represented 21 per cent of Australian beef farm capital in 2016–17 and these farms made up 8 per cent of Australian beef farms. The aggregate value of capital rose by about 127 per cent from 2000–01 to 2016–17, and the number of farms increased by 12 per cent.

Very large beef farms (more than 5,400 head) owned around 11 per cent of Australian beef farm capital in 2016–17 and made up 2 per cent of the total number of beef farms. The aggregate value of very large beef farm capital rose by 108 per cent from 2000–01 to 2016–17, although the number of farms fell by around 4 per cent.

Very large beef farms are generally pastorally focused and have a greater quantity of less fertile land with a lower average value per hectare than other size groups. Combined with the greater number of cattle on hand, this results in very large farms having a significantly lower proportion of total capital held in land and a greater proportion embodied in the cattle stock (Figure 26).

Physical characteristics

  • From 2000–01 to 2016–17 the total number of Australian beef farms fell by 25 per cent. Most of the decline was in the Southern region with the number of beef farms in the Northern region remaining relatively unchanged.
  • Turn-off rate (cattle sold or transferred off-farm as a percentage of the average herd size) averaged 32 per cent in northern Australia and 44 per cent in southern Australia for the 10 years between 2007‒08 and 2016‒17.

Detailed physical characteristics findings

Aruni Weragoda, James Frilay and Dale Ashton

In 2016–17 an estimated 25,000 Australian farms had at least 100 head of beef cattle at 30 June. Around 70 per cent of these farms were in the Southern region and the remaining 30 per cent were in the Northern region (Map 1).

From 2000–01 to 2016–17 the total number of Australian beef farms fell by around 25 per cent. Most of this decline was in the Southern region, where the number of beef farms fell by 28 per cent (Figure 27). The number of beef farms in the Northern region remained relatively unchanged.

Figure 27 Number of beef farms, by region, 2000–01 to 2016–17
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

In 2016–17 around 60 per cent of beef farms were classified as small (100 to 400 head), accounting for 16 per cent of the national beef herd (Table 7). Medium beef farms (400 to 1,600 head) made up 30 per cent of Australian beef farms and accounted for about 27 per cent of the beef herd. Around 8 per cent of beef farms were in the large category (1,600 to 5,400 head), accounting for 27 per cent of the beef herd. Only 2 per cent of beef farms were very large (more than 5,400 head), but they accounted for 29 per cent of the national beef herd.

Table 7 Proportions of farms and cattle, by herd size, Australia, 2016–17
Farm size Number of farms (no.) Share of farms (%) Share of beef cattle (%) Share of area operated (%)
Small (100 to 400 head) 15,100 60 16 7
Medium (400 to 1,600 head) 7,600 30 27 14
Large (1,600 to 5,400 head) 2,100 8 27 31
Very large (More than 5,400 head) 400 2 29 48
Total head 25,200 100 100 100

Note: Column totals may not sum to 100 due to rounding.
Source: ABS; ABARES Australian Agricultural and Grazing Industries Survey

Trends in physical characteristics, by region

Climate, pastures, industry infrastructure and proximity to markets differ markedly between the Northern and Southern regions and within each region. These factors have affected the development and nature of the beef industry and associated farm businesses in each region.

From 1989–90 to 2016–17 the total size of the Australian beef herd (excluding feedlots and dairy) fluctuated between around 19 million and 21 million head. Overall, in the same period the proportion of the Australian beef herd held on farms in the Northern region trended upwards slightly (Figure 28).

Figure 28 Total herd size, beef farms, by region, 1989–90 to 2016–17
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Northern region

From 2000–01 to 2016–17 the Northern region accounted for around 61 per cent of the Australian beef herd each year, on average. The Northern region beef herd varies widely from year to year depending on prevailing seasonal and market conditions. In 2014–15, following a 10-year peak in total turn-off in 2013–14, producers began rebuilding herds in response to improved seasonal conditions.

In 2016–17 around 18 per cent of Northern region beef farms had an average herd of between 1,600 and 5,400 head and 5 per cent of farms had more than 5,400 head (Figure 29). An estimated 41 per cent of Northern region beef farms had 100 to 400 head of cattle.

Figure 29 Proportion of farms in each size group, beef farms, by region, 2016–17
Source: ABARES Australian Agricultural and Grazing Industries Survey

In the Northern region, during the 2000s average stocking rates per hectare operated for beef farms increased slightly (Figure 30). In 2016–17 the average number of beef cattle per hectare operated was 11 per cent higher than in 2000–01. The average stocking rate in the Northern region includes a number of relatively smaller farms in southeast Queensland and much larger beef farms in the rest of the region.

Figure 30 Beef cattle per hectare operated, beef farms, by region, 2000–01 to 2016–17
average per farm
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Despite increases in average stocking rates, the rate of turn-off (sales and transfers off farm as a proportion of opening cattle numbers) has fluctuated from year to year and shows no apparent trend (Figure 31). Turn-off rate (cattle sold or transferred off-farm as a percentage of the average herd size) averaged 32 per cent in northern Australia for the 10 years between 2007‒08 and 2016‒17.

Figure 31 Turn-off rate, beef farms, by region, 2000–01 to 2016–17
average per farm
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Branding rates (calves branded as a percentage of cows mated) are also typically lower and more variable in the Northern region than in the Southern region, reflecting less favourable pasture conditions. Branding rates in the Northern region averaged 70 per cent over the 10 years to 2016–17.

Southern region

The total number of beef cattle in the Southern region is less variable from year to year than in the Northern region (Figure 28). More favourable pasture conditions, higher and less variable branding rates, and higher cattle growth rates in the Southern region contribute to more stable production.

In 2016–17 around 68 per cent of Southern region beef farms had between 100 and 400 head of beef cattle (Figure 29). Only 4 per cent of beef farms in the Southern region had a herd of between 1,600 and 5,400 head and less than 1 per cent had more than 5,400 head.

Average stocking rates per hectare for beef farms in the Southern region have fluctuated since the early 2000s (Figure 30). In 2016–17 the average number of beef cattle per hectare operated was 21 per cent higher than in 2000–01. Branding rates in the Southern region averaged 87 per cent over the 10 years to 2016–17.

Cost of production

  • In 2017–18, the total on-farm cost of beef production is estimated to have averaged 197 cents per kilogram live weight in the Northern region and 233 cents in the Southern region.
  • There is estimated to have been little change in the cost of beef production in both the Northern and Southern regions between 2016–17 and 2017–18.
  • Higher prices for beef cattle resulted in an increase in operating margins in the Southern region in 2016–17.
  • Reduced prices received for beef cattle sold in 2017–18 resulted in a decline in operating margins in both the Northern and Southern regions.
  • Total on-farm production costs per kilogram decline in both the Southern and Northern regions as herd size increases.
  • Small beef farms (with less than 400 beef cattle) generally covered their cash operating costs, finance costs and depreciation. However, most did not cover the value of unpaid owner–manager, partner and family labour, over the three years to 2017–18.

Detailed cost of production findings

Peter Martin

Cost of beef production

Higher prices for beef cattle in 2015–16 led to increased cashflow. In response, producers in both the Northern and Southern regions increased expenditure on farm inputs. In particular, large increases were recorded in expenditure on repairs and maintenance, hired labour and contracts.

In 2016–17, there was a small decrease in the total on-farm per kilogram live weight cost of beef production in the Southern region and a slightly larger reduction in the Northern region. These changes reflected reduced expenditure on fodder and hired labour from high expenditure in 2015–16, together with a small reduction in total labour input.

In 2017–18, little change was recorded in the average per kilogram live weight cost of beef production in both the Northern and Southern region (Table 8). In the Southern region expenditure on fodder increased (by 10 cents per kg live weight) as a result of the onset of dry seasonal conditions in some regions and higher fodder prices. However, averaged across all Southern region beef farms, this increase was mostly offset by reduced expenditure on repairs and maintenance, fertiliser, interest payments and slightly reduced labour input compared to 2016–17. In the Northern region, expenditure on fodder also increased but by less than in the Southern region and expenditure on purchases of beef cattle increased. These increases in the Northern region were offset by a reduction in expenditure on repairs and maintenance and depreciation from high expenditure in 2015–16 and 2016–17, together with a small reduction in total labour input (Figure 32).

Table 8 Per kilogram live weight cost of beef production and operating margins for beef cattle–producing farms, 2015–16 to 2017–18
average per farm
Production and price unit Southern region Northern region
2015-16 2016-17 2017-18p 2015-16 2016-17p 2017-18p
Total live weight of cattle produced tonnes 78 (5) 79 (7) 86 (7) 182 (5) 210 (6) 226 (5)
Average price received c/kg 266 (2) 294 (3) 253 (2) 274 (3) 268 (2) 244 (2)
Production costs
Total cash costs excluding finance costs c/kg 151 (3) 151 (5) 159 (4) 143 (4) 138 (4) 138 (3)
Total cash costs including finance costs c/kg 163 (3) 163 (5) 170 (4) 160 (4) 152 (4) 152 (3)
Total cash, finance and depreciation costs c/kg 185 (3) 183 (5) 190 (4) 180 (4) 171 (4) 170 (3)
Total costs (all cash costs, finance, depreciation and the value of unpaid labour) c/kg 231 (3) 229 (5) 233 (3) 213 (3) 199 (4) 197 (3)
Operating margin over
Cash costs c/kg 115 (5) 143 (5) 95 (6) 130 (7) 130 (6) 106 115
Cash and finance costs c/kg 104 (5) 131 (6) 84 (7) 114 (8) 116 (6) 93 104
Cash, finance and depreciation costs c/kg 81 (7) 111 (7) 63 (10) 94 (10) 97 (8) 75 81
All costs including unpaid labour costs c/kg 35 (19) 66 (15) 20 (37) 60 (16) 69 (11) 47 35

Note: Figures in parentheses are standard errors expressed as a percentage of the estimate. Estimates have been rounded to the nearest whole number and are presented in 2018–19 dollars. Cash costs include all expenditure on materials, interest, rent, services and labour such as fodder, rates, irrigation water, fuel, fertiliser, accountancy, electricity, veterinary chemicals and repairs incurred in the production of farm income. Cash costs do not include expenditure on items of farm capital such as purchase of vehicles, machinery, land, structures or improvements or value of labour and other inputs where no direct cash expenditure is made.
Source: ABARES Australian Agricultural and Grazing Industries Surveyy

Box 1 Calculation of the per kilogram live weight cost of beef production

The Australian Agricultural and Grazing Industries Survey of Australian broadacre farms collects detailed financial, physical and production data. ABARES included additional questions in the 2007–08, 2008–09 and 2012–13 to 2017–18 surveys so it could calculate the per kilogram live weight cost of beef cattle and sheep production. These additional questions covered the live weight of cattle, calves, sheep and lambs sold or transferred off-farm and the proportion of key variable costs attributable to beef, sheep and cropping enterprises on mixed enterprise farms. Key variable costs included crop and pasture chemicals, fertiliser, fodder, fuel, repairs and maintenance, contracts paid, veterinary and livestock materials, and hired and family labour.

Fixed (overhead) costs such as accountancy, telephone, insurance and capital depreciation were attributed to enterprises on the basis of their share of total farm cash receipts.

ABARES calculated total live weight of beef production as the total live weight sold and transferred off-farm, adjusting for changes in total live weight of the herd at the beginning and end of each financial year. Total live weight of the herd at the beginning and end of each financial year was calculated by applying average live weights to the categories of cattle on hand (calves, heifers, cows, bulls and steers) at the beginning and end of each financial year.

Per kilogram live weight costs of production were calculated by dividing the beef enterprise share of costs by the total live weight of beef produced.

The on-farm costs of beef production vary across farm businesses depending on herd size, the farm’s location, the quality of farm management and climatic and other production conditions during the year.

In the short term, to continue operating an enterprise, farm businesses need to generate only sufficient receipts to cover cash operating costs. This enables them to avoid drawing on receipts from other enterprises or borrowing or using financial assets to cover cash shortfalls.

Over a longer period, farm businesses need to replace farm capital (such as vehicles, machinery, plant, sheds and fencing) to maintain productivity as capital wears out. This cost is mostly captured in capital depreciation, but repairs and maintenance included in cash costs also include replacement and upgrading of some farm capital. Farms often vary their expenditure on capital items depending on need, available cash flow and access to finance. In some years farms invest more than the calculated depreciation and in other years much less. A farm business that continually invests less than the calculated depreciation will lose production capacity over the medium to long term.

ABARES includes the value of unpaid labour in its measurement of farm financial performance. In 2017–18 more than 95 per cent of Australian beef cattle–producing farms were family operated. Family-operated farms use a large amount of owner–manager, partner and family labour. These farms generally do not pay wages or salaries to family and partners who provide labour for the farm’s operation. Valuation of this labour input enables ABARES to compare the performance of all farm businesses equally regardless of the (paid or unpaid) labour arrangements in place. Valuation of unpaid labour also captures the requirement for the farm’s operators to receive a fair return for their labour input. ABARES values unpaid labour inputs at standard industry award wage rates.

Over the three years to 2017–18, on average, the smallest herd size producers had much higher cash costs of production per kilogram live weight produced than farms with larger herd sizes (Table 9, Table 10, Figure 33). On average, these small herd size farms had higher fixed (overhead) cash costs and higher variable costs per kilogram live weight produced.

Table 9 Per kilogram live weight cost of beef production and operating margins for beef cattle–producing farms, by herd size, Northern region, 2015–16 to 2017–18
average per farm
Production and price unit 100 to 400 head 400 to 1,600 head 1,600 to 5,400 head more than 5,400 head average
Total live weight of cattle produced tonnes 35 (5) 117 (3) 369 (3) 1975 (4) 206 (2)
Average price received c/kg 265 (3) 268 (2) 293 (3) 236 (2) 261 (1)
Production costs
Cattle purchases c/kg 40 (15) 27 (11) 28 (9) 34 (9) 31 (5)
Repairs and maintenance c/kg 30 (8) 22 (5) 21 (5) 12 (5) 18 (3)
Fodder c/kg 19 (11) 16 (7) 15 (7) 10 (6) 13 (4)
Hired labour c/kg 2 (27) 4 (16) 8 (8) 16 (4) 10 (4)
Fuel and lubricants c/kg 16 (7) 10 (5) 9 (4) 8 (4) 9 (2)
Freight c/kg 5 (11) 6 (5) 9 (4) 11 (5) 9 (3)
Contracts paid c/kg 6 (17) 6 (11) 9 (9) 7 (6) 7 (5)
Administration c/kg 13 (9) 8 (6) 6 (5) 5 (10) 7 (4)
Rates c/kg 12 (7) 7 (8) 5 (9) 3 (5) 5 (4)
Livestock materials and veterinary chemicals c/kg 7 (9) 5 (7) 5 (7) 4 (10) 5 (5)
Handling and marketing c/kg 4 (14) 5 (7) 4 (7) 4 (8) 4 (4)
Land rent c/kg 3 (25) 4 (13) 3 (18) 2 (9) 3 (8)
Crop and pasture chemicals c/kg 2 (19) 1 (24) 1 (24) 0 (26) 1 (13)
Fertiliser c/kg 3 (15) 1 (25) 1 (37) 0 (23) 1 (15)
Other cash costs c/kg 30 (6) 21 (6) 18 (5) 11 (10) 16 (4)
Finance costs c/kg 13 (13) 19 (8) 20 (8) 9 (12) 15 (5)
Capital depreciation c/kg 36 (6) 28 (4) 21 (4) 9 (3) 19 (2)
Value of unpaid owner-manager, partner and family labour c/kg 130 (6) 53 (3) 25 (4) 4 (6) 30 (3)
Total cash costs excluding finance c/kg 190 (5) 145 (4) 143 (3) 126 (3) 140 190
Total cash costs including finance costs c/kg 203 (5) 163 (4) 163 (3) 136 (3) 154 203
Total cash, finance and depreciation costs c/kg 239 (5) 191 (3) 185 (3) 145 (3) 173 239
Total costs (all cash costs, finance, depreciation and the value of unpaid labour) c/kg 369 (4) 245 (3) 210 (3) 149 (3) 203 369
Operating margin over
Cash costs c/kg 75 (9) 123 (5) 150 (6) 109 (5) 122 (3)
Cash and finance costs c/kg 62 (12) 104 (7) 130 (7) 100 (6) 107 (4)
Cash, finance and depreciation costs c/kg 26 (32) 77 (10) 109 (9) 91 (6) 88 (5)
All costs including unpaid labour costs c/kg -104 (11) 23 (32) 84 (11) 86 (6) 58 (7)

Note: Figures in parentheses are standard errors expressed as a percentage of the estimate. Estimates have been rounded to the nearest whole number and are presented in 2018–19 dollars. Cash costs include all expenditure on materials, interest, rent, services and labour such as fodder, rates, irrigation water, fuel, fertiliser, accountancy, electricity, veterinary chemicals and repairs incurred in the production of farm income. Cash costs do not include expenditure on items of farm capital such as purchase of vehicles, machinery, land, structures or improvements or value of labour and other inputs where no direct cash expenditure is made.
Source: ABARES Australian Agricultural and Grazing Industries Survey

On average, over the three years to 2017–18 producers in all herd size categories in the Northern and Southern regions covered cash costs of production. However, producers in both regions with fewer than 400 head of cattle, on average, did not fully cover all costs including the value of unpaid labour. The value of unpaid labour substantially adds to estimated total beef production costs, particularly for small herd size producers. On average, the total cost per kilogram live weight produced for farms with fewer than 400 head of beef cattle in both the Southern and Northern regions is estimated over the three years to 2016–17 to have been above the price received per kilogram of beef live weight sold.

Table 10 Per kilogram live weight cost of beef production and operating margins for beef cattle–producing farms, by herd size, Southern region, 2015–16 to 2017–18
average per farm
Production and price unit 100 to 200 head 200 to 400 head 400 to 800 head More than 800 head average
Total live weight of cattle produced tonnes 26 (4) 58 (4) 119 (4) 331 (4) 81 (2)
Average price received c/kg 260 (2) 271 (2) 266 (2) 276 (2) 270 (1)
Production cost
Cattle purchases c/kg 35 (11) 39 (13) 28 (19) 38 (12) 35 (7)
Repairs and maintenance c/kg 25 (9) 19 (9) 14 (6) 14 (6) 17 (4)
Fertiliser c/kg 11 (14) 12 (10) 12 (9) 13 (6) 12 (4)
Fodder c/kg 14 (13) 11 (14) 15 (14) 9 (12) 12 (7)
Rates c/kg 14 (7) 11 (6) 7 (7) 5 (5) 8 (3)
Fuel and lubricants c/kg 3 (21) 3 (19) 7 (18) 11 (8) 7 (7)
Hired labour c/kg 11 (9) 9 (7) 7 (5) 5 (6) 7 (3)
Administration c/kg 12 (9) 7 (6) 7 (8) 5 (5) 7 (4)
Handling and marketing c/kg 7 (11) 6 (12) 7 (10) 7 (6) 7 (5)
Livestock materials and veterinary chemicals c/kg 9 (8) 6 (8) 6 (8) 5 (5) 6 (4)
Freight c/kg 5 (8) 5 (7) 5 (7) 6 (6) 5 (4)
Contracts paid c/kg 6 (21) 4 (13) 4 (15) 6 (11) 5 (7)
Land rent c/kg 3 (15) 3 (23) 2 (23) 3 (13) 3 (9)
Crop and pasture chemicals c/kg 3 (18) 3 (14) 2 (16) 2 (10) 2 (7)
Other cash costs c/kg 27 (4) 19 (5) 20 (7) 18 (6) 20 (3)
Finance costs c/kg 8 (11) 10 (15) 11 (12) 13 (9) 11 (6)
Capital depreciation c/kg 35 (6) 28 (5) 20 (4) 14 (4) 21 (3)
Value of unpaid owner-manager, partner and family labour c/kg 91 (5) 73 (6) 41 (6) 16 (6) 45 (3)
Total cash costs excluding finance costs c/kg 185 (4) 158 (3) 143 (5) 147 (4) 154 (2)
Total cash costs including finance costs c/kg 193 (4) 168 (3) 154 (5) 161 (4) 165 (2)
Total cash, finance and depreciation costs c/kg 228 (4) 196 (3) 174 (4) 174 (4) 186 (2)
Total costs (all cash costs, finance, depreciation and the value of unpaid labour) c/kg 319 (4) 268 (3) 215 (4) 191 (3) 231 (2)
Operating margin over
Cash costs c/kg 75 (11) 114 (5) 123 (5) 129 (4) 117 (3)
Cash and finance costs c/kg 67 (12) 104 (6) 112 (6) 116 (5) 105 (3)
Cash, finance and depreciation costs c/kg 32 (27) 76 (8) 92 (7) 102 (6) 84 (4)
All costs including unpaid labour costs c/kg -59 (18) 3 (237) 51 (15) 86 (7) 39 (10)

Note: Figures in parentheses are standard errors expressed as a percentage of the estimate. Estimates have been rounded to the nearest whole number and are presented in 2018–19 dollars. Cash costs include all expenditure on materials, interest, rent, services and labour such as fodder, rates, irrigation water, fuel, fertiliser, accountancy, electricity, veterinary chemicals and repairs incurred in the production of farm income. Cash costs do not include expenditure on items of farm capital such as purchase of vehicles, machinery, land, structures or improvements or value of labour and other inputs where no direct cash expenditure is made.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Many small herd size farms use income from other farm enterprises and off-farm sources to help meet operator living expenses. Small herd size producers, particularly small specialist beef producers (farms deriving more than 50 per cent of their farm receipts from sales of beef cattle) with no other farm enterprise, have high per kilogram production costs. Unpaid labour costs are particularly high for these farms. Also, fixed costs – including the running costs of farm vehicles and plant and machinery, shire rates, maintenance and insurance of farm buildings, improvements and any included household expenditure – are spread over relatively little output.

For larger herd size farms (those with more than 400 head of beef cattle), the price received for beef cattle was, on average, sufficient to cover all costs of production including the value of unpaid labour (Figure 33).

The average price received per kilogram of beef was slightly lower for the largest herd size farms in the Northern region (Figure 33). This partly reflects the impact of dry seasonal conditions in parts of the northern region between 2013–14 and 2016–17, together with a higher proportion of younger cattle turned off for live export and or transferred to other farms for finishing.

In the southern region, between 2015–16 and 2017–18 the average price received per kilogram of beef produced increased slightly with herd size (Figure 33). This may indicate that farms with larger herd sizes in the southern region produced better quality or better finished beef cattle during this period.

This suggests that beef production in the Northern and Southern regions exhibits economies of size. The results show the average cost of production declines consistently with increased herd size.

Over the three years to 2017–18, total costs of production averaged 203 cents per kilogram live weight in the Northern region (Table 9) and 231 cents in Southern region (Table 10).

Regional differences in average costs of beef production partly reflect the distribution of farms by herd size. Victoria has the highest proportion of small herd size farms (Martin 2015) and the highest average total cost of production, at 247 cents per kilogram for the three years to 2017–18 (Table 11). In contrast, the Northern Territory has a high proportion of very large herd sizes and the lowest total cost of production, at 141 cents per kilogram. A higher proportion of cattle in the Northern Territory were turned off for live export. Costs of production for cattle sold for live export are generally lower. This is because cattle are sold for live export at a younger age and at lighter weights than they are for domestic slaughter (Gleeson, Martin & Mifsud 2012).

Table 11 Per kilogram live weight cost of production and operating margins for beef cattle–producing farms, by state and territory, 2015–16 to 2017–18
average per farm
Production and price unit New South Wales Victoria Queensland South Australia Western Australia Tasmania Northern Territory
Total live weight of cattle produced tonnes 81 (4) 68 (5) 173 (3) 87 (13) 144 (6) 116 (7) 1454 (7)
Average price received c/kg 287 (2) 259 (2) 268 (2) 253 (5) 237 (3) 258 (3) 229 (4)
Production costs
Total cash costs excluding finance costs c/kg 163 (3) 153 (5) 142 (2) 138 (6) 131 (5) 154 (4) 122 (5)
Total cash costs including finance costs c/kg 178 (3) 160 (4) 159 (2) 144 (6) 138 (5) 164 (4) 127 (5)
Total cash, finance and depreciation costs c/kg 198 (3) 185 (4) 180 (2) 163 (6) 157 (5) 182 (4) 137 (5)
Total costs (all cash costs, finance, depreciation and the value of unpaid labour) c/kg 241 (2) 247 (4) 215 (2) 194 (7) 183 (4) 218 (4) 141 (4)
Operating margin over
Cash costs c/kg 124 (4) 106 (6) 126 (4) 115 (9) 106 (7) 104 (6) 108 (7)
Cash and finance costs c/kg 109 (5) 98 (7) 109 (5) 109 (10) 99 (7) 94 (7) 102 (7)
Cash, finance and depreciation costs c/kg 89 (6) 74 (10) 88 (6) 90 (12) 80 (9) 76 (9) 93 (7)
All costs including unpaid labour costs c/kg 46 (12) 12 (82) 53 (10) 59 (19) 54 (15) 40 (17) 88 (8)

Note: Figures in parentheses are standard errors expressed as a percentage of the estimate. Estimates have been rounded to the nearest whole number and are presented in 2018–19 dollars. Cash costs include all expenditure on materials, interest, rent, services and labour such as fodder, rates, irrigation water, fuel, fertiliser, accountancy, electricity, veterinary chemicals and repairs incurred in the production of farm income. Cash costs do not include expenditure on items of farm capital such as purchase of vehicles, machinery, land, structures or improvements or value of labour and other inputs where no direct cash expenditure is made.
Source: ABARES Australian Agricultural and Grazing Industries Survey

The total cost of beef production for Queensland was relatively high, averaging 215 cents per kilogram for the three years ending 2017–18. Several factors contributed to relatively high production costs in Queensland during this period:

  • Queensland has a large proportion of relatively small beef herd farms, particularly near coastal and cropping areas. Many of the small farms have high cash costs relative to the quantity of beef they produce.
  • A high proportion of Queensland beef producers experienced dry seasonal conditions between 2015–16 and 2017–18. This resulted in increased cash costs, particularly for fodder and freight.
  • Many beef farms in Queensland have relatively high debt levels. Finance costs (interest payments on debt) accounted for 8 per cent of the total costs of beef production in Queensland (or 17 cents per kilogram), averaged over the three years from 2015–16 to 2017–18. This proportion was higher than all other states and the Northern Territory.

Operating margins

The average operating margin for beef cattle producers in the Southern region increased significantly between 2015–16 and 2016–17 due to higher average prices received for cattle (Figure 34 and Table 8). In the Northern region there was a modest increase in operating margins in 2016-17 compared with the previous year due to a decline in costs (largely fodder, repairs and maintenance, and labour costs). Average cattle prices in the Northern region were largely unchanged in 2016-17, with dry seasonal conditions in 2017 resulting in an increase in turn-off of unfinished cattle.

In 2017–18 average prices received for beef cattle declined as turn-off of more unfinished cattle resulted in reduced operating margins in both regions. The reduction in prices received was larger in the Southern region due to the onset of dry seasonal conditions, resulting in a larger decline in operating margins compared to the north. Operating margins declined to average 47 and 20 cents per kilogram live weight for the Northern and Southern regions respectively.

Productivity

Agricultural productivity estimates are available for the beef industry.

References

ABS 2018, Agricultural commodities, Australia, 2016‒2017, cat. no. 3235.0 Australian Bureau of Statistics, Canberra, accessed 10 January 2019.

Gleeson, T, Martin, P & Mifsud, C 2012, Northern Australian beef industry: assessment of risks and opportunities, ABARES report to client for the Northern Australia Ministerial Forum, Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra.

Martin, P 2013, ‘Farm debt: farm level analysis’, Agricultural commodities: September quarter 2013, Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra.

Martin, P 2015, Australian beef: financial performance of beef cattle producing farms, 2012–13 to 2014–15, ABARES research report prepared for Meat & Livestock Australia, Canberra, August.

Data and other resources

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

Previous reports

Australian beef: financial performance of beef farms, 2015‒2016 to 2017‒2018

See our publications page for previous versions of the report Australian beef: financial performance of beef 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 2016–17 to 2018–19.

Last reviewed:
20 Jun 2019