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Grain farms

Industry overview

The grains industry makes an important contribution to the Australian economy. In 2016–17 production of grains, oilseeds and pulse crops accounted for around 27 per cent ($17 billion) of the total gross value of farm production (GVP) and around 27 per cent of the total value of farm export income.

Around 27 per cent of all Australian farms produced grains, oilseeds and pulses in 2016–17. Wheat is the most important individual crop by tonnage and value. In 2016–17 the GVP for wheat was $7.4 billion, around 44 per cent of total GVP for the grains industry. Total production of wheat in 2016–17 was around 31.8 million tonnes or 53 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

Key drivers of farm income

Farm financial performance

  • In 2018–19, the dominant influence on the financial performance of grain farms is drought in much of south-eastern Australia. Average farm cash income in 2018–19 is projected to fall by around 18 per cent to $237,000 per farm despite high grain prices.
  • The projected decline in average farm cash income at the national level in 2018–19 is not as large as in previous droughts because the current drought is directly impacting fewer cropping regions.
  • For grain farms in drought-affected regions, farm incomes are projected to be substantially lower in 2018–19 due to reduced crop plantings and lower yields.

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Detailed farm financial performance findings

Frederick Litchfield, Aruni Weragoda and Dale Ashton

Farm cash income and profit

In 2018–19, the dominant influence on the financial performance of grain farms is drought in much of south-eastern Australia. Despite high grain prices, average farm cash income in 2018–19 is projected to fall by around 18 per cent to $237,000 per farm (Table 1). This follows an increase in average farm cash income of around 2 per cent in 2017–18. Higher prices offset reduced crop yields and lower grain production in that year.

The projected decline in average farm cash income at the national level in 2018–19 is not as significant as in previous droughts because the current drought is directly impacting fewer cropping regions. However, for cropping farms in drought-affected regions, farm incomes are projected to be substantially lower in 2018–19 due to reduced crop plantings and lower yields. In other regions, high prices for most grain, oilseed and grain legume crops are helping to keep incomes for grain farms at historically high levels.

Table 1 Farm financial performance, grain farms, 2016–17 to 2018–19
average per farm
Performance measure Unit 2016–17 2017–18p 2018–19y
Australia
Total cash receipts $ 825,170 869,500 801,000
Total cash costs $ 540,880 580,800 563,000
Farm cash income $ 284,290 288,700 237,000
Farm business profit $ 186,900 99,800 55,000
Rate of return a % 4.6 2.6 1.8
Specialist grain farms
Total cash receipts $ 1,188,270 1,130,300 1,030,000
Total cash costs $ 781,950 758,400 729,000
Farm cash income $ 406,320 371,900 301,000
Farm business profit $ 292,270 137,100 98,000
Rate of return a % 5.8 3.2 2.5
Non-specialist grain farms
Total cash receipts $ 469,070 590,700 543,000
Total cash costs $ 304,460 390,900 377,000
Farm cash income $ 164,620 199,800 166,000
Farm business profit $ 83,560 59,900 7,000
Rate of return a % 2.7 1.8 0.8

p Preliminary estimate. y Provisional estimate. a Excluding capital appreciation.
Note: Specialist farms are grain farms that obtained more than 50 per cent of total cash receipts from crop receipts. Non-specialist farms 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

Average farm cash income of grain farms has generally trended upwards over the last 30 years, especially since 2006–07 (Figure 1). Farm cash income on a per hectare basis has followed a similar trend over this period, despite grain farms becoming larger in size on average. Average farm cash income of grain farms in 2018–19 is projected to be the fourth-highest since 1989–90 in real terms, 86 per cent higher than the median. The fall in farm cash income in other major droughts was more pronounced, such as in 2006–07 which was 63 per cent below the median since 1989–90.


Figure 2 shows the farm cash income of Australian grain farms projected in 2018–19 is in the top 25 per cent of years at the national level and in the Western region. In the Northern and Southern regions, the estimate for 2018–19 is within the middle 50 per cent of years.


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 farm.

In 2017–18, lower grain production and high prices led many farms to run down their stocks of grain to boost incomes, leading to a decrease in the quantity of trading stock on hand at 30 June. This contributed to farm business profit declining by around 47 per cent to $99,800 per farm (Table 1). In 2018–19, average farm business profit is projected to fall further by around 45 per cent to $55,000 per farm.

At the national level, lower farm business profit in 2017–18 resulted in a rise to around 47 per cent in the proportion of farms recording negative farm business profit (Figure 3). In the 10 years to 2017–18 the proportion of grain farms recording negative farm business profit averaged 50 per cent a year. In 2018–19, a projected 55 per cent of grain farms are expected to record negative farm business profit.

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.

On average 18 per cent of grain farms recording negative farm business profit in any given year from 2000–01 to 2017–18 recorded positive profit in the following year.


Total cash receipts

Total cash receipts for grain farms increased by 5 per cent to $869,500 per farm in 2017–18 (Table 1). A decline in total crop receipts was offset by higher farm-gate prices for lambs and wool leading to an increase in total livestock receipts. Receipts from pulses and oilseeds fell in 2017–18 while receipts from wheat, barley and grain sorghum were slightly higher.

In 2018–19, average total cash receipts are projected to decline by around 8 per cent to an estimated $801,000 per farm. This is a result of reduced crop production and a fall in prices for beef, partly offset by continuing high prices for crops, sheep, lambs and wool.

Total cash costs

Average total cash costs of Australian grain farms increased by around 7 per cent in 2017–18 (Table 1). Increased expenditure on fodder, interest payments, repairs and maintenance, fertiliser and hired labour were partly offset by reduced expenditure on crop and pasture chemicals and contracts.

In 2018–19, average total cash costs are projected to decrease by 3 per cent, despite a projected increase of expenditure on fodder. Expenditure on a majority of cost items (fertiliser, seed, crop and pasture chemicals, repairs and maintenance and contracts) are projected to fall because of declines in the area planted to grains, pulses and oilseeds due to dry seasonal conditions.

Performance of specialist and non-specialist grain farms

Non-specialist grain farms are defined as grain farms obtaining less than 50 per cent of their total cash receipts from crop sales. These farms are typically smaller than specialist grain farms and have a mix of sheep, beef cattle and cropping activities. Specialist grain farms are defined as grain farms obtaining more than 50 per cent of their total cash receipts from crop sales. These farms typically operate larger areas than non-specialists and focus primarily on crops, with usually relatively small sheep and beef cattle activities.

In 2017–18, farm cash income increased for non-specialist grain farms, but fell for specialist grain farms. Average farm cash income for non-specialist grain farms increased by around 21 per cent in 2017–18 as higher total receipts offset higher total costs (Figure 4). This was a result of increased receipts from wool, sheep and beef. Average farm cash income for specialist grain farms decreased by around 8 per cent in 2017–18, with a small fall in average total costs being more than offset by reduced crop receipts.

In 2018–19, projected decreases in total crop receipts, are expected to lead to falls in average farm cash incomes for both specialist and non-specialist grain farms.


Performance by region

The financial performance of grain farms in 2018–19 varies across regions reflecting differences in exposure to drought (Figure 5). Grain growers in the Northern region recorded the second consecutive year of drought, while drought and below average seasonal conditions extended into the Southern region. In contrast, grain growers in the Western region recorded a strong improvement in seasonal conditions in 2018–19.

In the Northern region, 65 per cent of grain farms reported drought conditions in 2018–19, a significant increase compared with the 5–year average from 2012–13 to 2016–17 of 11 per cent. In the Southern region, the proportion of farms reporting drought conditions increased from the 5-year average from 2012–13 to 2016–17 of 5 per cent to 24 per cent in 2018–19. In the Western region, the proportion of farms reporting average to above average seasonal conditions increased in 2018–19 and reported drought exposure fell to zero.


Average farm cash income rose in the Southern and Western regions in 2017–18 (Table 2). In both regions, higher grain prices mostly offset the impact on farm cash incomes of lower grain production in 2017–18. Increased sheep and wool receipts as a result of higher sheep, lamb and wool prices in 2017–18 also contributed to higher farm cash income in these regions.

Average farm cash income fell in the Northern region in 2017–18. Total crop receipts fell because of lower crop production due to dry seasonal conditions, while increased fodder costs contributed to higher total cash costs.

In 2018–19, farm cash income is projected to decrease in the Northern and Southern regions because of significantly lower production influenced by drought conditions. Average farm cash income in the Northern region is projected to be the lowest since 2011–12, a 52 per cent decline from 2017–18 and only 1 per cent above the median from 1989–90 to 2017–18.

In 2018–19, farm cash income is projected to increase by 35 per cent in the Western region because of increased crop production and high grain prices. Average farm cash income of Western region grain farms in 2018–19 is projected to be the highest since 1989–90 in real terms.

Table 2 Farm financial performance, grain farms, by region, 2016–17 to 2018–19
average per farm
Performance measure Unit 2016–17 2017–18p 2018–19y
Northern region
Farm cash income $ 251,810 240,000 117,000
Farm business profit $ 159,040 28,200 –78,000
Rate of return a % 4.1 1.3 –0.2
Southern region
Farm cash income $ 247,990 265,400 208,000
Farm business profit $ 176,300 114,000 50,000
Rate of return a % 4.5 3.0 1.8
Western region
Farm cash income $ 442,740 460,500 620,000
Farm business profit $ 279,900 247,000 413,000
Rate of return a % 5.9 5.1 7.2

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

In almost all years from 1989–90 to 2018–19, specialist grain farms recorded higher average farm cash incomes than non-specialist farms in each region (Figure 6).

In 2018–19, average farm cash income is projected to decline for both specialist and non-specialist grain farms in the Northern region because of significant falls in grain production, despite higher grain prices.

In the Southern region, average farm cash income in 2018–19 is projected to fall for specialist grain farms and to rise slightly for non-specialist grain farms.

In the Western region, average farm cash income for specialist grain farms is projected to increase in 2018–19 because of higher crop, sheep, lamb and wool receipts, but is projected to fall for non-specialist grain farms as a rise in total cash costs more than offsets increased total cash receipts.


Total cash receipts

Wheat is the main crop in each region, contributing 24 per cent of total cash receipts in the Northern region, 31 per cent in the Southern region and 43 per cent in the Western region on average from 2009–10 to 2018–19 (Figure 7). Summer crops make an important contribution to cash receipts in the Northern region, barley and oilseeds are important in the Southern and Western regions.

In both the Northern and Southern regions total cash receipts are projected to decline in 2018–19 because of the impact of drought on crop production. In contrast, the Western region is projected to benefit from good seasonal conditions with increased crop production and higher total cash receipts in 2018–19.


Total cash costs

In the Northern region, interest payments, repairs and maintenance, and fertiliser accounted for the largest share of total cash costs from 2008–09 to 2017–18. Crop and pasture chemicals, fuel, oil and grease, contracts and hired labour each accounted for more than 5 per cent of total cash costs. Because of high prices for purchased feed due to drought conditions, average expenditure on fodder increased by 66 per cent in the Northern region to account for 7 per cent of total cash costs in 2018–19 (Figure 8). Expenditure on contracts, repairs and maintenance, fertiliser and crop and pasture chemicals are projected to decline in 2018–19 due to lower crop areas planted. As a result, total cash costs per farm are projected to decline by around 8 per cent.

In the Southern region, fertiliser, crop and pasture chemicals, and interest payments accounted for the largest share of total cash costs from 2008–09 to 2017–18. Repairs and maintenance, fuel, oil and grease, and hired labour each accounted for more than 5 per cent of total cash costs. As with the Northern region, drought conditions have impacted production and fodder costs increased by 35 per cent in 2018–19. Expenditure on contracts, repairs and maintenance, and crop and pasture chemicals are projected to decline in 2018–19 due to lower crop areas leading to a decline in total cash costs by 5 per cent on average.

In the Western region, fertiliser was the largest contributor to total cash costs, accounting for an average of around 20 per cent from 2008–09 to 2017–18. Crop and pasture chemicals, interest payments, repairs and maintenance, fuel, oil and grease, freight and hired labour each accounted for more than 5 per cent of total cash costs. Expenditure on fuel, oil and grease, crop and pasture chemicals, fertiliser, repairs and maintenance, and hired labour are projected to increase with increased crop production leading to a 10 per cent increase in total cash costs in 2018–19.


Rate of return

The average rate of return (excluding capital appreciation) for grain farms declined from 4.6 per cent in 2016–17 to 2.6 per cent in 2017–18 (Figure 9). In 2018–19, the average rate of return is projected to decrease further to around 1.8 per cent, below the average of 2.4 per cent recorded from 2000–01 to 2017–18.

For specialist grain farms, the average rate of return in 2017–18 fell to 3.2 per cent and is projected to decrease further to 2.5 per cent in 2018–19. For non-specialist grain farms, the average rate of return decreased to 1.8 per cent in 2017–18 and is projected to fall further to 0.8 per cent in 2018–19.


In 2017–18 and 2018–19, farm financial performance varied widely between individual grain farms but was generally positive (Figure 10). In 2017–18, around 70 per cent of grain farms recorded rates of return (excluding capital appreciation) above zero, with around 28 per cent of all grain farms having rates of return above 5 per cent. Around 8 per cent of grain farms had rates of return below –5 per cent.

In 2018–19, 60 per cent of grain farms are expected to record rates of return above zero and around 25 per cent of all grain farms will have rates of return above 5 per cent. Around 10 per cent of grain farms are projected to have rates of return below –5 per cent.


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.

The annual average rate of return is widely distributed by region. Grain farms in the Southern region have the greatest overall distribution of rates of return and those in the Northern region have the smallest (Figure 11).

Farm debt and equity

  • Average farm debt of Australian grain farms increased by around 7 per cent to around $913,000 in 2016–17 (in real terms). Average grain farm debt is projected to increase a further 1 per cent in 2017–18.
  • From 2000–01 to 2016–17 the average equity ratio of grain farms has fluctuated around 85 per cent.

Detailed farm debt and equity findings

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 grain farms. At the national level, between 2000–01 and 2017–18 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 (Figure 12). However, since 2010–11 the annual rate of increase in average debt per farm has slowed. In 2016–17 average debt of grain farms increased by 7 per cent to around $913,000 in real terms. Average debt of grain farms is projected to increase by a further 1 per cent in 2017–18 to an estimated $921,000 per farm.

Figure 12 Total farm debt at 30 June, grain farms, 2000–01 to 2017–18
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 2016–17 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 2016–17 land purchase debt and working capital debt each accounted for around 39 per cent of average total debt for grain farms (Figure 13).

Figure 13 Main purpose of farm debt, grain farms, Australia, 2014–15 to 2016–17
average proportion per farm
Add alt text
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, between 2000–01 and 2016–17 the average equity ratio of grain farms fluctuated around an average of 85 per cent.

Around 56 per cent of grain farms had an equity ratio greater than 90 per cent in 2016–17. On average, these farms are relatively small and more diverse. Only 53 per cent of their total receipts are from selling crops. A further 31 per cent of grain farms had an equity ratio of 70 to 90 per cent in 2016–17. Only 12 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 76 per cent of total cash receipts from crops (Table 3).

Table 3 Farm performance, by equity ratio, grain farms, Australia, 2016–17
Equity ratio Unit More than 90% 70 to 90% Less than 70%
Proportion of farms % 56 31 12
Total area operated ha 1,637 2,828 4,312
Total area sown to crops ha 582 1,231 2,101
Crop receipts $ 274,748 716,291 1,212,781
Total cash receipts $ 521,406 1,053,184 1,590,220
Crop receipts as a proportion of total receipts % 53 68 76

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.

Between 2001–02 and 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 debt has improved as a result of higher cash receipts and reduced interest rates. Over the 10 years to 2016–17 the proportion of receipts needed to pay interest averaged around 8 per cent. In 2016–17 the proportion of farm receipts needed to fund interest payments was around 5 per cent. The proportion of farm receipts needed to fund interest payments is projected to increase slightly in 2017–18 to around 6 per cent (Figure 14).

Figure 14 Ratio of interest paid to total cash receipts, grain farms, Australia, 2000–01 to 2017–18
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 2016–17 (Figure 15). An estimated 36 per cent of grain farms increased their debt on average in 2016–17, and 4 per cent of farms had no change in debt. The remaining 21 per cent of farms had no debt at 1 July 2016 and 30 June 2017.

Figure 15 Distribution of farms, by change in debt, grain farms, Australia 2016–17
Add alt text
Note: Change in debt from 1 July 2016 to 30 June 2017.
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 16 shows the average debt of grain farms in the Northern, Southern and Western regions increased at similar rates between 2000–01 and 2008–09. Between 2008–09 and 2011–12 average debt in the Western region increased because of increases 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 2017–18 average debt per farm increased, largely as a result of increased working capital debt.

In the Southern region average debt per farm has declined slightly each year since 2014–15. In the Western region average debt per farm is considerably higher than in other regions, reflecting larger average farm sizes and higher working capital debt.

Figure 16 Total farm debt, grain farms, by region 2000–01 to 2017–18
average per farm
Add alt text
p Preliminary estimate. y Provisional estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Between 2000–01 and 2016–17 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 between 2000–01 and 2013–14 before increasing to above 80 per cent in 2014–15 (Figure 17). The equity ratio fluctuated around 84 per cent in the Northern region and 88 per cent in the Southern region.

Figure 17 Equity ratio, grain farms, by region, 2000–01 to 2016–17
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

Between 2001–02 and 2017–18 the average debt of specialist grain growers increased at a faster rate than for non-specialists (Figure 18). Working capital and land purchase debt represented the largest proportions of debt of specialist grain growers, each accounting for 38 per cent of average debt. Land purchase debt represented the largest share of debt of non-specialist growers, accounting for 41 per cent of average debt in 2016–17.

Figure 18 Total farm debt, grain farms, by group, 2000–01 to 2017–18
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 between 2000–01 and 2016–17. 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 2016–17 (Figure 19).

Figure 19 Equity ratio, grain farms, by group, 2000–01 to 2016–17
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 2017. An estimated 25 per cent of grain farms in Australia had no debt at 30 June. A further 12 per cent held less than $100,000 in debt. An estimated 27 per cent of farms had debt in excess of $1 million. Around 56 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 2017
percentage
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
More than 90% 25 12 9 5 4 1 0 56
80 to less than 90% 0 0 2 5 5 5 2 19
70 to less than 80% 0 0 1 1 2 4 3 12
60 to less than 70% 0 0 0 0 1 3 4 8
Less than 60% 0 0 0 0 1 1 3 4
Total 25 12 13 11 13 14 13 100

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

  • The total value of capital for Australian grain farms increased by 68 per cent in real terms from 2000–01 to 2016–17, although the number of grain farms declined.
  • On average, 64 per cent of grain 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 grain and oilseed production increased by around 39 per cent in real terms to an estimated $18.5 billion. Over the same period the number of grain farms declined by 31 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 68 per cent in real terms from 2000–01 to 2016–17, although the number of grain and oilseed farms declined (Figure 20).On a per farm basis, total capital more than doubled to around $6 million per farm in 2016–17, largely as a result of increasing average farm sizes and appreciation in land values.

Figure 20 Total value of capital and number of farms, grain farms, Australia, 2000–01 to 2016–17
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Land accounted for an average of 81 per cent of total capital per farm from 2012–13 to 2016–17 (Figure 21). Plant and equipment accounted for 12 per cent of total capital, and livestock accounted for a further 6 per cent.

Figure 21 Components of capital, grain farms, Australia, 2012–13 to 2016–17
average per farm
a The value of all inventories including stocks of wool 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 22 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 5.4 per cent per year. From 1990–91 to 1999–2000 the average annual return from land appreciation was 1.9 per cent per year before stronger demand for farm land 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 per year before declining to an average of 1.1 per cent per year for 2009–10 to 2016–17.

Figure 22 Value of land and fixed improvements per hectare, grain 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, 64 per cent of grain farms each year made additions to their total capital over the 10 years to 2016–17 (Figure 23). The average value invested each year by those making capital additions fluctuated around an average of $276,000, broadly in line with movements in farm cash incomes.

In 2016–17 an estimated 74 per cent of grain farms made capital additions at an average of $297,000 per farm.

Figure 23 Total capital additions, grain 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 24 shows the proportion of grain farms 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 8 per cent of grain farms bought land each year on average from 2012–13 to 2016–17. Average expenditure on land for those making purchases was around $1.1 million per farm.

Around 62 per cent of all grain farms made additions to plant and equipment on average each year over the period, at an average of around $139,000 per farm. Around 9 per cent of grain farms made additions to buildings and structures. Expenditure on these capital additions averaged around $81,000 per farm.

Figure 24 Components of capital additions, grain farms, Australia, 2012–13 to 2016–17
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 25 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 53 per cent from 2011–12 to 2016–17. In 2016–17 an estimated 36 per cent of grain farms held FMDs at an average value of around $304,000 per farm.

Figure 25 Farm management deposits, grain farms, Australia, 2000–01 to 2016–17
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 a farm’s income. The ratio of FMDs to total cash costs increased from 2000–01 to 2016–17, indicating increasing capacity of farms to soften short-term downturns in farm income. In 2016–17 grain farms held FMDs representing 49 per cent of total cash costs and 29 per cent of average total cash receipts for those farms holding FMDs.

In 2016–17 an estimated 33 per cent of grain farms in the Northern region held FMDs. The average value of FMDs held per farm in the region was $310,000. Around 39 per cent of grain farms in the Southern region held FMDs in 2016–17 at an average value of $261,000 per farm. In the Western region 35 per cent of grain farms held FMDs in 2016–17 at an average of $355,000 per farm.

Investment and capital by region

In each grain region, trends in the total value of farm capital followed the national trend from 2000–01 to 2016–17—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 2016–17 the total value of capital of grain farms in the Northern region increased by 65 per cent (Figure 26). The region accounted for around 44 per cent of the total capital value of grain farms in 2016–17. The number of grain farms in the Northern region declined by 30 per cent from 2000–01 to 2016–17 (Figure 27).

The total capital value of grain farms in the Southern region rose by 93 per cent in real terms from 2000–01 to 2016–17. The region accounted for 35 per cent of the total capital value of Australian grain farms in 2016–17. The number of grain farms in the Southern region declined by 32 per cent from 2000–01 to 2016–17.

The number of grain farms in the Western region fell by 33 per cent but the total capital value grew by 41 per cent in real terms from 2000–01 to 2016–17. In 2016–17 the Western region accounted for 20 per cent of the total capital value of Australian grain farms.

Figure 26 Total value of capital, grain farms, by region, 2000–01 to 2016–17
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey
Figure 27 Number of grain farms, by region, 2000–01 to 2016–17
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 28). The Northern region has a relatively higher proportion of farms with mixed farming enterprises and fewer specialist growers than the Southern and Western regions.

Figure 28 Components of capital, grain 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 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 (Figure 29). Land values in the Southern and Western regions have trended upwards since 2013–14. Average land values in the Northern region were relatively steady compared with the other regions, but are estimated to have increased in 2016–17.

Figure 29 Value of land and fixed improvements per hectare, grain farms, by region, 2012–13 to 2016–17
average per farm
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Around 6 per cent of grain farms in the Northern region purchased land on average over the 5 years ending 2016–17 (Figure 30). The average level of investment for those farms making land additions was the largest among the regions at around $1.4 million per farm. Around 10 per cent of Northern region grain farms added buildings and structures and 62 per cent added plant and equipment over the 5 years ending 2016–17.

In the Southern region around 10 per cent of grain farms on average added land, 9 per cent added buildings and structures and 63 per cent added new plant and equipment over the 5 years ending 2016–17.

An average of 10 per cent of grain farms in the Western region purchased land and 7 per cent added buildings and structures. Around 59 per cent of grain farms invested in new plant and equipment. Average additions to plant and equipment in the Western region was $221,000 per farm, which was considerably higher than the average additions in the other regions. This reflects larger farm sizes in the Western region.

Figure 30 Components of capital addition, grain farms, by region, 2012–13 to 2016–17
proportion of farms and average per farm
Source: ABARES Australian Agricultural and Grazing Industries Survey

Investment and capital 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 45 per cent from 2000–01 to 2016–17 (Figure 31). Total capital value of specialist growers rose by 69 per cent since 2000–01 and accounted for 60 per cent of total grain farm capital in 2016–17 (Figure 32). Average total capital per specialist grain farm was $7.4 million in 2016–17.

Figure 31 Number of grain farms, by group, 2000–01 to 2016–17
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

The number of non-specialist grain growers declined by 8 per cent from 2000–01 to 2016–17. The total capital value of non-specialist grain growers increased by 66 per cent to account for 40 per cent of total grain farm capital in 2016–17. The total value of capital of non-specialist grain growers declined from 2008–09 because of lower land values, before rising from 2014–15 to 2016–17 when land values increased in response to stronger demand for farm land.

Figure 32 Total value of capital, grain farms, by group, 2000–01 to 2016–17
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Land accounted for 81 per cent of total capital of specialist grain growers from 2012–13 to 2016–17 (Figure 33). 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 accounted for 80 per cent of total capital, plant and equipment accounted for 9 per cent and livestock accounted for 10 per cent.

Figure 33 Components of capital, grain farms, by group, 2012–13 to 2016–17
average per farm
a The value of all inventories including stocks of wool and grains held on the farm at 30 June.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Over the 5 years to 2016–17 an estimated 67 per cent of specialist grain growers each year made new additions to capital at an average of $377,000 per farm making capital additions. On average 63 per cent of non-specialist grain growers each year made capital additions from 2012–13 to 2016–17. Those non-specialist grain growers making new additions to capital spent on average $152,000 per farm each year from 2012–13 to 2016–17.

Average spending on land was significantly greater for specialist grain growers than non-specialist growers at $1.3 million per farm from 2012–13 to 2016–17. 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 34).

Figure 34 Components of capital addition, grain farms, by group, 2012–13 to 2016–17
proportion of farms and average per farm in category
Source: ABARES Australian Agricultural and Grazing Industries Survey

Physical characteristics

  • From 2000–01 to 2016–17 the total number of Australian grain farms fell by around 31 per cent. Most of this decline was in the number of farms planting less than 1,200 hectares.
  • The number of farms planting more than 2,400 hectares of grain increased, increasingly dominating total output of grains, pulses and oilseeds.

Detailed physical characteristics findings

Aruni Weragoda, James Frilay and Dale Ashton

In 2016–17 an estimated 23,000 Australian farms had at least 40 hectares sown to grains, oilseeds or pulses. Around 44 per cent of these farms were in the Northern region, 37 per cent in the Southern region and 18 per cent in the Western region (Map 1).

From 2000–01 to 2016–17 the total number of Australian grain farms fell by around 31 per cent. In the Northern region the number of grain farms fell by 30 per cent, in the Southern region by 32 per cent and in the Western region by 33 per cent (Figure 35).

Figure 35 Number of grain farms, by region, 2000–01 to 2016–17
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 2016–17 wheat accounted for 55 per cent of the area planted to grains, oilseeds and pulses, on average, followed by barley (18 per cent). In 2016–17 the share of area planted to wheat was 53 per cent and the area planted to barley was 18 per cent (Table 5).

From 2000–01 to 2016–17 the share of area planted to oilseeds trended upwards. In 2016–17 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 2016–17 pulses accounted for an estimated 11 per cent of total area planted.

Table 5 Physical performance, grain farms, Australia, 2016–17
average per farm
Indicator Unit 2016–17p
Area operated ha 2380
Area sown to grains, oilseeds and pulses ha 912
Number of sheep at 30 June no. 1899
Number of beef cattle at 30 June no. 139
Proportion of area sown to grain crops
Wheat % 53
Oats % 6
Barley % 18
Grain sorghum % 1
Pulses % 11
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 2016–17 around 38 per cent of Northern region grain farms were specialist grain growers. Over the 3 years to 2016–17 around 71 per cent of Northern region grain farms planted less than 600 hectares and 6 per cent planted more than 2,400 hectares (Figure 36).

Wheat is the main crop grown by Northern region grain farms. From 2000–01 to 2016–17 wheat accounted for around 56 per cent of total grain production in the region each year. In 2016–17 these farms accounted for 34 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 2016–17 increased by 27 per cent from the previous year (Figure 37).

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 2016–17 around 60 per cent of Southern region grain farms were specialist grain growers. Over the 3 years to 2016–17 around 59 per cent of Southern region grain farms planted less than 600 hectares and 7 per cent planted more than 2,400 hectares (Figure 36).

From 2000–01 to 2016–17, 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 2016–17 these farms accounted for 36 per cent of Australian grain, oilseed and pulse production—similar to that of 2000–01. Total grain production in the Southern region doubled in 2016–17 from the previous year (Figure 37).

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 2016–17 around 57 per cent of these farms were specialist grain growers. Over the 3 years to 2016–17 around 31 per cent of Western region grain farms planted more than 2,400 hectares and 37 per cent planted less than 600 hectares (Figure 36).

From 2000–01 to 2016–17, on average, wheat accounted for 62 per cent of total grain production on Western region grain farms each year and barley accounted for 21 per cent. From 2006–07 production of oilseeds increased, accounting for 12 per cent of total production in 2016–17. Grain farms in the Western region accounted for around 30 per cent of Australian grain, oilseed and pulse production in 2016–17—up from 22 per cent in 2000–01. Total grain production in the Western region in 2016–17 increased by 19 per cent from the previous year (Figure 37).

Figure 36 Proportion of grain farms by area of crop, by region, average of 2014–15 to 2016–17
Source: ABARES Australian Agricultural and Grazing Industries Survey
Figure 37 Total grain, oilseed and pulse production, by region, 2000–01 to 2016–17
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 to 2016–17 the Western region recorded the lowest overall variation in wheat yields (Figure 38).

Figure 38 Variability in yield, by region, 2000–01 to 2016–17
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 2016–17 the average wheat yield per hectare was 2.3 tonnes in both the Northern and Southern regions and 1.7 tonnes in the Western region (Figure 39).

Figure 39 Average wheat yield, grain farms, by region, 2000–01 to 2016–17
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

From 2000–01 to 2016–17 average grain, oilseed and pulse yields increased (Figure 40). However, the Millennium Drought had a depressing effect on average yields over the period. Average wheat yield in 2016–17 is estimated to have been 2.6 tonnes per hectare and the barley yield was 3.1 tonnes per hectare.

Figure 40 Grain, oilseed and pulses yields, grain farms, Australia, 2000–01 to 2016–17
average per farm
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Grain stocks

The level of grain stocks held on farms varies with grain prices, requirements for seed and livestock feeding, marketing arrangements and timing of harvest. From 2000–01 to 2016–17 the average stock of grains, oilseeds and pulses on hand at 30 June trended upwards (Figure 41). The average stock of grain on hand per farm at 30 June 2017 was around 349 tonnes, up 32 per cent from 30 June 2016 mainly as a result of increased grain production. Of this total grain stock per farm, wheat accounted for 45 per cent and barley 25 per cent (Table 6).

Figure 41 Grain stocks at 30 June, grain farms, Australia, 2000–01 to 2016–17
average per farm
p Preliminary estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey
Table 6 Grain stocks at 30 June, grain farms, Australia, 2015–16 to 2016–17
average per farm
Crop Unit 2015–16 2016–17p
Pulses t 14 43
Oilseeds t 7 3
Wheat t 130 157
Oats t 14 32
Barley t 77 89
Grain sorghum t 14 9
All grains t 264 349

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

Physical characteristics by scale of grain production

From 2000–01 to 2016–17 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 42). Larger farms are increasingly dominating total output of grains, pulses and oilseeds.

From 2000–01 to 2016–17 large grain farms significantly increased their share of production. From 2014–15 to 2016–17 around 10 per cent of grain farms, planted more than 2,400 hectares. These farms accounted for 46 per cent of production and the 61 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, 2014–15 to 2016–17
Area planted to grains, oilseeds or pulses Proportion of farms (%) Proportion of production (%)
Less than 600 hectares 61 15
600 to 1,200 hectares 16 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 2016–17 the number of farms planting more than 2,400 hectares of grain increased by 103 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 42 Number of grain farms, by area planted, 2000–01 to 2016–17
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

Australian grains: financial performance of grain farms, 2015–16 to 2017–18

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 2016–17 to 2018–19.

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Last reviewed:
06 May 2019