Farm financial performance - Victoria

Estimates of financial performance are available for all broadacre, beef, sheep, grains, dairy and vegetable farms in Victoria.

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Performance of broadacre farms

Average farm cash income of Victorian broadacre farms was slightly below the long-term average in 2018–19, particularly for cropping farms. Dry seasonal conditions reduced broadacre crop production by around 40% relative to the 10-year average. The dry conditions also resulted in increased turn-off of beef cattle at lighter weights and increased expenditure on purchased fodder. This lead to lower farm cash incomes for beef farms (Table 1, Figure 1).

In 2019–20, average farm cash incomes are projected to increase in all regions. Increased crop production in the Mallee, Wimmera and Central North is projected to result in higher receipts for wheat, barley, oilseeds and grain legumes, contributing to significantly higher average farm cash incomes. This is despite a small reduction in wheat prices expected in 2019–20. In response to high fodder prices, some crops were cut for hay in early 2019–20, including those affected by dry conditions in spring or late frosts. This assisted in increasing crop receipts, particularly in northern Victoria (Table 2).

In Southern and Eastern Victoria, average farm cash incomes are also projected to increase in 2019–20 compared with the previous year, with increased receipts from lambs and beef cattle as a result of higher prices offsetting lower receipts for wool. Fires in eastern Victoria in December 2019 and January 2020 will have affected production and farm costs in this region. ABARES estimates of financial performance in 2019–20 were based on surveys conducted prior to these major fire events. However, farmland affected by these fires is a relatively small proportion of total farm area in Southern and Eastern Victoria.

Figure 1 Farm cash income, broadacre farms, 1999–2000 to 2019–20
average per farm
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p Preliminary estimate. y Provisional estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey
 
Table 1 Financial performance, broadacre farms, Victoria, 2017–18 to 2019–20
average per farm
Performance measure Unit 2017–18 2018–19p RSE 2019–20y
Total cash receipts $ 396,580 354,100 (5) 434,000
Total cash costs $ 261,980 253,200 (5) 262,000
Farm cash income $ 134,600 100,900 (9) 173,000
Farm business profit $ 42,850 –5,700 (99) 52,000
Profit at full equity
— excluding capital appreciation $ 72,700 21,900 (48) 79,000
— including capital appreciation $ 240,810 237,100 (15) na
Farm capital at 30 June a $ 3,871,510 4,201,200 (4) na
Farm business debt at 30 June b $ 400,400 390,000 (9) 392,000
Change in debt — 1 July to 30 June b $ 16,960 35,600 (33) –12,000
Farm business equity at 30 June bc $ 3,471,100 3,811,300 (5) na
Equity ratio bd %    90 90 (1) na
Farm liquid assets at 30 June b $ 179,050 182,200 (11) na
Rate of Return e
— excluding capital appreciation % 1.9 0.5 (46) 1.7
— including capital appreciation % 6.3 5.5 (14) na
Off-farm income of owner manager and partner b $ 66,100 53,500 (31) na

a Excludes leased plant and equipment. b Excludes capital appreciation. c Farm capital minus farm debt. d Equity expressed as a percentage of farm capital. e Rate of return to farm capital at 1 July. p Preliminary estimate. y Provisional estimate. RSE Figures in parentheses are standard errors expressed as a percentage of the estimate provided. na Not available.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Table 2 Farm cash income, Victoria, broadacre farms, by region, 2017–18 to 2019–20
average per farm
ABARES region a Unit 2017–18 2018–19p RSE 2019–20y
Mallee $ 214,700 151,000 (21) 374,000
Wimmera $ 263,200 184,000 (19) 378,000
Central North $ 117,800 82,000 (14) 152,000
Southern and Eastern Victoria $ 99,900 81,000 (14) 104,000

a See Farm surveys definitions and methods web page for ABARES Australian Agricultural and Grazing Industries Survey (AAGIS) zones and regions map. p Preliminary estimate. y Provisional estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Table 3 Financial performance, Victoria, by industry, 2017–18 to 2019–20
average per farm
Industry Farm cash income ($) Proportion of farms (%)
2017–18 2018–19p RSE 2019–20y 2018–19p
All broadacre farms 134,600 101,000 (10) 173,000 100
Wheat and other crops 333,400 205,000 (18) 567,000 13
Mixed livestock–crops 131,000 150,000 (27) 263,000 16
Sheep 153,100 135,000 (13) 135,000 25
Beef 52,600 30,000 (29) 41,000 44
Sheep–beef 125,300 182,000 (29) 279,000 2

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

Performance of wheat and other crops industry farms

Wheat and other crops industry farms in Victoria are expected to record a large increase in average farm cash income in 2019–20. This is because of a substantial increase in receipts from cropping as a result of increased production. Average farm cash income is projected to increase by 71% to $173,000 per farm in 2019–20, following a 25% fall in 2018–19 (Figure 2).

Figure 2 Farm cash income, wheat and other crops industry, 1999–2000 to 2019–20
average per farm
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p Preliminary estimate. y Provisional estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Performance of mixed livestock–crops industry farms

Mixed livestock–crops industry farms in Victoria are expected to record a large increase in average farm cash income in 2019–20. This is mainly because of a substantial increase in receipts from cropping as a result of increased production. Average farm cash income is projected to increase by 75% to $263,000 per farm in 2019–20, following a 15% increase in 2018–19 (Figure 3).

Figure 3 Farm cash income, mixed livestock–crops industry, 1999–2000 to 2019–20
average per farm
blank
p Preliminary estimate. y Provisional estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Performance of sheep industry farms

The projected improvement in farm performance in Victoria’s livestock industries is more modest compared with cropping farms. Lower receipts from wool (due to lower wool prices) are projected to be partly offset by increased receipts from sales of sheep and lambs. Farm cash income of sheep industry farms is projected to decline slightly in real terms in 2019–20 to average $135,000 per farm, following a 12% fall in 2018–19. (Figure 4).

Figure 4 Farm cash income, sheep industry, 1999–2000 to 2019–20
average per farm
blank
p Preliminary estimate. y Provisional estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Performance of beef industry farms

For beef industry farms, receipts from beef cattle are projected to increase due to higher beef prices, while expenditure on purchased fodder is expected to fall due to lower fodder prices. Farm cash income of beef industry farms is projected to increase by 37% in 2019–20 to average $41,000 per farm, following a 43% fall in 2018–19 (Figure 5).

Figure 5 Farm cash income, beef industry, 1999–2000 to 2019–20
average per farm
blank
p Preliminary estimate. y Provisional estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Performance of sheep–beef industry farms

For sheep–beef industry farms, lower receipts from wool (due to lower wool prices) are projected to be partly offset by increased receipts from sales of sheep and lambs. Receipts from beef cattle are projected to increase due to higher beef prices, while expenditure on purchased fodder is expected to fall due to lower fodder prices. Average farm cash income of sheep industry farms is projected to increase by 53% to $279,000 per farm in 2019–20, following a 12% fall in 2018–19. (Figure 6).

Figure 6 Farm cash income, sheep-beef industry, 1999–2000 to 2019–20
average per farm
blank
p Preliminary estimate. y Provisional estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Performance of dairy farms

Dairy farms in Victoria are projected to return to profitability in 2019–20 as a result of increased milk prices. In 2018–19, average farm cash income fell by 26% and average farm business profit was negative (Table 4). Markedly higher expenditure on purchased feed and water were the main drivers, which more than offset slightly higher farmgate milk prices in 2018–19.

Farmgate milk prices are projected to increase further in 2019–20, leading to an increase in milk receipts. However, overall state milk production is projected to fall, mainly as a result of the exit of farms from dairying. A small reduction in milk production is also expected on some farms remaining in dairying, particularly in northern Victoria.

Continued dry seasonal conditions in 2019 in northern Victoria and high prices for hay, silage and feed grains have maintained purchased feed and water costs at a high level, constraining the increase in average farm cash income. Average farm cash income is projected to increase from $107,700 per farm in 2018–19 to $159,000 in 2019–20 (Figure 7).

Figure 7 Farm cash income, dairy farms, 1999–2000 to 2019–20
average per farm
blank
p Preliminary estimate. y Provisional estimate.
Source: ABARES Australian Dairy Industry Survey
 
Table 4 Financial performance, dairy farms, Victoria, 2017–18 to 2019–20
average per farm
Performance measure Unit 2017–18 2018–19p RSE 2019–20y
Total cash receipts $ 747,530 812,800 (4) 846,000
Total cash costs $ 602,910 705,000 (4) 687,000
Farm cash income $ 144,620 107,700 (17) 159,000
Farm business profit $ 85,760 –30,900 (65) 25,000
Profit at full equity
— excluding capital appreciation $ 153,170 36,100 (57) 88,000
— including capital appreciation $ 230,000 144,200 (30) na
Farm capital at 30 June a $ 4,892,220 4,813,000 (5) na
Farm business debt at 30 June b $ 1,014,370 907,800 (7) 908,000
Change in debt — 1 July to 30 June b $ 1,890 7,600 (99) 8,000
Farm business equity at 30 June bc $ 3,877,840 3,905,300 (6) na
Equity ratio bd %    79 81 (2) na
Farm liquid assets at 30 June b $ 95,000 78,400 (18) na
Rate of Return e
— excluding capital appreciation % 3.2 0.8 (57) 1.8
— including capital appreciation % 4.8 3.1 (30) na
Off-farm income of owner manager and partner b $ 15,120 16,600 (28) na

a Excludes leased plant and equipment. b Average per responding farm. c Farm capital minus farm debt. d Equity expressed as a percentage of farm capital. e Rate of return to farm capital at 1 July. p Preliminary estimates. y Provisional estimates. RSE Figures in parentheses are standard errors expressed as a percentage of the estimate provided. na Not Available.
Source: ABARES Australian Dairy Industry Survey

Performance of vegetable industry farms

Victoria had an estimated 446 vegetable-growing farms in 2017–18. Most farms were located around Greater Melbourne, Gippsland and the irrigated regions along the Murray River. The highest value vegetables were tomatoes, mushrooms, potatoes and lettuce (ABS 2019). Victorian vegetable-growing farms had the largest average area of vegetables cropped (63 hectares), with many large farms being located in the north of the state.

Farm cash income for Victorian vegetable-growing farms fell by 3 per cent to average $448,000 per farm in 2017–18 (Table 5). Total vegetable receipts declined due to lower yields for most vegetables reducing production. Decreased receipts from carrots contributed most to the decline in total vegetable receipts. Average total cash costs decreased by 10 per cent to $1,653,500 per farm. Reduced expenditure on contracts paid, packing materials and charges, freight, and repairs and maintenance contributed most to the decline in cash costs.

Average farm cash income is estimated to have declined by a further 7 per cent to $419,000 per farm in 2018–19 (Figure 8). This is because total cash costs are estimated to have increased by more than the small increase in total cash receipts.

Table 5 Selected physical and financial results, vegetable-growing farms, Victoria, 2017–18 and 2018–19
average per farm
Indicator 2017–18p RSE % change from 2016–17 2018–19y % change from 2017–18
Vegetable cash receipts ($) 1,889,800 (19) –13 1,880,000 –0.5
Area planted to vegetables (ha) 63 (12) 0 62 –2
Quantity of vegetables produced (t) 2,174 (21) –10 2,170 –0.2
Farm cash income ($) 448,000 (22) –3 419,000 –7

p Preliminary estimate. y Provisional estimate.
Note: Figures in parentheses are standard errors expressed as a percentage of the estimate.
Source: Australian vegetable-growing farms survey

Figure 8 Farm cash income, vegetable-growing farms, 2007–08 to 2018–19

p Preliminary estimate. y Provisional estimate.
Source: Australian vegetable-growing farms survey

Definitions

Major financial performance indicators

  • Total cash receipts: total revenues received by the business during the financial year.
  • Total cash costs: payments made by the business for materials and services and for permanent and casual hired labour (excluding owner manager, partner and family labour).
  • Farm cash income: total cash receipts - total cash costs
  • Farm business profit: farm cash income + changes in trading stocks - depreciation - imputed labour costs
  • Profit at full equity: return produced by all the resources used in the business, farm business profit + rent + interest + finance lease payments - depreciation on leased items
  • Rate of return: return to all capital used, profit at full equity * 100 / total opening capital
  • Equity ratio: Farm capital minus farm debt expressed as a percentage of farm capital

Industry types

  • Grains: farms mainly engaged in producing broadacre crops such as wheat, coarse grains, oilseeds and pulses, and including farms running sheep and/or beef cattle in conjunction with substantial broadacre crop activity.
  • Sheep: farms mainly engaged in running sheep.
  • Beef: farms mainly engaged in running beef cattle.
  • Dairy: farms mainly engaged in milk production.
  • Vegetable: farms mainly engaged in growing vegetables.

Farm surveys definitions and methods
Further information about our survey definitions and methods.

Last reviewed: 7 May 2020
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