Financial performance of cropping farms
2018–19 to 2020–21
Improved financial performance in 2020–21
- In 2019–20, an estimated 28% of Australian broadacre farms were classified as cropping farms (14,600 farms), including those in the wheat and other crops industry (6,530 farms) and the mixed livestock-crops industry (8,070 farms) (Box 1).
- Improved seasonal conditions in 2020–21 were a major driver of improved farm performance of cropping farms in Australia, with good rainfall contributing to increased crop production in most regions.
- At the national level, farm cash income for cropping farms increased by $35,000 (around 12%) to average $336,000 per farm in 2020–21. Increases in crop receipts because of increased crop production were partly offset by lower prices for most grain, oilseed, grain legume and fodder crops. Total cash costs also increased reflecting increases in crop production.
- On average, farm cash income in 2020–21 is estimated to have been around 22% above the longer-term average of $275,300 per farm in real terms for the 10 years to 2019–20.
- Results vary by state, with farm cash income of cropping farms estimated to have increased in New South Wales but decreased in other states in 2020–21.
- Average farm business profit at the national level increased by almost $80,000, from an average of $92,200 per farm in 2019–20 to $172,000 per farm in 2020–21. This increase was greater than the increase in farm cash income because of increases in stocks of grain held on farm and livestock inventories at 30 June following the drought-affected lows of the previous year.
- In 2020–21, the average rate of return (excluding capital appreciation) increased to around 2.9%, slightly below the 10-year average to 2019–20 of 3.2%.
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Prospects of recovery remain strong
- The overall financial situation for cropping farms remains strong despite the severity of drought in many regions.
- At the national level, average debt of cropping farms increased by $63,000 (around 5%) to $1,338,000 per farm in 2019–20. This was mainly due to an increase in working capital debt.
- Increases in farm business debt over time have generally been matched by increases in land prices, resulting in equity ratios remaining strong at an average of around 83%.
- Historically low interest rates have meant that debt servicing capacity is relatively high among cropping farms. In 2019–20, the proportion of farm receipts needed to fund interest payments was 5.5%, below the 10-year average to 2018–19 of 7.1%.
- Many cropping farms also have substantial holdings of liquid assets relative to farm household income that makes them well placed to withstand short-term downturns in income, although there is wide distribution across farms (Figure 1).
Specialist cropping farms
- For specialist cropping farms, average farm incomes increased by $39,000 (around 9%) to $468,000 per farm in 2020–21.
- Despite average cropping specialist incomes increasing at the national level, all states apart from New South Wales and Western Australia had declines in average farm cash income from 2019–20 to 2020–21.
- Improved seasonal conditions in 2020–21 contributed to farm incomes that were well above the long-term average in many regions, particularly Central and Southern New South Wales, Victoria, Murray lands and Yorke Peninsula in South Australia and South West Western Australia (Map 1).
- However, incomes in other regions remained well below the long-term average with lower grain prices more than offsetting higher crop yields.
- Average farm business profit increased by around $84,000, from $184,700 per farm in 2019–20 to $269,000 per farm in 2020–21.
- Rate of return (excluding capital appreciation) increased from around negative 3.1% in 2019–20 to 3.8% per farm in 2020–21.
Box 1 ABARES farm survey industry definitions
The data in this report are drawn from ABARES Australian Agricultural and Grazing Industries Survey (AAGIS). AAGIS covers broadacre farms with an estimated value of agricultural operations (EVAO) greater than $40,000 and includes the following industries (defined by Australian and New Zealand Standard Industrial Classification (ANZSIC)):
- Wheat and Other Crops Farming: Specialised producers of cereal grains, coarse grains, pulses, and oilseeds.
- Mixed Livestock-Crops Farming: Farm businesses engaged in producing sheep and/or beef cattle in conjunction with substantial activity in broadacre crops such as wheat, coarse grains, pulses and oilseeds.
- Beef Cattle Farming: Specialised producers of beef cattle.
- Sheep Farming: Specialised producers of prime lambs, sheep, sheep milk or wool.
- Sheep-Beef Cattle Farming: Producers who have a mix of sheep and beef cattle. Farms classified to sheep-beef industry combine sheep and beef enterprises such that neither enterprise dominates the other.
AAGIS provides a wide range of information on the current and historical economic performance of farm business units, including farm costs, receipts, income and profit, debt, assets, farm capital and labour, industry and farm size.
ABARES usually produces projections of key estimates based on survey responses collected from October to January each year of farmers’ estimates of production, receipts and costs over the remainder of the financial year. In 2020–21, the farm surveys were conducted entirely by phone because of travel and other restrictions related to COVID-19. To reduce respondent burden and complexity of the survey ABARES developed a model-based approach to producing its projections of key estimates.
Further information on the ABARES farm surveys and survey methodology can be found on the ABARES website.
Data and other resources
AgSurf provides a large selection of ABARES farm survey data on the broadacre and dairy industries
See our previous research page for previous versions of the report Australian grains: financial performance of grain farms.
Further information about our survey definitions and methods.
This web report provides a detailed profile of the financial performance of farm businesses in the grains, livestock and dairy industries in the years 2018–19 to 2020–21.