2020–21 to 2022–23
- An estimated 38% of Australian farm businesses are classified as broadacre livestock farms (33,500 farms), of which 19,400 were beef specialists, 10,400 were sheep specialists, and around 3,600 produced a mix of beef cattle and sheep.
- Lower prices for beef cattle, sheep, wool and lambs are expected to contribute to reduced incomes for livestock farms in 2022–23. However, increased turnoff of cattle and sheep is expected to moderate this decrease.
- At the national level, average farm cash income for livestock farms is estimated to have decreased by 16% in 2022–23 to $168,000 per farm but is 18% above the long-term average in real terms (see methodology) for the 10 years to 2021–22 (Figure 1). Increased turnoff of beef cattle and sheep are projected to have moderated the decrease in incomes from lower prices for beef cattle and lambs. High input prices are also contributing to increased costs on livestock farms.
- The average rate of return (excluding capital appreciation) for livestock farms is estimated to have fallen in 2022 – 23 to an estimated 1.2% per farm compared with 2.2% in 2021–22.
- There is wide variability across farms, with the top 20% of broadacre livestock farms estimated to earn an average farm cash income of $609,000 per farm in 2022–23, and an average rate of return to capital of 2.5%. In contrast, the bottom 20% of livestock farms are estimated to earn an average farm cash income of negative $68,000 in 2022–23 with an average rate of return to capital of -0.9%.
- In 2022–23, average farm cash incomes declined for livestock farms in all states except for Western Australia where incomes remained relatively constant (Figure 2). In Western Australia a decrease in incomes of beef cattle farms was offset by increased incomes of sheep farms.
- The largest decrease in income is expected in Tasmania where lower prices for wool, sheep and beef had a large impact on incomes because turnoff and wool sold remains largely unchanged from 2021–22 to 2022–23. In other states the impact of falling livestock prices has been partly offset by increased turnoff.
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Beef specialist farms
- The average farm cash income for beef specialist farms at the national level is estimated to have fallen by 13% to around $203,000 per farm in 2022–23, due to falling beef prices and rising fuel costs. However prices have remained quite high relative to historic values, allowing incomes to remain 37% above the average in real terms for the 10 years to 2021–22 (Figure 3). Lower lamb and wool prices are estimated to have been partly offset by a slight increase in lamb and wool production.
- The average rate of return (excluding capital appreciation) for beef specialist farms is estimated to have fallen in 2022–23 to an estimated 1.4%, compared with 2.5% in 2021–22.
Specialist beef farms
- Farm cash income for sheep specialist farms is estimated to have decreased by 18% in 2022–23 to average $100,000 per farm (Figure 3).
- The average rate of return (excluding capital appreciation) for sheep specialist farms is estimated to have fallen to 0.4% in 2022–23, compared with 1.2% in 2021–22.
- Debt is an important source of funds for farm investment and ongoing working capital for many livestock farms, although a large proportion of livestock farms have no debt at all (42% in 2021–22). At the national scale, average livestock farm debt increased by around 2% from 2020–21 to 2021–22 (Figure 4).
- Farm equity ratios stayed high at an average of 94% in 2021–22. Slightly higher average debt was offset by increases in average farm land values.
- Among a range of factors, the viability of a farm business 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 cash income spent on interest payments (interest coverage ratio) is a useful indicator of short-term capacity to service debt.
- In 2021–22 the average interest coverage ratio for livestock farms was 11% (Figure 5). The downward trend in the interest coverage ratio over the last decade has been predominantly driven by rises in average incomes and falling interest rates, despite rising levels of debt (Figure 6).
- In 2022–23 the average interest coverage ratio for livestock farms is expected to increase to 23% due to increases in interest rates and further increases in average debt holdings (Figure 6). However, current high incomes are limiting the impact of interest rate increases on the interest coverage ratio relative to historic levels. If there were to be a significant downturn in farm incomes the recent interest rate rises would have a more pronounced effect on interest coverage ratios.
Liquid assets and non-farm income
- Many livestock farms 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 farm sizes (Figure 7).
- Non-farm income increases business resilience to shocks to farm financial performance for many farms. In particular, small livestock farms sourced the majority of their household incomes (farm cash income plus non-farm income) from non-farm sources in from 2019–20 to 2021–22. The proportion of non-farm income was substantially lower for larger farms.
- Farm Management Deposits (FMDs) are an important financial risk management tool for many livestock farms and forms part of their liquid assets. At 30 June 2022, an estimated 21% of livestock farms held FMD accounts, at an average value of $260,000 per farm.
All dollar values in this industry report are reported in real terms, adjusted to 2022–23 values. Adjusting to real terms removes the effect of inflation and allows financial values of different time periods to be compared in like terms. ABARES adjusts for inflation using the consumer price index, supplied by the Australian Bureau of Statistics (Australian Bureau of Statistics, 2023).
The data in this report is 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. Broadacre farms account for around 60% of all Australian farm businesses and they include the following industries (defined by Australian and New Zealand Standard Industrial Classification (ANZSIC)):
- Beef Cattle Farming: Specialised producers of beef cattle.
- Sheep Farming: Specialised producers of prime lambs, sheep, 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.
- 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.
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.
To reduce respondent burden and complexity of the survey ABARES developed a model-based approach to producing its projections of key estimates. Data in this report for 2022–23 is derived from this model.
Further information on ABARES farm surveys and survey methodology can be found on the ABARES website.
Previous versions of this and related reports.
Further information about our survey definitions and methods.
The Farm Data Portal is an interactive tool containing all data from ABARES surveys of broadacre and dairy farms, and outputs from those surveys, all in the one location.