News

Beef farm incomes rise in north, fall in south: ABARES

James Nason, 03/07/2012

Australia’s official commodity analyst says the financial performance of Australian beef production enterprises has varied in the past 12 months, with those in the north generating more income on average than the previous year, while those in the south have earned less.

The Australian Bureau of Resources and Agricultural Economics and Sciences (ABARES) estimates that the average northern Australian beef cattle farm generated $118,900 in income in the past 12 months, up from $90,960 the year before.

In the south beef farms are estimated to have recorded average farm cash incomes of $81,600 in the past 12 months, down from $93,400 the previous year.

The year-on-year improvement in the north comes despite a fall in total cash receipts caused by a reduction in numbers of cattle sold due to herd building, ABARES says.

It has attributed the improved overall result to an even sharper reduction in overall costs, in particular in relation to cattle and fodder purchases and repairs, maintenance and interest payments.

One clear exception involves those businesses that rely upon the Indonesian live export market. ABARES’s report pays limited attention to this category, but in the detail lies the estimate that northern operations geared to supplying Indonesia are expected to have endured a 40pc decline in overall farm cash incomes in 2011–12 compared to 2010-11.

Southern operations have also recorded a reduction in costs, but ABARES says overall receipts have fallen by a greater amount (due to lower prices and fewer sales as a result of herd rebuilding) which has underpinned the overall decline in southern financial performance.

The estimates are contained in an ABARES report, Financial performance of beef cattle producing farms, 2009–10 to 2011–12, released late last week.

The report defines ‘Northern Australia’ has northern WA, the Northern Territory and Queensland, and ‘Southern Australia’ as southern WA, South Australia, NSW, ACT, Victoria and Tasmania. It excludes farm businesses with fewer than 100 head of cattle to focus it analysis on larger beef cattle producers.

Annual rates of return for beef cattle producing farms averaged 1.6pc over the past three years in the north, and 1.3pc in the south.

In contrast to the short term trend, longer term data illustrates a decline in average incomes in the north and a rise in average incomes in the south.

Farm cash income for northern beef producers for the three years to 2010-11 averaged $71,400, well below the $102,000 average recorded during the 10 years ending 2004-05.

The equivalent figure for southern beef producers in the three years to 2010-11 was $74,000, higher than the $68,000 average for the 10 years to 2004-05.

To read the full report click here

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