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Outlook: Average beef farm income $67,000 in 2011-12

Beef Central, 08/03/2012

Cash incomes for Australian beef farms are expected to average $67,000 this financial year, about 6pc higher than the current 10 year average.

Behind the result, according to ABARES, is a significant reduction in cattle purchase costs, which has offset a small reduction in cash receipts.

Cash receipts will be lower primarily because beef farms have typically sold fewer cattle this financial year due to a focus on herd rebuilding and converting grass into kilograms of beef.

The breeding push has also meant that farms have typically purchased fewer cattle, which in turn has reduced their cattle purchase expenditure.

This, combined with reduced expenditure on fodder due to better seasons and lower expenditure on interest payments, has resulted in average total cash costs for beef industry farms declining by around 10 per cent.

The small reduction in cash receipts and much larger reduction in cash costs is expected to result in overall average farm cash income this financial year increasing to average $67 000 per farm in 2011–12.

In southern Australia, New South Wales, Victoria, South Australia, Tasmania and southern Western Australia, where small herd size farms predominate, farm cash income for beef industry farms is projected to increase from an average of $35 400 per farm in 2010–11 to an average of $45 300 per farm in 2011–12.

In Queensland, the Northern Territory and northern Western Australia, where average herd size is much larger than the rest of Australia, farm cash income for beef industry farms is projected to increase from an average of $91 700 per farm in 2010–11 to an average of $107 000 in 2011–12.

As a result of further reductions in the number of cattle expected to be sold for live export to Indonesia in 2011–12, farm cash income for the 300 northern cattle businesses that rely upon live exports for more than 50pc of their income is expected to decline by around 40pc from an average of $519 000 per farm in 2010–11 to around $310 000 per farm in 2011–12.

However, overall farm cash income is projected to increase for northern Australian farms from an average of $127 000 per farm business in 2010–11 to an average of $165 000 in 2011–12.

Although turn-off of cattle for live export was reduced in 2010–11 and is expected to be further reduced in 2011–12, farms received higher average prices for cattle for slaughter, partly due to higher sale weights for cattle resulting from excellent seasonal conditions in 2011–12, together with a substantial reduction in expenditure on cattle purchased and transferred onto northern properties.

Further, the increase in average farm cash income in the northern live cattle export regions is mainly being driven by improved performance of the largest corporately owned farm businesses.

Farm cash income for family operated farm businesses in the northern live cattle export region is expected to average $120 000 per business in 2011–12, similar to the level in 2010–11.

In 2011–12, beef cattle numbers are expected to increase in almost all regions of both northern and southern Australia, resulting in a further boost to the value of inventories of cattle on farms.

As a result, farm business profit in most regions is expected to increase in percentage terms by a relatively larger amount than farm cash income.

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