Bumper year for most farmers

Duncan B.

Australian farmers are set to enjoy the highest farm incomes and profits in 20 years, thanks to a bumper winter grain crop and excellent returns for wool, sheep and cattle.

A report released in early March by the Australian Bureau of Agricultural and Resource Economics and Sciences predicts that farm production value will hit $63.8 billion in 2016-2017, with export earnings predicted to exceed $48 billion.

Average broadacre farm profit will be about $111,000, although this figure varies from state to state and between different commodities.

Dairy Farmers Suffering

On the down side, 13% of farms are still in the red, and dairy farmers are expected to experience lower earnings and steep financial losses. This is due to lower milk prices and reduced milk production.

As if this is not bad enough, dairy farmers are also copping another hit at the hands of the supermarket giants Woolworths and Coles. They have started a price war based on cheese, with Woolworths selling own-brand tasty cheese imported from New Zealand for $6 per kilo. Dairy industry sources are asking how this price can be profitable when tasty cheese sells for about $5000 per tonne on the world market. Freight, cutting, packaging and retail distributions and margin must be added to this before the product reaches the supermarket. Dairy farmers are furious about the actions of supermarkets in selling cheese so cheaply. Some are questioning whether they still have a future in farming.

Brand name cheeses such as Coon and Bega which sell for much more than $6 per kilo, and provide a better return for dairy farmers are likely to experience reduced sales, leading to reduced incomes for their dairy farmer suppliers.

Increasing Concentration of Ownership

In January, Agribusiness Australia released a report which stated that the agribusiness
sector was worth over $500 billion to the Australian economy in 2015-16. Food manufacturing and processing was worth $132 billion and the food retail sector was worth $127 billion.

Ownership of Australian farming is becoming more concentrated, with corporate farming and large family farm operations earning more than $2 million dominating Australian agriculture.

Corporate and family-corporate farms generated $16.3 billion in gross income or about a third of the $46.3 billion earned by total farming enterprises in 2015-16.  Small farmers earning less than $200,000 in gross income accounted for only 12% of total farm revenue.