20/08/2013 - 15:36

Farmers average just 1% return

20/08/2013 - 15:36

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Farmers average just 1% return
FARMING STATS: Planfarm managing director Greg Kirk, Bankwest rural and regional state manager John Sgambelluri and Planfarm consultant Graeme McConnell at the Planfarm Bankwest survey launch.

Western Australian broadacre farmers only averaged a “fairly miserly” 1.07 per cent return on capital for their 2012 harvests due to variability in grain prices, low rainfall, higher costs and lower yields.

The results from the Planfarm Bankwest benchmarks survey, which looks at more than 500 WA broadacre farm businesses and is considered the most comprehensive annual farm performance survey showed there were big differences between the top 25 per cent performing farmers and the bottom 25 per cent.

The average broadacre farmers operating profit was $120 per hectare with operating costs of $281/ha but the top 25 per cent were able to double their operating profit at an average of $245/ha while the bottom 25 per cent had an average operating profit of only $5/ha which leaves no capacity to meet the finance costs of $35/ha and living costs of $25/ha.

Planfarm results showed farming areas with medium rainfall had the highest ROC, followed by higher rainfall areas, while low rainfall areas struggled to produce positive returns.

Planfarm consultant Graeme McConnell said the 2012 return on capital was below expectations and fairly miserly, but for the top 25 per cent of broadacre farmers they had an average 2012 ROC of 5.26 per cent.

“I actually think there are a couple of really good positives out of this,” Mr McConnell said.  

“The average yields that we’ve got out of that sort of rainfall has been quite remarkable, so I think the ability of our farmers is fantastic to generate results they have out of this sort of event especially in a high cost year.” 

Mr McConnell said the key to operating profitably as a broadacre farmer in WA was capitalising on good years, which were most recently in 2011 and 2008.

In 2011 the average ROC was 8 per cent and 21 per cent ROC for the top 25 per cent, and in 2008 the  average ROC was 8 per cent and 16 per cent ROC for the top 25 per cent.

“The long-term data is starting to have more and more relevance as we go through. The average top 25 per cent of farmers are achieving about 8 per cent (over the last six years) and the average are sitting at about 4 per cent and the bottom 25 per cent aren’t making any money,”Mr McConnell said.

“There’s one thing that’s really obvious is that the top 25 per cent, they’ve made most of their money in two years. What’s happened with the bottom 25 per cent is that they’ve missed those years, so with the variability people need to be really aware that they’ve got to capitalise on those years, they can’t miss it.” 

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