2018–19 to 2020–21
Improved financial performance in 2020–21
- In 2019–20, an estimated 72% of Australian broadacre farms were classified as livestock farms (37,210 farms), including those in the beef industry (20,300 farms), sheep industry (12,980 farms), and sheep-beef industry (3,930 farms) (Box 1).
- Farm financial performance of livestock farms improved in 2020–21, with better seasonal conditions resulting in reduced expenditure on fodder, higher receipts from beef cattle but lower receipts for sheep, lambs and wool because of a focus on flock rebuilding due to improved seasonal conditions.
- At the national level, farm cash income for livestock farms increased by around $32,000 to average $123,000 per farm in 2020–21. This estimate is around 14% above the longer-term average of $108,300 per farm in real terms for the 10 years to 2019–20.
- Results vary by state, with average farm cash incomes of livestock farms estimated to have increased in 2020–21 in New South Wales, Western Australia and the Northern Territory, but to have decreased in Tasmania and South Australia, and remained relatively constant in Queensland and Victoria.
- Average farm business profit at the national level increased by around $67,500, from an average of negative $45,500 per farm in 2019–20 to $23,000 per farm in 2020–21. This increase was greater than the increase in farm cash income because of increases in livestock inventories (mainly sheep) following the lows of the previous year.
- The average rate of return (excluding capital appreciation) of livestock farms increased slightly, from negative 0.4% in 2019–20 to 0.8% in 2020–21, slightly above the 10-year average to 2019–20 of 0.7%.
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Prospects for recovery remain strong
- The overall financial situation for livestock farms remains strong despite prolonged and severe drought in many regions.
- At the national level, average debt of livestock farms increased by around $36,000 to $451,000 per farm in 2019–20. This was mainly due to an increase in working capital debt, much of which was used to purchase fodder.
- Increases in farm business debt over time have generally been matched by increases in land prices, resulting in equity ratios remaining strong at an average of around 91%.
- Historically low interest rates have meant that debt servicing capacity is relatively high among livestock farms. In 2019–20, the proportion of farm receipts needed to fund interest payments was 5.3%, below the 10-year average to 2018–19 of 7.4%.
- Many livestock farms also 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 farms (Figure 1).
Figure 1 Farm household income and liquid assets by farm size, livestock farms, 2019–20 average per farm
Specialist beef farms
- For specialist beef farms, average farm incomes increased by around $40,000 to $133,000 in 2020–21, with a combination of increased cattle sales, higher beef cattle prices and lower fodder costs.
- In 2020–21, average fodder expenditure per farm almost halved from 2019–20 levels. This reduction was partially offset by an increase in expenditure on crop and pasture chemicals and fertiliser.
- In 2020–21, most specialist beef farms recorded farm incomes well above the 10-year average to 2019–20 across much of Australia (Map 1). This was a significant improvement in many regions compared with 2019–20 (Map 2).
- Farm business profit increased by almost $26,000, from an average of negative $5,700 in 2019–20 to $16,000 in 2020–21. This increase in profit was not as large as the increase in farm cash income due to a slight reduction in cattle inventories.
- Rate of return (excluding capital appreciation) increased from around negative 0.5% in 2019–20 to 0.6% per farm in 2020–21.
Map 1 Farm cash income, specialist beef farms, Australia, 2020–21
Map 2 Farm cash income, specialist beef farms, Australia, 2019–20
Box 1 ABARES farm survey industry definitions
The data in this report are 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 and includes the following industries (defined by Australian and New Zealand Standard Industrial Classification (ANZSIC)):
- 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.
- 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.
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.
ABARES usually produces projections of key estimates based on survey responses collected from October to January each year of farmers’ estimates of production, receipts and costs over the remainder of the financial year. In 2020–21, the farm surveys were conducted entirely by phone because of travel and other restrictions related to COVID-19. To reduce respondent burden and complexity of the survey ABARES developed a model-based approach to producing its projections of key estimates.
Further information on the ABARES farm surveys and survey methodology can be found on the ABARES website.
Beef cost of production, 2018–19 to 2019–20
- The average cash costs of beef cattle production increased from 179 cents per kilogram in 2018–19 to 239 cents per kilogram in 2019–20.
- This increase was mainly driven by increased expenditure on fodder because of drought.
- Higher cattle prices more than offset the increase in the average cost of production with an increase in the operating margin (over cash costs) from 75 cents per kilogram in 2018–19 to 223 cents per kilogram in 2019–20.
Data and other resources
A large selection of ABARES farm survey data on the beef, slaughter lambs and sheep industries.
See our previous research page for previous versions of the report Australian beef: financial performance of beef farms.
Further information about our survey definitions and methods.
This web report provides a detailed profile of the financial performance of farm businesses in the grains, livestock and dairy industries in the years 2018–19 to 2020–21.