by Professor Ross Kingwell, AEGIC Chief Economist
Hats off to farmers, advisers and scientists; gold star performance!
Each year a very useful survey report1 is released that shows the performance of farm businesses in the agricultural region of Western Australia. The most recent report released in late 2022 includes results from 444 farm businesses, combining data from three different farm consultant practices in WA. The average farm size in the survey was 4,628 hectares, with crop production accounting for 79% of effective farm area. So, the farmers’ principal activity was grain production.
Some of the findings from this year’s report are worth highlighting as they reveal the phenomenal performance of many grain farm businesses in the last couple of years. It’s time to celebrate – or at least make widely known – the remarkable achievements of these farmers, their advisers and the scores of scientists who help drive innovation and improvement in agriculture. Their combined efforts have delivered spectacular returns to farm businesses in WA in recent years.
The efficiency gains of these farm operations through time are revealed by this chart of the farms’ water use efficiency (Figure 1). Through use of dry-sowing, soil amelioration, better varieties, improved weed control and sound nutrition; farmers have become increasingly skilled at turning rain into grain.
Not only have farmers been highly skilled in grain production; but they’ve also shown great financial or business prowess. Look at the rates of return to capital generated by these businesses over the recent decade; 2012 to 2021 (Figure 2).
At the start of 2022, almost 90% of all farms surveyed had an equity percentage above 80%, with 31% sitting at 100% equity. Turn the clock back a decade and in 2012 only 43% of farm businesses displayed 80% equity or greater. Over that decade, not only have many farm businesses enjoyed sound or high rates of return to capital and paid off debt, but they’ve also experienced huge capital appreciation.
These Western Australian grain farm businesses can savour and celebrate their success in farming. Well done!
1 Planfarm (2022) Planfarm Benchmarks: 2021 Season, Available via: https://www.planfarm.com.au/resources/
Banner image: the 2022 harvest in action in Morawa, WA. Credit: Katrina Sasse
Expert grains industry analysis and commentary from AEGIC’s Economics and Market Insight Team on a range of big-picture topics that affect Australia’s export grains sector.