Last season best in 22 years: survey

21 Aug, 2002 10:00 PM
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THE Planfarm 2001 farm business survey has revealed last year's performance was one of the best in 22 years for most of the state, contrasting with this season's worsening drought scenario.

While last year's season got off to a slow start, good rains in late July saved crops in eastern areas and provided best-ever yields in the west of the state.

Prices were also high with the wheat pool return estimated at $249/t for Australian Premium White base wheat, the second highest price since 1992-93.

Farm operating surpluses were the highest recorded in all areas with grain ‹ mainly wheat ‹ providing most of last year's total farm receipt increases.

"It does not mean sheep are not important, it just means they are not as important as crops in terms of income," Planfarm director Peter Falconer said at the release of the survey last week.

Good cost control measures, or more efficient spending, also contributed to the farm operating surpluses in lower rainfall areas.

The survey included 388 farm businesses grouped in Agriculture Department rainfall regions, with Medium Rainfall South (MRFS) containing 147 farmers, the most in any of the rainfall areas.

The Medium Rainfall North (MRFN) had 98 farmers, the Low Rainfall (LRF) region had 93, High Rainfall South (HRFS) 29, and High Rainfall North (HRFN) 21.

The survey area accounted for 12.5pc of the state's production and the number of farmers (including 6.5pc of WA's active wheat growers) was four times the sample used by ABARE, according to Mr Falconer.

Sheep and wool contributed a further 18pc to gross farm income in 2001, with HRFS area the only area where crops didn't dominate.

MRFN had the highest operating surplus per hectare of $174.36, which also had the highest amount of crop of all areas.

"For the first time we saw farm income per hectare over $350 in two of the rainfall areas," Mr Falconer said. HRFN was also above $350 while HRFS averaged $322.

In the previous five years of surveys, no region had recorded an average income above $300ha.

However, there were likely to be tax issues this year as a result of last year's surpluses.

The equity increases last year ranged between $185,967 and $563,428. The highest figure was recorded in MRFN.

The effective farming area has been on the increase from 1997-2001, with the LRF recording an increase of 600ha in the past five years.

Last year's crop area was slightly lower and sheep numbers were slightly higher.

Average return on capital was 9pc, with LRF averaging 10.9pc and MRFN 10.34pc.

Fertiliser was the major cost of production at 20-25pc of all operating costs with weed control accounting for 8-19pc across the regions, although there had been a combined fertiliser and weed control cost reduction of $8/ha since 1998.

The top 25pc of farmers in all areas had operating surpluses ranging between 58-92pc higher than the average.

Mr Falconcer said the top 25pc had higher operating costs, which showed their gains were from higher production and not lower costs.

He said there were no surprises in the fact price and yield drove profit but sometimes this had to be reinforced in the face of agricultural fads.

The report found no relationship between investment in plant and ROC.

"It's the capacity that's important in plant rather than its value," Mr Falconer said.

Plant investment averaged $607,052, an increase of $33,492.

Wool prices were higher in the top 25pc groups with the exception being those farmers in the HRFS. Wool prices were up two years in a row and the average was $4.69kg net in HRFS.

The land value and assets of each farm averaged $2.2 million and in the MRFN this reached $4.3m and LRF $3m. Liabilities were 13pc in HRFN and 17pc in other areas, reduced from 18-21pc one year before.

"Farming might be a lifestyle but it's also a significant business," Mr Falconer said.

He said the difficulty experienced by farmers in the bad times could be traced back to decisions made in the good times.

"We think farming has huge opportunities for people with management abilities and adequate capital," he said.

"2001 was an exception rather than the rule, it was a year where good surpluses should have been conserved or spent wisely."

Mr Falconer said it was embarrassing to release last year's good results given the state was on a knife edge, with some farms now facing a disastrous situation.

"There are huge problems for individual farmers and unless we get good finishing rains, we have got problems in this state," he said.

Planfarm provided most of the survey data with a contribution from Bedbrook Johnston and GRD Byres & Co.

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