Farm profit to drop 41 per cent due to big dry and low markets
Farmers continue to face the wrath of the market and weather, with incomes expected to be “well below the long-term average” in 2023-24.
Farm cash income is predicted to plummet by a staggering 41 per cent in 2023-24 due to the twin forces of drying weather conditions and falling commodity prices hammering crop and livestock producers, according to new ABARES data.
In dollar terms, ABARES has forecast that the average national farm operation income will be about $197,000, reverting back to income levels last seen three years ago.
The farm business profit profile was $294,000 in 2021-22 and $240,00 in 2022-23, but this is expected to fall to just $56,000 in 2023-24.
The dip follows record farm profits in 2020-21 and 2021-22 and national agricultural production topping $95 billion last financial year.
ABARES executive director Jared Greenville has warned that farmers across large regions of Australia can expect incomes “well below the long-term average” in 2023-24.
“Livestock farms will be affected by large decreases in prices for beef cattle and sheep, with sheep farm incomes forecast to be well below average,” Dr Greenville said.
“It’s important to note these numbers are based on price and weather forecasts from early September. Prices for cattle and sheep have fallen further in recent weeks so there is likely more downside risk to these forecasts than upside at present.”
For livestock producers, while sales are forecast to increase in 2023-24, following a period of favourable weather and herd restocking, the current trend of increased sales being offset by an overall decrease in receipts is tipped to continue.
Incomes for beef farms are forecast to drop 27 per cent to $132,000, with a lower estimate of $92,000, but remain in line with the long-term average for beef farms following record incomes in the previous two years.
Meanwhile, sheep farm incomes are forecast to decrease by 38 per cent to $36,000 in 2023-24, with a lower estimate of $27,000.
Incomes for cropping farms are forecast to decline by a staggering 45 per cent to average around $627,000 nationally in 2023-24, with the lower estimate being $479,000.
The production declines for major winters crops due to drier conditions in 2023–24 is led by wheat, forecast to be down 36 per cent, barley (down 26 per cent) and oilseeds (down 38 per cent).
Further declines are only saved by current strong soil moisture.
The areas predicted to be most affected by a combination of declining sheep, lamb and wool prices and dry conditions are southern Victoria, South Australia, parts of Tasmania and Western Australia.
While farmers in cropping zones in northern NSW, southern Queensland and northern Western Australia can expect tighter margins.
Meanwhile, the report also showed that farm debt had increased substantially in recent years as strong incomes and low interest rates led to increased lending, mainly to purchase land.
The BOM officially declared an El Nino last month while the ABARES report follows news
that the average Australian farm has lost almost $30,000 due to adverse seasonal conditions since 2001.
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