ABARES: Rising costs challenge farmers’ profitability

ABARES latest number crunching has shed light on the daunting financial landscape ahead for Australian producers.

Farmers’ ability to keep costs in check is being severely tested with the price of labour, chemicals and repairs tipped to keep surging into next financial year.

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) latest number crunching on farm costs and returns highlights the key headwinds being faced by primary producers.

Even though a rebound in livestock prices and a promising winter growing season are expected, the cost of doing business for Australian farmers continues to rise.

Chemical and fertiliser costs have come off record highs paid three years ago, but they are still tipped to jump from $3.7 billion in 2023-24 to $3.8 billion next financial year.

Materials and services remain the biggest cost pressure for farmers with a slight rise from $43.1 billion to $43.4 billion also tipped.

Labour costs continue to grow with a step up from $7.9 billion to $8.3 billion — a rise of $2 billion since 2019-20.

Fuel, freight and contracting services are tipped to “moderate slightly” in 2024-25.

National Farmers Federation president David Jochinke. Picture: Martin Ollman

National Farmers Federation president David Jochinke said curbing costs remained a massive challenge.

“I don’t think there are too many things farmers touch that haven’t had a price increase of significance,” he said.

“The question will always be how do farmers manage these costs under what feels like a very volatile market in almost every commodity.

“And then what are the opportunities for these costs to come down as far as inputs and stabilising some of those key overheads.

“I can’t see how we can manage these rising costs unless there are some big decisions made by governments.

“The key to that is having good policy, having access to markets, making sure they’re not closing legitimate markets.”

The cost of insurance has never been higher, rising from $260 million in 2017-18 to $397 million with big jumps being blamed on successive natural disasters.

United Dairy Farmers of Victoria president Bernie Free said the cost crunch for farmers was being felt across the board.

“Everybody thinks we’re making plenty of money, but when you’re a farmer with an average debt or a little bit more, it gets a bit interesting paying the bills and the interest,” he said.

“Power has gone up significantly and most of the stuff you buy out of a rural store has gone up significantly.

“Wages have gone up and are continuing to go up.

“It doesn’t matter what business you’re in at the moment, it’s costly and dairy certainly chews some money when you’re trying not to spend money.”