physical and financial performance benchmarks for grain

Physical and financial performance benchmarks for grain producing

farms, South Australia and Victoria Mallee agroecological zone

Australian Bureau of Agricultural and Resource Economics and Sciences

Australian Government

www.aba re s . gov. auS c i e n c e a n d e c o n o m i c s f o r d e c i s i o n - m a k e r s

ABARES report prepared for the Grains Research and Development Corporation

Stephen Hooper and Caroline Levantis

February 2011

ii

© Commonwealth of Australia 2011

This work is copyright. The Copyright Act 1968 permits fair dealing for study, research, news reporting, criticism or review. Selected passages, tables or diagrams may be reproduced for such purposes provided acknowledgment of the source is included. Major extracts or the entire document may not be reproduced by any process without the written permission of the Executive Director, ABARES.

The Australian Government acting through the Australian Bureau of Agricultural and Resource Economics and Sciences has exercised due care and skill in the preparation and compilation of the information and data set out in this publication. Notwithstanding, the Australian Bureau of Agricultural and Resource Economics and Sciences, its employees and advisers disclaim all liability, including liability for negligence, for any loss, damage, injury, expense or cost incurred by any person as a result of accessing, using or relying upon any of the information or data set out in this publication to the maximum extent permitted by law.

Hooper, S and Levantis, C 2011, Physical and financial performance benchmarks for grain producing farms, South Australia and Victoria Mallee agroecological zone, ABARES report prepared for the Grains Research and Development Corporation, Canberra, February.

Australian Bureau of Agricultural and Resource Economics and Sciences Postal address GPO Box 1563 Canberra ACT 2601 Australia Switchboard +61 2 6272 2010 Facsimile +61 2 6272 2001 Email [email protected] Web abares.gov.au

ABARES project 43145

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) was formed following the merger of the Australian Bureau of Agricultural and Resource Economics (ABARE) and the Bureau of Rural Sciences (BRS) in 2010–11.

iii

ContentsIntroduction 1

Broadacre production in the South Australia and Victoria Mallee zone 3

Farm financial performance 4

Socioeconomic benchmarks 6

Farm performance benchmarks 6

Survey methods and definitions 18

Maps1 GRDC agroecological zones 1

Tables1 Agricultural production in the South Australia and Victoria Mallee zone 3

2 Summary of financial performance: South Australia and Victoria Mallee zone 4

3 Socioeconomic benchmarks: South Australia and Victoria Mallee zone 7

4 Physical performance benchmarks and prices: South Australia and Victoria Mallee zone 16

5 Financial performance benchmarks: South Australia and Victoria Mallee zone 17

Figuresa Farm business profit, South Australia and Victoria Mallee zone 5

b Rate of return on capital at full equity, excluding capital appreciation, South Australia and Victoria Mallee zone 6

c Area operated, South Australia and Victoria Mallee zone 8

d Land use intensity, South Australia and Victoria Mallee zone 9

e Proportion of farm area sown to crops, South Australia and Victoria Mallee zone 9

f Grain production, South Australia and Victoria Mallee zone 10

g Average grain yield per hectare sown, South Australia and Victoria Mallee zone 11

h Average price received for grain, South Australia and Victoria Mallee zone 12

i Water use efficiency, South Australia and Victoria Mallee zone 13

j Total cost to value of output ratio, South Australia and Victoria Mallee zone 15

South Australia and Victoria Mallee ABARES

1

IntroductionIn May 2010 the Grains Research and Development Corporation (GRDC) commissioned ABARE (now ABARES) to use data from its extensive Australian agricultural and grazing industries survey (AAGIS) to develop a range of physical and financial performance benchmarks for each GRDC agroecological zone (map 1). The objective of this study is to enhance grain producers’ and consultants’ awareness of the financial performance of grain producing farms, and of the key factors driving the stronger results of the better performing farms.

The analysis has been conducted separately for each of the 13 agroecological zones (map 1) for the three-year period 2006–07 to 2008–09. In addition, data for the period 1978–79 to 2008–09 are presented for selected variables to provide a longer term perspective. This report presents the results of the analysis for the South Australia and Victoria Mallee agroecological zone.

The current analysis divides the grain industry into two sectors—specialist grain producing farms and mixed enterprise grain producing farms. Farms classified as being in the wheat and other crops industry (box 1) are referred to as specialist grain farms. Any broadacre farm surveyed by ABARES that is not classified as being in the wheat and other crops industry but that planted more than 40 hectares of grain crops is classified as a mixed enterprise grain farm.

ABARES (formerly ABARE) has conducted the AAGIS annually since 1977–78 to collect detailed physical, financial and socioeconomic data from broadacre farms. As well as the standard farm financial performance variables reported in ABARES publications, additional benchmarks from the existing database were developed to enable comparison between farms of different scales of operation. These benchmarks fall into three broad categories:

GRDC agroecological zonesmap 1

WA Mallee and Sandplain

WA northern

WA eastern

WA central

SA mid-north – lower Yorke and Eyre

SA Vic Mallee

SA Vic Bordertown–Wimmera

Vic high rainfall and Tas grains area

NSW Vic slopes

NSW central

NSW north-west Qld south-west

Qld central

NSW north-east Qld south-east

2


• Whole-of-farm benchmarks—including farm size, rainfall, land use intensity, enterprise mix, rate of return and a range of farm financial performance variables expressed on a per hectare operated basis to enable a direct comparison between farms of different scales.

• Enterprise-specific benchmarks—including grain yields, livestock reproduction rates, wool production per head shorn and the average price received for each commodity produced.

• Socioeconomic benchmarks—covering the age, education and off-farm employment of the operator and spouse. In addition, the total off-farm income of the operator and spouse is estimated.

This report comprises four main sections, starting with a brief discussion of the value of broadacre agriculture in the South Australia and Victoria Mallee agroecological zone. This is followed by a discussion of farm financial performance (covering farm cash income, farm business profit and rate of return) and socioeconomic benchmarks. The main body of the report contains a detailed discussion of the main performance benchmarks of the top performing farms in the zone.

Performance benchmarks for the average and top performing farmsIn this research, the GRDC was interested in obtaining an increased understanding of the factors driving the performance of top performing farms. To address this, the top performing farms in each sector were identified by ranking the surveyed farms by rate of return on capital excluding capital appreciation. For all zones, the top performing farms were defined as the top 10 per cent of farms based on rate of return within the specified three-year period. In some zones the top 10 per cent was not a representative sample, so the cut-off was increased to the top 20 or 30 per cent of farms. Where the top 30 per cent of farms did not result in a representative sample, the analysis of the top performing farms was not undertaken.

The superior financial performance of the top performing farms in each group is likely to be the result of a number of factors, including differences in the scale of the farm, the natural resources on the farm lands and management decisions and practices. The effect of these

box 1 Broadacre farms’ industry classification

Wheat and other crops industry (ANZSIC06 Class 0146 and 0149) includes farms engaged mainly in growing rice, other cereal grains, coarse grains, oilseeds and/or pulses.

Mixed livestock–crops industry (ANZSIC06 Class 0145) includes farms engaged mainly in running sheep, beef cattle or both and growing cereal grains, coarse grains, oilseeds and/or pulses.

Sheep industry (ANZSIC06 Class 0141) includes farms engaged mainly in running sheep.

Beef industry (ANZSIC06 Class 0142) includes farms engaged mainly in running beef cattle.

Sheep–beef industry (ANZSIC06 Class 0144) includes farms engaged mainly in running both sheep and beef cattle.


3

differences may be reflected in the farm’s overall production, enterprise mix, prices received or cost of production. To investigate this further, a series of physical and financial performance benchmarks were used for each of the four groups:

• specialist grain farms• top performing specialist grain farms• mixed enterprise grain farms• top performing mixed enterprise grain farms.

Broadacre production in the South Australia and Victoria Mallee zoneIn the three years to 2008–09, there were an estimated 2548 broadacre grain producing farms in the South Australia and Victoria Mallee agroecological zone, of which 62 per cent were specialist grain farms (table 1). Grain producers in the zone predominantly operated grain, grain–beef and grain–sheep farms, with annual crop and livestock sales worth $777 million. During the three years to 2008–09, wheat and barley accounted for almost 90 per cent of the $562 million worth of grain crops produced. The other main crop varieties grown in the zone include canola, lupins, field peas as well as small areas of pulses like chickpeas and faba beans. Specialist grain farms accounted for almost 80 per cent of the total value of grain produced in the zone, while mixed enterprise grain farms accounted for 53 per cent of the value of livestock and livestock products.

1 Agricultural production in the South Australia and Victoria Mallee zone

average per financial year over the period 2006–07 to 2008–09

specialist mixed enterprise all broadacre grain farms grain farms grain farms

contribution contribution contribution all farms of top 20% a all farms of top 20% a all farms of top 20% a

Average number of farms 1 569 978 2 548 Sample number 150 106 256

Gross value of: $m % $m % $m %Grain crop sales 447 38 115 33 562 37– wheat 285 39 70 37 355 39– barley 113 34 35 30 148 33– oats 2 47 1 11 3 37– oilseeds 10 78 1 0 12 69– pulses 20 56 2 74 21 57– other grain crops 17 13 7 16 24 14Hay sales 25 28 8 40 33 31Other crop sales 2 80 2 13 4 47

Livestock sales 83 18 95 16 178 17– beef cattle 9 12 33 12 42 12– sheep and lambs 45 20 39 20 83 20– wool 30 17 23 16 53 16

a Contribution of the top 20 per cent of farms (according to rate of return, excluding capital appreciation) to the sector in the zone. Source: ABARES, Australian agricultural and grazing industries survey.

4


When farms in both sectors of the grain industry were distributed by rate of return excluding capital appreciation, the top 20 per cent of farms accounted for a disproportionately large share of the value of grain production by broadacre farms in the South Australia and Victoria Mallee zone (table 1). The top performing grain farms accounted for 37 per cent of the value of grain production but only 17 per cent of livestock and livestock product sales.

Farm financial performanceIn the three years to 2008–09, specialist grain farms in the South Australia and Victoria Mallee agroecological zone, on average, realised farm cash incomes of almost $108 000 a farm. Farm business losses, once depreciation and the imputed cost of unpaid family labour is included, averaged around $25 500 a farm (table 2). On average, these farms generated annual farm cash receipts of around $440 000, of which 76 per cent came from the sale of grain crops (table 2). In comparison, mixed enterprise grain farms in the three years to 2008–09 generated an average farm cash income of $56 937 a farm and business losses averaging $39 685 a farm. Annually, these farms generated farm cash receipts of almost $278 000 a farm, with 55 per cent derived from the sale of grain crops.

2 Summary of financial performance: South Australia and Victoria Mallee zone, 2006–07 to 2008–09, by industry average per farm

mixed enterprise specialist grain farms grain farms

average top 20% a average top 20% a

Farm cash receipts $ 440 628 (5) 717 176 (9) 277 827 (8) 459 960 (23)

– beef cattle $ 5 440 (16) 3 047 (51) 33 724 (14) 21 008 (12)

– crops $ 335 206 (5) 593 778 (10) 154 919 (15) 354 296 (31)

– sheep and lambs $ 28 372 (11) 26 148 (0) 39 399 (8) 41 308 (12)

– wool $ 19 213 (24) 15 379 (0) 23 518 (10) 19 231 (21)

less Farm cash costs $ 332 883 (4) 456 264 (9) 220 889 (6) 240 024 (18)

– contracts $ 7 819 (16) 10 825 (29) 3 275 (19) 4 137 (42)

– crop and pasture chemicals $ 47 947 (7) 90 463 (12) 20 566 (8) 35 693 (16)

– fuel, oil and grease $ 43 002 (4) 49 231 (7) 25 661 (6) 27 493 (18)

– fertilisers $ 64 729 (5) 104 905 (11) 33 077 (9) 43 647 (18)

– interest payments $ 27 892 (9) 28 782 (15) 20 731 (12) 12 388 (27)

– repairs and maintenance $ 29 189 (5) 33 625 (10) 20 557 (8) 19 918 (19)

Farm cash income $ 107 745 (13) 260 912 (12) 56 937 (26) 219 935 (31)

plus build-up in trading stocks $ –3 482 (179) 27 896 (55) –8 663 (64) 1 822 (231)

less depreciation $ 70 977 (4) 81 864 (9) 37 642 (7) 45 241 (25)

less imputed cost of family labour $ 58 764 (3) 58 997 (7) 50 265 (5) 51 338 (13)

Farm business profit $ –25 479 (47) 147 947 (19) –39 633 (34) 125 179 (43)

Farm business profit at full equity $ 10 535 (108) 187 849 (15) –17 013 (78) 139 288 (40)

Rate of return at full equity – excluding capital appreciation % 0.4 (108) 5.8 (15) –0.7 (80) 5.1 (30)

– including capital appreciation % 3.6 (18) 6.9 (19) –0.2 (691) 7.2 (44)

a Ranked by rate of return at full equity, excluding capital appreciation. Note: Figures in parentheses are relative standard errors (RSEs), which are standard errors expressed as a percentage of the estimate provided. A guide on how to use RSEs is in the survey methods and definitions section.


5

The farm financial performance of the top 20 per cent of farms in both the specialist grain and mixed enterprise grain sectors was markedly stronger than the average. The top specialist grain farms realised an average farm business profit of almost $148 000 a farm and the top performing mixed enterprise grain farms realised a profit of $125 000 a farm.

Over the past three decades, there has been a significant divergence in the performance of the top performing farms in both sectors relative to the sector average. On average, farms in both the specialist grain and mixed enterprise grain sectors consistently struggled to realise a profit (figure a). In contrast, the profitability of the top performing farms in both sectors has strengthened markedly since the early 1980s. For example, farm business profit for the top performing mixed enterprise grain farms averaged $24 000 a farm during the 1980s, compared with $135 000 a farm during the 2000s.

The strengthening in farm business profit of the top performing specialist grain farms has been reflected in a steady rise in the average rate of return on capital (calculated as profit at full equity as a proportion of the value of farm capital) of these farms, despite capital values also increasing during this period (figure b). That is, the rate of growth in profitability of the top performing farms was greater than the rate of growth in farm capital values, resulting in higher rates of return. In the case of the top performing mixed enterprise grain farms, the rate of growth in farm business profits has been slower than that of capital values, resulting in rates of return trending downwards during the 1980s and 1990s. During the 2000s, however, the stronger growth in profits resulted in some strengthening in rates of returns until the drought in the late 2000s.

Farm business pro�t, South Australia and Victoria Mallee zone

2008–09$‘000

a

–100–50

50

100

150

200

250

300

350

specialist grain farms mixed enterprise grain farms

top 20 per centaverage

2006

–07

to 2

008–

09

1997

–98

to 1

999–

2000

2000

–01

to 2

002–

03

1985

–86

to 1

987–

88

1988

–89

to 1

990–

91

1991

–92

to 1

993–

94

1994

–95

to 1

996–

97

1979

–80

to 1

981–

82

1982

–83

to 1

984–

85

2006

–07

to 2

008–

09

1997

–98

to 1

999–

2000

2000

–01

to 2

002–

03

1985

–86

to 1

987–

88

1988

–89

to 1

990–

91

1991

–92

to 1

993–

94

1994

–95

to 1

996–

97

1979

–80

to 1

981–

82

1982

–83

to 1

984–

85

2003

–04

to 2

005–

06

2003

–04

to 2

005–

06

6


Socioeconomic benchmarksIn the three years to 2008–09, the operators of the top performing specialist grain farms, and their spouses, were slightly younger and better educated than the specialist grain sector overall (table 3). During this period, the operators of specialist grain farms and their spouses earned an average of almost $29 000 a year from off-farm income sources, with the spouse’s off-farm salaries comprising most of this.

In the mixed enterprise grain sector, operators of the top performing farms, and their spouses, were of a similar age to those in the mixed enterprise grain sector overall (table 3). Among the top performing farms, none of the operators had undertaken a tertiary course and none of the spouses had completed a trade apprenticeship or technical college course. In the three years to 2008–09, the operator of mixed enterprise grain farms and their spouse earned almost $35 000 a year from off-farm income sources, compared with $27 000 earned by their counterparts in the top 20 per cent of mixed enterprise grain farms.

Farm performance benchmarksFarm financial performance in the South Australia and Victoria Mallee zone has been influenced by a range of factors that have affected the farms’ underlying profitability (including factors like input and output prices, seasonal conditions, farm productivity and management decisions) as well as producers’ investments in land to boost the scale of the farming business. In this section, ABARES survey data are used to investigate the effect of changes in the farm scale and farm profitability to improve the industry’s understanding of the factors driving the superior performance of the top performing farms in both sectors of the grain industry.

Rate of return on capital at full equity, excluding capital appreciation,South Australia and Victoria Mallee zoneb

%

–5

5

10

15

20

25



2006

–07

to 2

008–

09

1997

–98

to 1

999–

2000

2000

–01

to 2

002–

03

1985

–86

to 1

987–

88

1988

–89

to 1

990–

91

1991

–92

to 1

993–

94

1994

–95

to 1

996–

97

1979

–80

to 1

981–

82

1982

–83

to 1

984–

85

2006

–07

to 2

008–

09

1997

–98

to 1

999–

2000

2000

–01

to 2

002–

03

1985

–86

to 1

987–

88

1988

–89

to 1

990–

91

1991

–92

to 1

993–

94

1994

–95

to 1

996–

97

1979

–80

to 1

981–

82

1982

–83

to 1

984–

85

2003

–04

to 2

005–

06

2003

–04

to 2

005–

06


7

Over the past three decades, operators of specialist grain farms have invested heavily to expand the size of their farms (figure c). In the 2000s, operators of specialist grain farms managed, on average, 2383 hectares—around 40 per cent more than in the 1980s. While the top performing specialist grain farms are larger than the sector average, the rate of growth in farm area slowed significantly in the 2000s relative to the sector average. Consequently, in the 2000s, the top performing specialist grain farms were only 2 per cent larger than the sector average, compared with 25 per cent larger in the 1990s.

In the mixed enterprise grain sector, there is no consistent pattern in changes in farm size in terms of area operated during the past three decades. Nonetheless, the top performing mixed enterprise grain farms were significantly larger than the sector average—averaging 21 per cent larger during the 2000s.

Grain producers in the zone have also increased the land use intensity (see box 2) of their farms over the last three decades (figure d). During the 1980s and 1990s, specialist grain farms’ land use intensity fluctuated between 5.5 and 6 sheep equivalents per hectare while land use intensity for mixed enterprise grain farms fluctuated between 4.5 and 5 sheep equivalents per hectare. As a result of lower returns from sheep, many producers reduced sheep numbers to expand cropping activities over the past two decades. During the 2000s, however, rising sheep meat prices have encouraged many producers in the zone to increase sheep numbers and to

3 Socioeconomic benchmarks: South Australia and Victoria Mallee zone, 2006–07 to 2008–09, by industry


average top 20% a average top 20% aOperator

Average age yr 54 (2) 52 (3) 55 (2) 54 (5)

Education – primary school % 4 (44) 0 (0) 6 (50) 0 (0)

– 1–4 years high school % 43 (10) 33 (20) 33 (17) 37 (49)


– trade apprenticeship/technical college % 14 (23) 19 (38) 21 (22) 14 (79)

– tertiary % 3 (48) 9 (73) 7 (30) 0 (0)

Weeks of work off farm wks 1 (65) 0 (0) 7 (22) 0 (0)

Spouse Average age yr 51 (2) 49 (3) 51 (3) 51 (5)

Education – primary school % 0 (0) 0 (0) 5 (61) 0 (0)



– trade apprenticeship/technical college % 4 (43) 13 (35) 9 (35) 0 (0)

– tertiary % 28 (16) 29 (28) 36 (17) 41 (44)

Weeks of work off farm wks 21 (13) 21 (21) 19 (11) 11 (33)

Operator and spouse off-farm income $ 28 835 (14) 21 511 (15) 34 638 (9) 26 897 (21)


8


change the focus of sheep production away from wool and to prime lambs. The greater focus on first cross lambs and efforts to improve pasture quality and quantity to finish more lambs before sale, combined with increased cropping activities, have been associated with a marked increase in the land use intensity of both specialist grain and mixed enterprise grain farms over the past decade.

Area operated, South Australia and Victoria Mallee zone

ha

c

top 20 per cent

1980s1990s2000s

average top 20 per centaverage


500

1000

1500

2000

2500

3000

box 2 Definitions of key terms and concepts

Land use intensity A proxy of the total resources used by agriculture is the measure ‘sheep equivalents’, which converts the resources used to produce sheep, beef cattle, dairy cattle and crops into a single unit. Insights into a farm’s land use intensity can be gained by expressing the sheep equivalent measure on a per hectare operated basis.

Average grain yield For each farm surveyed, this is calculated as the weighted average yield realised across all crop types grown.

Average grain price For each farm surveyed, this is calculated as the weighted average price received across all crop types grown.

Water use efficiency Provides insights into how successfully a farm operator has converted rainfall into farm production. It is defined as farm cash receipts plus the build-up in the value of trading stocks per hectare per 100 millimetres of rainfall.

Ratio of the value of Quantifies total outlays on all farm inputs to produce one dollar of output. inputs to outputs Changes in the ratio of inputs to outputs over time provide insights into changes in the farm’s profitability that are independent of changes in farm size. The value of farm inputs is calculated as total cash costs plus depreciation and the imputed value of unpaid family labour. The value of farm outputs is defined as farm cash receipts plus the build-up in the value of farm trading stocks.


9

Over the past three decades, the top performing specialist grain farms have consistently been operated with a higher land use intensity than the sector average. In comparison, the top performing farms in the mixed enterprise grain sector were operated with a lower land use intensity during the 1980s, but the greater focus on cropping and prime lamb activities in the 1990s and 2000s resulted in these farms being run more intensively than the sector average in the past two decades.

Proportion of farm area sown to crops, South Australia and Victoria Mallee zonee

%

20

40

60

80

100



2006

–07

to 2

008–

09

2000

–01

to 2

002–

03

2003

–04

to 2

005–

06

1994

–95

to 1

996–

97

1997

–98

to 1

999–

2000

1988

–89

to 1

990–

91

1991

–92

to 1

993–

94

2006

–07

to 2

008–

09

2000

–01

to 2

002–

03

2003

–04

to 2

005–

06

1994

–95

to 1

996–

97

1997

–98

to 1

999–

2000

1988

–89

to 1

990–

91

1991

–92

to 1

993–

94

Land use intensity, South Australia and Victoria Mallee zoned

0shee

p eq

uiva

lent

s pe

r hec

tare

ope

rate

d

2

4

6

8

10

12



2006

–07

to 2

008–

09

1997

–98

to 1

999–

2000

2000

–01

to 2

002–

03

1985

–86

to 1

987–

88

1988

–89

to 1

990–

91

1991

–92

to 1

993–

94

1994

–95

to 1

996–

97

1979

–80

to 1

981–

82

1982

–83

to 1

984–

85

2006

–07

to 2

008–

09

1997

–98

to 1

999–

2000

2000

–01

to 2

002–

03

1985

–86

to 1

987–

88

1988

–89

to 1

990–

91

1991

–92

to 1

993–

94

1994

–95

to 1

996–

97

1979

–80

to 1

981–

82

1982

–83

to 1

984–

85

2003

–04

to 2

005–

06

2003

–04

to 2

005–

06

10


The greater focus on grain crop production in the zone has been reflected in the proportion of the farm area that was sown to crops. During the 1990s, operators of specialist grain farms, on average, sowed 40–45 per cent of the farm area to grain crops. By the late 2000s, this had increased to around 60 per cent. In the case of the top performing specialist grain farms, over 70 per cent of the farm land was sown to grain crops in the late 2000s (figure e).

In the mixed enterprise grain sector, cropping activities accounted for just 25–30 per cent of the farm land during the early to mid-1990s, reflecting the importance of livestock activities (particularly sheep) to these farms during this period. However, the steady decline in sheep numbers during the late 1990s and 2000s enabled these producers, on average, to boost the proportion of the farm area sown to grain crops to more than 40 per cent in the late 2000s. In the case of the top performing mixed enterprise grain farms, the shift out of sheep that began in the early 1990s continued throughout the past two decades, and enabled these operators to double the proportion of their farm area sown to crops to more than 50 per cent.

While the area sown to grain crops by farms in both the specialist grain and mixed enterprise grain sectors increased significantly over the past two decades, the quantity of grain produced did not increase as significantly. For example, in the specialist grain sector, the area sown by grain farms during the 2000s averaged 64 per cent greater than during the 1990s, but grain production increased by just 24 per cent (figure f ).

The slower rate of growth in grain production relative to area sown largely reflects the impact of seasonal conditions on grain yields (figure g). Hot and dry conditions throughout much of the 2000s resulted in highly variable and diminishing grain yields for most types of crops.

Grain production, South Australia and Victoria Mallee zone

tonnes/farm

f

500

1000

1500

2000

2500



2006

–07

to 2

008–

09

2000

–01

to 2

002–

03

2003

–04

to 2

005–

06

1994

–95

to 1

996–

97

1997

–98

to 1

999–

2000

1988

–89

to 1

990–

91

1991

–92

to 1

993–

94

2006

–07

to 2

008–

09

2000

–01

to 2

002–

03

2003

–04

to 2

005–

06

1994

–95

to 1

996–

97

1997

–98

to 1

999–

2000

1988

–89

to 1

990–

91

1991

–92

to 1

993–

94


11

Since the mix of crops planted by farms in both sectors of the grain industry has remained largely unchanged for the past two decades (with wheat and barley consistently accounting for 80–90 per cent of the total area sown to crops), the steady fall in individual crop yields translates to a steady decline in the overall average grain yield (see box 2). The average grain yield of the top performing specialist grain and mixed enterprise grain farms fell more sharply over the past decade, mainly reflecting differences in the timing of rainfall events rather than in the total annual rainfall received by these farms relative to the sector average. Nonetheless, the top performing farms in both sectors still consistently realised higher yields than the respective sector averages.

Over the past three decades, the average real grain price (see box 2) received in the zone has weakened, though in the three years to 2008–09 this trend reversed sharply (figure h). However, there is no consistent trend in terms of the top performing farms consistently realising higher (or lower) prices. The higher average grain price realised in the three years to 2008–09 largely reflects international market developments, such as reduced global cereal stocks and increased use of grain to produce ethanol and vegetable oils to produce biodiesel.

The financial performance of broadacre grain producing farms in the South Australia and Victoria Mallee agroecological zone, particularly in the mixed enterprise grain sector, is also heavily influenced by developments in the sheep meat, wool and beef cattle industries.

In the three years to 2008–09, the top performing farms in both sectors were less dependent than other farms on livestock activities. However, in the mixed enterprise grain sector, the top performing farms sold 10 per cent more lambs than the sector average, despite having 10 per cent fewer sheep (table 4). A greater focus on the production of first cross prime lambs resulted in these farms realising higher lambing rates, which enabled them to sustain a higher turn-off

Average grain yield per hectare sown, South Australia and VictoriaMallee zone

t/ha

g

0.5

1.0

1.5

2.0

2.5



2006

–07

to 2

008–

09

2000

–01

to 2

002–

03

2003

–04

to 2

005–

06

1994

–95

to 1

996–

97

1997

–98

to 1

999–

2000

1988

–89

to 1

990–

91

1991

–92

to 1

993–

94

2006

–07

to 2

008–

09

2000

–01

to 2

002–

03

2003

–04

to 2

005–

06

1994

–95

to 1

996–

97

1997

–98

to 1

999–

2000

1988

–89

to 1

990–

91

1991

–92

to 1

993–

94

12


rate for lambs. Furthermore, these farms produced 16 per cent more wool per head shorn than the sector average.

In the specialist grain sector, the top performing farms had 8 per cent fewer sheep than the sector average and sold 8 per cent fewer lambs (table 4). However, these producers achieved slightly higher lambing rates and 7 per cent more wool per head shorn during the three-year period to 2008–09.

During the three years to 2008–09, in both sectors there was little difference between the average price received for most livestock and livestock products by the top performing farms and the sector average.

The financial performance of a producer’s land allocation and production decisions is affected by more than just relative prices and yields. Seasonal conditions, particularly rainfall, affect crops and livestock differently. Crops depend on rain during a narrow growing season, while rain is needed over a longer period for pasture growth for livestock production. Although poor rainfall during the grain growing season can result in crop failure or low yields, poor pasture growth because of a lack of rainfall can be supplemented with purchased (or stored) grain and fodder. In any year, maintaining or improving a farm’s financial performance depends on how effectively a producer can take into account rainfall patterns when making farming decisions (about enterprise mix between crops and livestock and the mix of crop types and cultivars sown). Water use efficiency (see box 2) is one benchmark that provides insights into how effectively a producer’s farming practices convert rainfall into output. For this analysis, rainfall

Average price received for grain, South Australia and Victoria Mallee zoneh

2008–09$/t

50

100

150

200

250

300

350



2006

–07

to 2

008–

09

2000

–01

to 2

002–

03

2003

–04

to 2

005–

06

1994

–95

to 1

996–

97

1997

–98

to 1

999–

2000

1988

–89

to 1

990–

91

1991

–92

to 1

993–

94

2006

–07

to 2

008–

09

2000

–01

to 2

002–

03

2003

–04

to 2

005–

06

1994

–95

to 1

996–

97

1997

–98

to 1

999–

2000

1988

–89

to 1

990–

91

1991

–92

to 1

993–

94


13

data were sourced from the Bureau of Meteorology, with each farm’s annual rainfall assumed to be the same as that observed at the nearest rainfall data collection point.

In the three years to 2008–09, the top performing farms in the specialist grain sector generated $102 a hectare per 100 mm of rainfall in farm receipts—70 per cent more than the sector average (table 5, figure i). In comparison, the top performing mixed enterprise grain farms generated $84 a hectare per 100 mm of rainfall—41 per cent more than the sector average. In the specialist grain sector, this gap in the water use efficiency between the top performing farms and the sector average has been evident for much of the past three decades, though its magnitude has varied considerably. For example, in the 1980s, the average difference between water use efficiency of the top performing farms and the sector average was 19 per cent, compared with 40 per cent during the 2000s.

In contrast, in the mixed enterprise grain sector, there was little difference in water use efficiency between the top performing farms and the sector average throughout the late 1970s and 1980s. However, in the early 1990s the top performing farms began to achieve a higher water use efficiency than the sector overall and this gap has widened since then. This reflects a number of factors including both higher average grain yields and livestock reproduction rates and changes in the farms’ enterprise mix in response to relative returns of crops, wool and sheep meat over the past two decades. That is, there was an earlier and greater move out of wool production to expand cropping activities starting in the early 1990s and to prime lamb production starting in the late 1990s.

In the three years to 2008–09, specialist grain farms spent $130 per hectare operated on farm inputs (table 5). The main cost items were fertilisers, chemicals, fuel, repairs and interest

Water use e�ciency, South Australia and Victoria Mallee zone

2008–09dollars

i

dolla

rs p

er 1

00 m

m p

er h

ecta

re

25

50

75

100

125

150

175

200



2006

–07

to 2

008–

09

1997

–98

to 1

999–

2000

2000

–01

to 2

002–

03

1985

–86

to 1

987–

88

1988

–89

to 1

990–

91

1991

–92

to 1

993–

94

1994

–95

to 1

996–

97

1979

–80

to 1

981–

82

1982

–83

to 1

984–

85

2006

–07

to 2

008–

09

1997

–98

to 1

999–

2000

2000

–01

to 2

002–

03

1985

–86

to 1

987–

88

1988

–89

to 1

990–

91

1991

–92

to 1

993–

94

1994

–95

to 1

996–

97

1979

–80

to 1

981–

82

1982

–83

to 1

984–

85

2003

–04

to 2

005–

06

2003

–04

to 2

005–

06

14


payments. While the top performing specialist grain farms spent $183 per hectare operated, the composition of these outlays differed markedly. The top performing specialist grain farms spent proportionately more on fertilisers and chemicals and less on fuel, interest and repairs.

In the mixed enterprise grain sector, farm cash costs averaged $116 per hectare operated on farm inputs. The main cost categories were fertilisers, chemicals, fuel and repairs. In the three years to 2008–09, around 7 per cent of farm cash costs were used to purchase beef cattle and 3 per cent to buy sheep to expand farm herd and flock numbers. In comparison, the top performing mixed enterprise grain farms spent $139 a hectare on farm inputs. Relative to the sector average, these farms spent proportionately more on fertilisers, chemicals and handling and marketing charges. In the three years to 2008–09, the top performing mixed enterprise grain farm operators used around 3 per cent of total cash costs to purchase sheep, but no funds were used to buy beef cattle.

While the costs of farm inputs per hectare operated may be higher for some farms, this could reflect either inefficiencies in the use of these inputs or a range of factors including differences in a farm’s enterprise mix or land use intensity. Another method of comparing the relative costs of farms with different scales of operation and enterprise mix is the ratio of the value of inputs to outputs (see box 2). A ratio of 80 indicates that the producer spent 80 cents on inputs to produce one dollar of output. Growth in the value of a farm’s output achieved through a smaller (greater) corresponding growth in expenditure on inputs is reflected in a lower (higher) ratio and stronger (weaker) farm financial performance. Furthermore, to maintain a stable value of inputs to outputs ratio, growth in the value of outputs needs to offset increases in input prices that occur over time.

In the three years to 2008–09, adverse seasonal conditions resulted in specialist grain farms spending 106 cents per dollar of output produced, compared with 115 cents per dollar of output in the mixed enterprise grain sector. In comparison, over the same period the top performing specialist grain farms spent 80 cents and the top performing mixed enterprise grain farms spent 73 cents. Further, over the past 20 years there are markedly different trends in the different sectors.

In the specialist grain sector, the ratio of the value of farm inputs to outputs improved between the early 1980s and the early 2000s, falling from an average of 102 cents in the 1980s to 95 cents in the 1990s. In the 2000s, adverse seasonal conditions constrained production (through factors like lower grain yields and livestock reproduction rates, and increased turn-off of lighter weight lambs). Consequently, the ratio rose to average 97 cents during the 2000s, but reached a peak of 106 cents in the three years to 2008–09. A similar trend is apparent in the top performing specialist grain farms, though the ratio was consistently around 20 cents per dollar of output lower than the sector average. This suggests that significant productivity and efficiency gains by operators of specialist grain farms during this period have boosted the profitability of the farm business.

While the trend observed in the specialist grain sector is also apparent in the top performing mixed enterprise grain farms, it is not evident for the mixed enterprise grain sector in general. Over the past three decades, the ratio has consistently fluctuated around 110 cents, with a brief period in the early to mid-2000s when the ratio dropped to 98 cents (figure j). This indicates


15

that these producers, on average, have not realised an improvement in the underlying profitability of the farm business during this period. In contrast, the falling ratio of inputs to outputs for the top performing mixed enterprise grain farms indicates that these producers have achieved a steady improvement in the profitability of the farm business as a result of productivity and efficiency gains.

Total cost to value of output ratio, South Australia and Victoria Mallee zonej

0

cent

s sp

ent o

n in

puts

per

dol

lar o

f out

put

(200

8–09

dol

lars

)

Total costs include total cash costs plus the imputed cost of family labour and depreciation. Value of output equals total cash receipts plus the build-up in the value of trading stocks.

25

50

75

100

125



2006

–07

to 2

008–

09

1997

–98

to 1

999–

2000

2000

–01

to 2

002–

03

1985

–86

to 1

987–

88

1988

–89

to 1

990–

91

1991

–92

to 1

993–

94

1994

–95

to 1

996–

97

1979

–80

to 1

981–

82

1982

–83

to 1

984–

85

2006

–07

to 2

008–

09

1997

–98

to 1

999–

2000

2000

–01

to 2

002–

03

1985

–86

to 1

987–

88

1988

–89

to 1

990–

91

1991

–92

to 1

993–

94

1994

–95

to 1

996–

97

1979

–80

to 1

981–

82

1982

–83

to 1

984–

85

2003

–04

to 2

005–

06

2003

–04

to 2

005–

06

16


4 Physical performance benchmarks and prices: South Australia and Victoria Mallee zone, 2006–07 to 2008–09, by industry average per farm


average top 20% a average top 20% aAnnual average rainfall mm 288 (1) 304 (3) 330 (2) 356 (8)

Total area operated, 30 June ha 2 596 (5) 2 534 (10) 1 907 (6) 1 724 (23)

Land use intensity (sheep equivalents) hd/ha 7.6 (3) 8.9 (3) 5.8 (5) 7 (8)

Total labour used wks 113 (3) 117 (6) 93 (5) 100 (13)

– sheep equiv. per labour unit dse/labour unit 8 434 (4) 9 244 (8) 5 664 (6) 5 772 (17)

Proportion of land sown to crops % 60.8 (3) 71.5 (4) 40.9 (6) 50.7 (11)

Total area sown to grain crops ha 1 484 (4) 1 738 (9) 732 (9) 839 (32)

– wheat % 60.7 (3) 62 (5) 55.3 (6) 67.4 (4)

– barley % 27.8 (6) 24.3 (7) 30.8 (7) 23.1 (11)

– oilseeds % 1.5 (23) 4 (25) 1.2 (32) 0.9 (103)

– pulses % 4 (14) 7 (21) 2.4 (27) 2.8 (60)

Grain production t 1 073 (6) 1 810 (11) 471 (13) 790 (33)

Number of sheep, 30 June no. 755 (11) 697 (21) 1 293 (6) 1 167 (18)

Sheep and lambs sold no. 408 (10) 351 (19) 602 (7) 593 (12)

– lambs sold no. 277 (12) 255 (20) 401 (8) 442 (12)

Number of beef cattle no. 15 (18) 10 (60) 41 (19) 44 (34)

Beef cattle sold no. 8 (17) 4 (50) 45 (15) 28 (12)

Wool production kg 3 775 (11) 3 627 (20) 6 294 (7) 5 458 (17)

Yields Average grain yield t/ha 0.7 (5) 1.0 (6) 0.6 (7) 0.9 (14)

– wheat t/ha 0.7 (5) 1.1 (7) 0.7 (10) 0.9 (18)

– barley t/ha 0.8 (6) 1.2 (8) 0.7 (9) 1.1 (16)

– oilseeds t/ha 0.6 (22) 0.7 (21) 0.3 (28) 0.1 (0)

– pulses t/ha 0.4 (12) 0.4 (13) 0.3 (52) 0.9 (58)

Calves branded per 100 cows mated % 100.3 (8) 85 (7) 88.2 (3) 84.5 (6)

Lambs marked per 100 ewes mated % 87 (2) 90 (3) 86.3 (2) 94 (2)

Wool clip per head shorn kg/hd 5.2 (3) 5.6 (3) 4.9 (3) 5.8 (6)

Prices received Average grain price $/t 299 (2) 324 (3) 274 (3) 277 (4)

– wheat $/t 344 (5) 352 (6) 363 (11) 471 (11)

– barley $/t 290 (6) 341 (10) 289 (20) 374 (59)

– oilseeds $/t 544 (6) 544 (8) 493 (6) 0 (0)

– pulses $/t 497 (7) 546 (10) 366 (9) 332 (2)

Adult sheep $/hd 56 (5) 69 (9) 47 (5) 44 (7)

Prime lambs $/hd 85 (5) 85 (3) 83 (4) 79 (7)

Wool c/kg 453 (2) 456 (5) 445 (3) 431 (12)

Beef cattle $/hd 687 (3) 801 (7) 748 (5) 743 (4))



17

5 Financial performance benchmarks: South Australia and Victoria Mallee zone, 2006–07 to 2008–09, by industry average per farm


average top 20% a average top 20% a

Farm cash receipts $/ha 172 (5) 288 (8) 146 (6) 267 (7)

Receipts from the main agricultural activities – crops $/ha 129.1 (6) 234.4 (9) 81.2 (11) 205.6 (13)

– beef cattle $/ha 2.1 (17) 1.2 (53) 17.7 (15) 12.2 (25)

– sheep and lambs $/ha 10.9 (11) 10.3 (16) 20.7 (9) 24.0 (20)

– wool $/ha 7.4 (22) 6.1 (19) 12.3 (11) 11.2 (34)

Water use efficiency $/100 mm/ha 60 (5) 102 (7) 44 (6) 84 (10)

Farm cash costs $/ha 130 (5) 183 (8) 116 (5) 139 (8)

– administration $/ha 4.3 (7) 5.0 (11) 4.1 (8) 3.8 (17)

– beef cattle purchases $/ha 0.4 (54) 0.5 (101) 7.6 (20) 0.4 (51)

– contracts $/ha 3.0 (17) 4.3 (30) 1.7 (20) 2.4 (56)

– crop and pasture chemicals $/ha 18.5 (8) 35.7 (11) 10.8 (8) 20.7 (17)

– fertilisers $/ha 24.9 (6) 41.4 (10) 17.3 (9) 25.3 (12)

– fodder $/ha 0.6 (48) 0.3 (46) 1.3 (25) 0.1 (85)

– freight $/ha 3.9 (10) 5.6 (14) 2.5 (20) 5.5 (27)

– fuel, oil and grease $/ha 16.6 (4) 19.4 (8) 13.5 (5) 16.0 (9)

– handling and marketing $/ha 6.1 (11) 7.9 (22) 6.4 (17) 13.9 (20)

– hired labour $/ha 3.0 (16) 5.2 (31) 1.7 (19) 5.0 (22)

– interest $/ha 10.7 (10) 11.4 (16) 10.9 (12) 7.2 (24)

– repairs and maintenance $/ha 11.2 (7) 13.3 (11) 10.8 (9) 11.6 (12)

– shearing and crutching $/ha 1.1 (13) 0.9 (18) 2.3 (10) 2.2 (20)

– sheep purchases $/ha 2.3 (22) 2.3 (40) 3.5 (19) 4.5 (39)

Farm financial performance Farm cash income $/ha 41.9 (12) 104.9 (11) 29.9 (23) 127.6 (17)

Farm business profit $/ha –9.8 (48) 58.4 (19) –20.8 (37) 72.6 (27)

Total cost to value of output ratio cents/$ of output 105.8 (3) 80.1 (4) 114.7 (5) 72.9 (8)

Total farm capital $/ha 1131 (4) 1 353 (8) 1 213 (6) 1 607 (17)

Rate of return on capital at full equity – excluding capital appreciation % 0.4 (108) 5.8 (15) –0.7 (80) 5.1 (30)


Farm equity $/ha 962 (5) 1 145 (8) 1 040 (7) 1 522 (18)

Return on farm equity – excluding capital appreciation % –1.0 (48) 5.1 (19) –2.0 (36) 4.8 (33)



18


Survey methods and definitionsABARES has conducted surveys of selected Australian agricultural industries since the 1940s. These surveys provide a broad range of information on the economic performance of farm business units in the rural sector. This comprehensive set of information is widely used for research and analysis which forms the basis of many publications, briefing material and industry reports. The annual broadacre Australian agricultural and grazing industries survey (AAGIS) commenced in 1978–79.

Target populationsThe AAGIS is designed from a frame (population list) drawn from the Australian Business Register (ABR) and maintained by the Australian Bureau of Statistics. The ABR-based frame provided to ABARES consists of agricultural businesses registered with the Australian Taxation Office, together with their corresponding statistical local area, industry classification and a size of operation variable.

ABARES surveys target farming establishments that make a significant contribution to the total value of agricultural output (commercial farms). Farms excluded from the ABARES target population will be the smallest units, and in aggregate will contribute less than 2 per cent to the total value of agricultural production for the industries covered by the surveys.

Reliability of estimatesThe reliability of the estimates of population characteristics published by ABARES depends on the design of the sample and the accuracy of the collection of characteristics for the individual sample farms.

Sampling errorsOnly some of the farms in a particular industry are surveyed. The data collected from each sample farm are weighted to calculate population estimates. Estimates derived from these farms are likely to be different from those that would have been obtained if information had been collected from a census of all farms. Any such differences are called ‘sampling errors’.

The size of the sampling error is mostly influenced by the survey design and the estimation procedures, as well as the sample size and the variability of farms in the population. The larger the sample size, the lower the sampling error is likely to be. Hence, national estimates are likely to have lower sampling errors than industry and state estimates.

To give a guide to the reliability of the survey estimates, standard errors are calculated for all estimates published by ABARES. These estimated errors are expressed as percentages of the survey estimates and termed ‘relative standard errors’ (RSEs).


19

Calculating confidence intervals using relative standard errorsRSEs can be used to calculate ‘confidence intervals’ that give an indication of how close the actual population value is likely to be to the survey estimate.

To obtain the standard error, multiply the relative standard error by the survey estimate and divide by 100. For example, if average total cash receipts are estimated to be $100 000 with a relative standard error of 6 per cent, the standard error for this estimate is $6000. This is one standard error. Two standard errors equal $12 000.

There is roughly a two in three chance that the ‘census value’ (the value that would have been obtained if all farms in the target population had been surveyed) is within one standard error of the survey estimate. This range of one standard error is described as the 66 per cent confidence interval. In this example, there is an approximately two in three chance that the census value is between $94 000 and $106 000 ($100 000 plus or minus $6000).

There is roughly a 19 in 20 chance that the census value is within two standard errors of the survey estimate (the 95 per cent confidence interval). In this example, there is an approximately 19 in 20 chance that the census value lies between $88 000 and $112 000 ($100 000 plus or minus $12 000).

Comparing estimatesWhen comparing estimates between two groups, it is important to recognise that some of the differences are subject to sampling error. As a rule of thumb, a conservative estimate of the standard error of the difference can be constructed by adding the squares of the estimated standard errors of the component estimates and taking the square root of the result. An example is given below.

Suppose the estimates of total cash receipts were $100 000 for the specialist grain producing sector and $125 000 for the top performing specialist grain farms—a difference of $25 000—and the relative standard error is given as 6 per cent for each estimate. The standard error of the difference can be estimated as:

(6 x $100 000 / 100)2 + (6 x $125 000 / 100)2 = $9605

A 95 per cent confidence interval for the difference is:

$25 000 ± 1.96 x $9605 = ($6174, $43 826)

Hence, if a large number (towards infinity) of different samples is taken, in approximately 95 per cent of them, the difference between these two estimates will lie between $6174 and $43 826. Also, since zero is not in this confidence interval, it is possible to say that the difference between the estimates is statistically significantly different from zero at the 95 per cent confidence level.

20


Definitions of itemsTotal area Includes all land operated by the farm business, whether owned or rented operated by the business, but excludes land sharefarmed on another farm.

Owner manager The primary decision-maker for the farm business. This person is usually responsible for the day-to-day operation of the farm and may own or have a share in the farm business.

Labour Measured in work-weeks, as estimated by the owner manager or manager. It includes all work on the farm by the owner manager, partners, family, hired permanent and casual workers and sharefarmers but excludes work done by contractors.

Hired labour Excludes the farm business manager, partners and family labour, and work undertaken by contractors. Expenditure on contract services appears as a cash cost.

Capital The value of farm capital is the value of all the assets used on a farm, including the value of leased items but excluding machinery and equipment either hired or used by contractors. The value of ‘owned’ capital is the value of farm capital excluding the value of leased machinery and equipment.

ABARES uses the owner manager’s valuation of the farm property. The valuation includes the value of land and fixed improvements used by each farm business in the survey, excluding land sharefarmed off the sample farm. Residences on the farm are included in the valuations.

Livestock are valued at estimated market prices for the land use zones within each state. These values are based on recorded sales and purchases by sample farms.

Before 2001–02, ABARE maintained an inventory of plant and machinery for each sample farm. Individual items were valued at replacement cost, depreciated for age. Each year, the replacement cost was indexed to allow for changes in that cost.

Since 2001–02, total value of plant and machinery has been based on market valuations provided by the owner manager for broad categories of capital such as tractors, vehicles and irrigation plant.

Total cash Total of revenues received by the farm business during the financial year, receipts including revenues from the sale of livestock, livestock products and crops, plus the value of livestock transfers off a property. Total cash receipts include revenue received from agistment, royalties, rebates, refunds, plant hire, contracts, sharefarming, insurance claims and compensation, and government assistance payments to the farm business.


21

Total cash costs Payments made by the farm business for materials and services and for permanent and casual hired labour (excluding owner manager, partner and other family labour). Total cash costs include the value of livestock transfers onto the property as well as any lease payments on capital, produce purchased for resale, rent, interest, livestock purchases and payments to sharefarmers. Capital and household expenditures are excluded from total cash costs.

Farm cash The difference between total cash receipts and total cash costs. income

Build-up in The closing value of all changes in the inventories of trading stocks during trading stocks the financial year. It includes the value of any change in herd or flock size or in stocks of wool, fruit and grain held on the farm.

Depreciation Estimated by the diminishing value method, based on the replacement cost of farm and age of each item. The rates applied are the standard rates allowed by improvements, the Commissioner of Taxation. Calculation of farm business profit does not plant and account for depreciation on items subject to a finance lease because cash equipment costs already include finance lease payments.

Imputed An estimate of the labour input of the owner manager, partners and their labour cost families is calculated in work-weeks and a value is imputed at the relevant Federal Pastoral Industry Award rates.

Farm business Farm cash income plus build-up in trading stocks, less depreciation and the profit imputed value of the owner manager, partner and family labour.

Profit at Farm business profit, plus rent, interest and finance lease payments, less full equity depreciation on leased items.

Rate of return Calculated by expressing profit at full equity as a percentage of total opening capital. Rate of return represents the ability of the business to generate a return to all capital used by the business, including that which is borrowed or leased.

Sheep A proxy of the total resources used by agriculture that converts all of the equivalents resources used to produce sheep, beef cattle, dairy cattle and crops into a single unit. It is calculated as:

Sheep equivalents = number of sheep + 12 x area sown to crops + 12 x number of dairy cattle + 8 x number of beef cattle

The higher the estimated sheep equivalents per hectare, the more intensively a farm’s resources are being used.

physical and financial performance benchmarks for grain

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