Broadacre farmers enjoy solid returns
WA’s broadacre farmers recorded an average return on capital of 4.2 per cent last year, indicating the State’s farming industry remained strong and viable in the face of widespread frosts and weak grain prices.
Although the average return on capital for the 12 months was down from 4.7 per cent the previous year, it compared favourably to the average return for Australian equities of 2 per cent, and declines in commercial and residential property over the same period to the end of February.
The Planfarm Bankwest Benchmarks analysis — the most comprehensive annual survey of farm performance in WA — was based on the financial records of 550 farm businesses across WA’s Wheatbelt.
During 2016, the average WA farm made an operating profit of $667,815 — equivalent to $178 a hectare — from a turnover of $2,203,904.
This was marginally below the $680,227 operating profit from turnover of $2,124,873 in the previous year.
Planfarm is a WA firm of management consultants that started in 1974 to introduce modern business management skills to the farming community.
It gathers regular data about farm performance from 550 of its clients who run farms throughout WA’s agricultural regions.
Planfarm director Graeme McConnell said while farm businesses in the analysis were dominated by cropping, sheep and cattle had also performed well.
Bankwest WA rural and regional banking manager Richard Bator said the top 25 per cent of WA’s broadacre farms achieved an average return on capital of 10.1 per cent.
Mr Bator said 2016 production was widely expected to be among the highest in many growers’ experience. The total harvest delivered to CBH for the 2016-17 cropping year was a record 16.6 million tonnes.
But extreme frosts meant not all fared well and low grain prices put a dampener on returns, hence the lower average return on capital.
“The sheer number of frost events in affected areas meant that most crops were exposed multiple times during the critical flowering period,” he said.
“Areas less affected by frost generally produced above average yields and returns.”
The report was compiled from the records of Planfarm, Bankwest, Bedbrook Johnston Williams, Business Ag and Ag Asset.
Jenne Brammer and Cally Dupe Planfarm director Graeme McConnell in Northam this week with the Planfarm Bankwest Benchmarks report 2016-2017.