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Estimates of selected financial aggregates of farm businesses in this section are based on data collected in the annual Australian Agricultural and Grazing Industries Survey conducted by the Australian Bureau of Agricultural and Resource Economics. This collection covers farm businesses engaged in the 'broadacre' industries of grain growing, sheep and beef farming, and beef cattle feedlot operations (Australian and New Zealand Standard Industrial Classification (Group 012)).
Selected financial performance measures - expressed as annual averages per farm - for all broadacre farm businesses for the years 1998-99 to 2002-03 are shown in table 14.7 and graphs 14.8, 14.9 and 14.10.
In 2002-03 Australia experienced a severe and widespread drought. As a result, the production of most crops was substantially reduced. Drought also affected pasture and water availability resulting in higher than usual turn-off of unfinished livestock. The need for increased supplementary feeding of livestock, coupled with higher grain prices, resulted in an increase in cash costs for livestock farms. Following a large increase in receipts in the previous year, average total cash receipts for broadacre farms are estimated to have decreased by 16% in 2002-03. Average total cash costs for broadacre farms increased by around 1% in 2002-03.
Farm cash income is a measure of the cash funds available for farm investment and consumption after paying all costs incurred in production, including interest payments, but excluding capital payments and payments to family workers. It is a short-term measure of farm income because it takes no account of depreciation on assets. Average cash income for the broadacre farms as a group more than halved to $46,500 in 2002-03 (graph 14.8), from a year of high farm cash income in 2001-02.
Average farm business profit was negative in 2002-03 falling from $42,400 in 2001-02 to negative $25,100 in 2002-03 (graph 14.9). Farm business profit is a longer-term measure of the profitability of farms because it takes account of depreciation and inventory changes.
For the broadacre industries as a group, rate of return averaged -0.2% in 2002-03 (graph 14.10), down from 3.7% in 2001-02.