Crop production costs rise for slaughter lamb producers – ABARES

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According to the recently released ABARES Financial performance of slaughter lamb producing farms (2012-13 to 2014-15) report, the average total cash cost of slaughter lamb producing farms has increased 30% between 1995-96 and 2014-15, in real terms. This rise, however, is largely in line with the expansion in the average scale of operation over the long-term.

For the three years ending 2013-14, total cash costs averaged $38 per sheep equivalent – relatively unchanged from the three years ending 1997-98.

ABARES report that the costs that registered the greatest increases for slaughter lamb producing farms were those related to crop production – especially sprays, fertiliser and depreciation. Interestingly, these crop-related costs, which accounted for 32% of total cash costs in 1995-96, have risen to account for 42% of the total in 2014-15.

From 2011-12 to 2013-14, for slaughter lamb producers:

• Fertiliser was the largest cash cost (10% of total costs)
• Interest payments were the second largest cash cost (8% of total costs)

For specialist slaughter lamb producers*:

• Sheep and beef cattle purchases were the largest cash cost (8% of total costs)
• Interest payments were the second largest cash cost (7% of total)

When considering non-cash costs, however, the value of family and partner labour is by far the greatest cost for both slaughter lamb producing farms and specialist slaughter lamb producing farms, followed by depreciation.

 

*For the purpose of the report, farms are classified as specialist slaughter lamb producing farms if, on average, more than 20% of total income over the three years ending 2013-14 was from the sale of lambs for slaughter.

To read the full ABARES report, click HERE.