Farm finances flourish

The financial performance of Australian lamb producing farms has been exceptional this year. Average farm cash incomes of Australian lamb producers in 2016-17 were the highest in more than 20 years, in real terms.

The annual ABARES Australian Agricultural and Grazing Industries Survey estimate the 2016-17 average income of lamb producing farms at $265,000 per farm – an increase of 25% from the previous year. As illustrated in the figure below, in 2016-17 the average income has climbed considerably higher (72%) than the previous 15-year average (2000-01 to 2015-16).

The projected rise in incomes is due to higher prices for lambs, sheep and wool in 2016-17, as well as increased receipts from crops. This is despite reduced lamb sales over the same period, as improved seasonal conditions in many key supply regions has encouraged flock rebuilding. 

All states except Tasmania are expected to record higher average farm cash incomes in 2016-17, with declining crop receipts in Tasmania expected to bring average incomes lower this year.

In terms of performance by scale of lamb production, farm cash income and business profit are projected to increase in 2016-17 for all farm size categories.

With higher farm incomes, the average rate of return (excluding capital appreciation) for Australian lamb producers has risen from 2.8% in 2015-16 to 3.7% in 2016-17. Return to capital varies, however, between states and indeed individual farms. The degree of variation depends largely on seasonal conditions, commodity prices, cost of farm inputs, and farm-specific factors such as other enterprises and management.

To read the full ABARES report on Farm Financial Performance, please click here.