An International Benchmarking Comparison of Australian Crop Production and Profitability

GRDC Updates - Ashley Herbert

Type: PDF
Knowledge level: Intermediate

Farm Table says:

Australian wheat crops had the lowest yield in the global data set, however profitability per tonne was competitive with other countries as a result of price received. The report states that low prices generally lead to low levels of profitability, so our competitiveness based on the price received is concerning (Must remember however this is a very small data set). We will have to keep watch for the next agri Benchmark report and see how our profitability has been affected over the last two seasons with the price drop.

This report draws upon data from the international cash crop benchmarking network, Agri Benchmark. Data for the seasons 2011 – 2015 is used to compared the profitability and costs of wheat production in Australia to the regions in the world. The wheat data was taken from 42 typical farms in the EU, Canada, USA, Ukraine, Russia, Argentina and Australia.

Seven typical cash cropping farms from Australia were
included in the analysis:

  • Kellerberrin district of the low rainfall central wheatbelt region of Western Australia.
  • Wittenoom Hills district in the high rainfall south coast region northeast of Esperance, Western Australia.
  • Tenindewa district in the low rainfall region of the Northern wheatbelt of Western Australia.
  • Sea Lake district in the low rainfall region of the Victorian Mallee.
  • Gulargambone district of the Central West of New South Wales.
  • Freeling district North of Adelaide, South Australia.
  • Warra district West of Dalby in South West region of Queensland.

Key results included:

Yield

  • Five year average yields of wheat in this analysis range from 1.6t/ha (AUVic) to 9.7t/ha (EU) with the EU standing out as the highest yielding region with a range of 4.7t/ha to 9.7t/ha.

Wheat price

  • Grain prices are presented on a farm gate basis per tonne nett of freight to endpoint and all selling costs. The price reflects the total value of grain produced including premiums or discounts for quality or grade.
  • The wheat price has been relatively consistent across regions with $US31/t difference between the 25th and 75th price percentile.
  • The median price for the data set was $US225/t.

Income and Costs

  • Crop income includes all proceeds from sales of grain and bi-products such as straw.
  • In most cases, grain sales make up the vast majority of the income on each farm.
  • Total crop income ranged from $US330/ha (AR) to a high of $US2 383/ha (EU).
  • The EU region stands out as a distinct group with high income and high cost of production. Income ranged from $US1 034/ha to $US2 383/ha. Total costs ranged from $US700/ha to $US1 654/ha.

Enterprise Margin

  • Wheat profitability on the farms from Canada, USA and Australia compare more favorably to the EU farms.
  • Two of the Australian margins were within the group of the highest margins at $US104/t and $US119/t respectively.
  • Despite having some of the highest production costs and lowest yields in the data set, the profit margin on the Australian farms was just above the average for the data set. This is attributable to the relatively high grain price achieved over the period.
2016 - Australia - GRDC Updates - Ashley Herbert
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