Australian Cotton Comparative Analysis 2016 

CRDC - Boyce Chartered Accountants

Type: PDF
Knowledge level: Intermediate

Farm Table says:

For average farmers, a yield of 8.9 bales/ha is required to cover total expenses, with the continued rise of costs worrying for the industry. The difference between average and the top 20% seems to be driven predominately by yield (58% of difference). As a result, the authors suggest that farmers should concentrate on growing higher yield within realistic cost framework rather than searching for dramatic cost-cutting measures if they wish to improve their performance significantly. Easy to read, well set out and insightful analysis.

This report has been commissioned by the CRDC to provide a comparative analysis of the 2016 cotton crop. The primary purpose is to show the income and expenses associated with growing a fully irrigated cotton on a per hectare and per bale basis.

The sample:

  • 878 ha average planted (less than the year prior due to water availability)
  • 340,000 bales (12% of total production)
  • Representation from different cotton growing valleys

Overview of results for ‘average’ farmers:

  • Yield (12.95 bales per hectare) increased only slightly from the previous year (2015 was 12.59 bales per hectare). This is 1.7 bales per hectare greater than the five-year average, which continues to rise strongly, but not as strong as last year.
  • Price per bale was $507 which is $10 lower than last year but $25 above the five-year average.
  • Operating costs continue to rise. 2016 costs per hectare were $4,500 compared to $4,363 for 2015 and $4,038 for the five-year average.
  • Fertilizer costs increased to around $591 per hectare, whereas fuel fell to its lowest cost since the 2012 analysis, partly due to prices falling throughout the 2016 year. Chemical herbicides and insecticides were both up again this year.
  • Total income was $6,565 per hectare for 2016. This was $1,090 higher than the five year average but very similar to last years’ income of $6,525.
  • Profit per hectare of $1,706 is slightly lower than last years’ $1,899 but much higher than the 5-year average
    of $1,106.

Overview of results for ‘Top 20%’ farmers:

  • Yield (13.69 bales per hectare), a decrease of approximately half a bale per hectare from the previous year (2015 was 14.31 bales per hectare).
  • Price per bale was $518, which is $20 down from 2015 and $25 above the five-year average.
  • Interestingly, operating costs for this group fell by $139 to $3,923, which is $194 above the five-year average.
  • This group continues to grow more cotton (.7 bales per hectare) than the Average Farmers and do it more cheaply ($3,923 v $4,500).
  • It was another excellent season for the Top 20% Farmers, with a profit of $3,159 per hectare. This was down on last years’ profit but still well up when compared to five year average of $2,272.
  • Interestingly, the 2016 result was a combination of a reduction in yield, price and total expenses from the previous year.

There are also a comparison of the following valleys:

  • Gwydir
  • Barwon/McIntyre
  • Macquarie
  • Namoi
  • Southern Valley

The authors posit the following questions to farmers:

  • What is your water use efficiency in terms of bales per megalitre?
  • Do your employees know your yield expectations?
  • Have you reviewed your strategies depending on the availability of water?
  • What was your maximum yield in a field and do you know why the other fields or areas did not perform as well?
2017 - Australia - CRDC - Boyce Chartered Accountants
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