2018–19 Livestock Farm Monitor Project reveals mixed profits
Sam Henty, Agriculture Victoria, Bendigo
The 2018–19 Victorian Livestock Farm Monitor Project annual report and summary infographics are now available at Farm monitor project.
Results of the project showed that it was a challenging year for sheep and beef farms, particularly in Gippsland and Northern Victoria.
Below-average rainfall across most of the state reduced pasture availability, increased the reliance on supplementary feed, and contributed to higher feed costs. On average, farm profits decreased in 2018–19 compared with the previous year, although performance was mixed across the regions.
Many surveyed farms in Gippsland and Northern Victoria de-stocked to reduce feed costs and ease cashflow deficits, whereas farms in the South West maintained stock numbers and production.
Figure 1 shows individual farm return on assets for each region, illustrating the range within and between the regions. Farm business profitability and efficiency are measured by return on assets.
2018–19 regional breakdown from surveyed farms
Average return on assets on surveyed South West farms was 4%, with all but one farm recording a positive result. Favourable market prices for lamb and wool increased average gross farm income to the highest levels reported in the 49 years of the survey.
The strong market signals prompted South West farmers to supplement livestock diets with on-farm feed reserves and purchased feed and compensate for reduced pasture availability.
Increases in the quantity of purchased feed and prices paid for the feed also increased average variable costs to the highest level recorded in the 49 years of the survey.
Average return on assets was down to 0.5%, with a very broad range (–12.5% to 7.7%) across the surveyed farms. Participant farmers reduced stock numbers and fed supplementary feed to manage low pasture availability, contributing to the higher costs.
The variability of beef market prices and high supplementary feed prices sent signals for farmers to minimise their losses, and they produced lower quantities of beef per hectare.
The high proportion of beef enterprises in the northern sample contributed to the average decline in farm profits for the region.
Average return on assets fell to –1.9% for surveyed farms in the region. The dry 12 months leading into the 2018 spring reduced pasture growth, increasing dependence on purchased supplementary feed.
This increased variable costs to the highest levels recorded in Gippsland for the 15 years of the project. Many surveyed farms destocked to manage the elevated feed prices and dry conditions.
This resulted in negative livestock trading accounts, which affected business wealth and financial performance.