Australian lamb: Financial performance of lamb producers, 2013-14 to 2015-16 - Research report 16.9

Overview

This report presents detailed financial performance estimates for lamb producers for 2013-14 to 2015-16, with an emphasis on 2014-15 results. Lamb producing farms are defined as those Australian broadacre farm businesses that sold, on average, 200 or more lambs for slaughter a year over the three years ending 2014-15.

The report draws on data from the ABARES annual Australian Agricultural and Grazing Industries Survey (AAGIS). This survey has been conducted by ABARES and its predecessors since 1977-78 and provides government and industry stakeholders with important data for analysing and monitoring changes in Australia's broadacre industries.

Meat & Livestock Australia commissioned and funded this report.

Key Issues
• Farm cash income of lamb producing farms rose on average over the period 2013-14 to 2014-15. The majority of the rise in farm incomes came from higher beef and lamb receipts due to increased prices and sales for both commodities. Average farm cash income of lamb producing farms is estimated to have increased further in 2015-16 mainly as a result of increased crop, wool and beef cattle sales. • Average incomes of lamb producing farms are estimated to have risen from 2014-15 to 2015-16 in New South Wales, Queensland and South Australia. The majority of the increase in farm incomes in these states was from higher cropping receipts. • In real terms, the estimated average farm incomes for 2014-15 and 2015-16 were among the highest recorded since 2001-02. • Rate of return (excluding capital appreciation) for lamb producers fell marginally from 2.6 per cent in 2013-14 to 2.5 per cent in 2014-15. The average rate of return is estimated to have increased in 2015-16 to around 3.0 per cent, reflecting higher incomes. • Average debt for lamb producers increased in real terms by around 88 per cent from $323 000 in 2000-01 (in 2015-16 dollars) to an estimated $605 000 in 2015-16. Increases in average debt over the past 15 years have been largely the consequence of increases in average farm size and borrowing for land purchase, as well as for ongoing working capital. • Overall, changes in average debt over time have been modest relative to lamb producers' capacity to service debt by generating income. On average, around 8 per cent of lamb producers' farm cash receipts were used to make interest payments over the 10 years to 2015-16. In 2015-16 an estimated 6 per cent of farm cash receipts were used to make interest payments.