Agriculture and Fisheries in the Greater Melbourne Region of Victoria, 2014

Agriculture and Fisheries in the Greater Melbourne Region of Victoria, 2014

Agriculture and Fisheries in the Greater Melbourne region of Victoria, 2014 ABARES

Agriculture and Fisheries in the Greater Melbourne region of Victoria, 2014

Research by the Australian Bureau of Agricultural
and Resource Economics and Sciences

About my region 14.15

March 2014

Decorative image of agriculture and food production

Agriculture and Fisheries in the Greater Melbourne region of Victoria, 2014 ABARES

© Commonwealth of Australia 2014

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Cataloguing data

ABARES 2014, Agriculture, Fisheries and Forestry in the Greater Melbourne region of Victoria 2014, About my region 14.15, Canberra, March.

ISSN TBA

ISBN 978-1-74323-075-6

ABARES project 43009

Internet

Agriculture and Fisheries in the Greater Melbourne region of Victoria 2014 is available at daff.gov.au/abares/publications.

Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES)

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The Australian Government acting through the Department of Agriculture, Fisheries and Forestry represented by the Australian Bureau of Agricultural and Resource Economics and Sciences, has exercised due care and skill in the preparation and compilation of the information and data in this publication. Notwithstanding, the Department of Agriculture, Fisheries and Forestry, ABARES, its employees and advisers disclaim all liability, including liability for negligence, for any loss, damage, injury, expense or cost incurred by any person as a result of accessing, using or relying upon any of the information or data in this publication to the maximum extent permitted by law.

Acknowledgements

This regional profile was updated by Tim Caboche, Peter Martin, Therese Thompson, Sonja Nikolova, Johnny Xu and Kasia Mazur.

Contents

1Regional overview

Employment

2Agriculture sector

Value of agricultural production

Number and type of farms

Farm financial performance—Victoria

3Fisheries sector

References

Tables

Table 1 Number of farms, by industry classification, 2011–12

Table 2 Financial performance, Victoria broadacre industries, 2011–12 to 2013–14, average per farm

Table 3 Farm cash income of Victoria broadacre farms, by region, 2012–13 to 2013–14, average per farm

Table 4 Financial performance, Victoria dairy industry, 2011–12 to 2013–14, average per farm

Table 5 Selected estimates, vegetable growers, Victoria, average per farm

Figures

Figure 1 Employment profile, Greater Melbourne region, August 2011

Figure 2 Value of agricultural production, Greater Melbourne region, Victoria,

Figure 3 Distribution of farms by estimated value of agricultural operations, Greater Melbourne, 2011–12

Figure 4 Real farm cash income, broadacre industries, average per farm

Figure 5 Real farm cash income, grains industry, average per farm

Figure 6 Real farm cash income, sheep industry, average per farm

Figure 7 Real farm cash income, beef industry, average per farm

Figure 8 Real farm cash income, dairy industry, average per farm

Maps

Map 1 Greater Melbourne region of Victoria

1

Agriculture and Fisheries in the Greater Melbourne region of Victoria, 2014 ABARES

1Regional overview

The Greater Melbourne region comprises 29 local government areas and parts of five others. It includes Melbourne and the major centres of Bacchus Marsh, Cockatoo, Frankston, Healesville, Macedon, Sandringham and Werribee. The region covers a total area of around 10000 square kilometres or 4 per cent of Victoria’s total area and is home to approximately 4000000 people (ABS 2011).

Agricultural land in the Greater Melbourne region occupies 4310 square kilometres, or 43 per cent of the region. Areas classified as conservation and natural environments (nature conservation, protected areas and minimal use) occupy 1930 square kilometres, or 19 per cent of the region. The most common land use by area is grazing modified pasture which occupies 3230 square kilometres or 32 per cent of the Greater Melbourne region.

Map 1Greater Melbourne region of Victoria

Employment

Australian Bureau of Statistics (ABS) census data from 2011 indicate that around 2 million people were employed in the Greater Melbourne region. The Greater Melbourne region accounts for 76per cent of total employment in Victoria and 17 per cent of all people employed in the Victoria agriculture, forestry and fishing sector.

Health care and social assistance was the largest employing sector with 213518 people followed by manufacturing with 208608 people (Figure 1). Other important employment sectors in the region were retail trade (203775 people), professional, scientific and technical services (172254), construction (157533) and education and training (153108 people).

The agriculture, forestry and fishing sector employed 9975 people, representing less than 1 per cent of the region’s workforce. Of these, 86 per cent were employed in agriculture, 9 per cent in support services for the agriculture, forestry and fishing sector, 2 per cent in forestry and logging, and 1 per cent in fishing hunting and trapping industries. In addition, an estimated 30397 people were employed in food product manufacturing and 13142 people were employed in wood, pulp and paper product manufacturing in the region (included in manufacturing sector employment).

Figure 1 Employment profile, Greater Melbourne region, August 2011

Number of people employed in the Greater Melbourne region by industry Health Care and Social Assistance 213 518 Manufacturing 208 608 Retail Trade 203 775 Professional Scientific and Technical Services 172 254 Construction 157 533 Education and Training 153 108 Accommodation and Food Services 112 979 Public Administration and Safety 98 209 Wholesale Trade 95 703 Transport Postal and Warehousing 93 234 Financial and Insurance Services 92 551 Administrative and Support Services 67 613 Information Media and Telecommunications 43 629 Arts and Recreation Services 35 619 Rental Hiring and Real Estate Services 28 740 Electricity Gas Water and Waste Services 18 470 Agriculture Forestry and Fishing 9 979 Mining 4 284 Other 118 118

Source: Australian Bureau of Statistics

2Agriculture sector

Value of agricultural production

In 2011–12 the gross value of agricultural production (GVAP) in the Greater Melbourne region was $1.3 billion, which was 12 per cent of the total gross value of agricultural production in Victoria ($11.3billion) for 2011–12. This is the most recent year for which data are available from the ABS on GVAP for this region.

The Greater Melbourne region has a diverse agricultural sector. In 2011–12, the Greater Melbourne region accounted for around 98 per cent of the total value of Victorian strawberries, 92 per cent of the total value of mushrooms, and 55 per cent of the total value of poultry.

The most important commodity in the Greater Melbourne region based on the gross value of agricultural production was vegetables (Figure 2). In 2011–12, vegetables contributed 27 per cent ($347million) to the value of agricultural production in the region. The main vegetable crops were mushrooms ($72 million), lettuce ($43 million) and broccoli ($42 million). Poultry accounted for 23 per cent ($295 million) and fruit 15per cent ($193million), with the main crops being strawberries ($92 million), apples ($62 million) and cherries ($6 million). Nurseries accounted for 12 per cent ($155 million), cut flowers 8per cent ($107 million), and eggs 4 per cent ($54 million).

Figure 2 Value of agricultural production, Greater Melbourne region, Victoria,

2011–12

Figure 2 Figure shows the value of agricultural production for the top commodities in the region as discussed in the above paragraph

Source: Australian Bureau of Statistics

Number and type of farms

ABS data indicate that in 2011–12 there were 3337 farms in the Greater Melbourne region with an estimated value of agricultural operations of more than $5000 (Table 1). The region contains 10per cent of all farm businesses in Victoria.

Table 1 Number of farms, by industry classification, 2011–12

Industry Classification / Greater Melbourne region / Victoria
no. / % / no. / %
Beef Cattle / 906 / 27 / 8,178 / 25
Fruit and nuts / 404 / 12 / 2,375 / 7
Other livestock / 315 / 9 / 1,493 / 5
Vegetable / 313 / 9 / 730 / 2
Nurseries, Cut Flowers and Turf / 289 / 9 / 424 / 1
Poultry / 152 / 5 / 264 / 1
Mixed livestock / 78 / 2 / 1,347 / 4
Dairy / 73 / 2 / 5,027 / 15
Sheep / 47 / 1 / 3,984 / 12
Mixed grains and livestock / 36 / 1 / 2,373 / 7
Other / 725 / 22 / 6,257 / 19
Total Agriculture / 3,337 / 100 / 32,452 / 100

Note: Where the estimated value of agricultural operations is more than $5000.
Source: Australian Bureau of Statistics

Farms are classified in Table 1 according to the activities that generate most of their value of production. Beef cattle (906 farms) were the most common, accounting for 27 per cent of all farms in the Greater Melbourne region, and 11 per cent of all beef cattle farms in Victoria.

A large proportion of farms in the region are small in terms of their business size. Estimated value of agricultural operations (EVAO) is a measure of the value of production from farms and a measure of their business size, and is somewhat similar to turnover. Around 53 per cent of farms in the Greater Melbourne region had an EVAO of less than $50000 (Figure 3). These farms accounted for only 3 per cent of the total value of agricultural operations in 2011–12. In comparison, 20 per cent of farms in the region had an EVAO of more than $350000 and accounted for an estimated 84per cent of the total value of agricultural operations in the region in 2011–12.

Figure 3 Distribution of farms by estimated value of agricultural operations, Greater Melbourne, 2011–12

Figure 3 Figure shows the proportion of farms in each EVAO range and proportion of value of agricultural operations in each EVAO range Discussed in the above paragraph

Source: Australian Bureau of Statistics

Farm financial performance—Victoria

Each year, ABARES interviews Australian broadacre, dairy and vegetable producers as part of its annual survey program. Broadacre industries covered in this survey include the grains, grains–livestock, sheep, beef and sheep–beef industries. The information collected is a basis for analysing the current financial position of farms in these industries and expected changes in the short term. This paper uses data from the ABARES Australian agriculture and grazing industries survey (AAGIS), Australian dairy industry survey (ADIS), and Australian vegetable growing industry survey to report estimates of financial performance indicators (Box 1) for broadacre, dairy and vegetable farms in Victoria.

Box 1 Definitions

Major financial performance indicators

  • Total cash receipts: total revenues received by the business during the financial year.
  • Total cash costs: payments made by the business for materials and services and for permanent and casual hired labour (excluding owner manager, partner and family labour).
  • Farm cash income:total cash receipts – total cash costs
  • Farm business profit:farm cash income + changes in trading stocks – depreciation – imputed labour costs
  • Profit at full equity: return produced by all the resources used in the business, farmbusinessprofit + rent + interest + financeleasepayments – depreciation on leased items
  • Rate of return: return to all capital used, profit at full equity * 100 / total opening capital
  • Equity ratio: Farm capital minus farm debt expressed as a percentage of farm capital

Industry types

  • Grains: farms mainly engaged in producing broadacre crops such as wheat, coarse grains, oilseeds and pulses, and including farms running sheep and/or beef cattle in conjunction with substantial broadacre crop activity.
  • Sheep: farms mainly engaged in running sheep.
  • Beef: farms mainly engaged in running beef cattle.
  • Dairy: farms mainly engaged in milk production.
  • Vegetable: farms mainly engaged in growing vegetables.

Performance of broadacre farms—Victoria

Farm cash income for Victorian broadacre farms declined from an estimated average of $92310per farm in 2011–12 to an average of $85600 per farm in 2012–13, mainly as a result of lower livestock prices and reduced grain production (Table 2).

In 2013–14, receipts from sheep, lambs and wool are projected to increase as a result of higher prices. However, despite increased turnoff of beef cattle, lower saleyard prices are projected to result in little change in beef cattle receipts. Receipts from cropping are projected to remain similar to 2012-13, with only a small increase in winter crop production and lower prices for canola, barley and some grain legumes. On average, farm cash income for broadacre farms in Victoria is projected to decline slightly to $82 000 per farm in 2013–14, around 12 per cent above the ten-year average to 2012–13 of $73 000 per farm.

Overall, farm cash incomes are projected to increase in the Mallee region, although farm cash incomes vary greatly within this region. Farm cash income is projected to decline slightly in the Wimmera mainly as a result of lower prices for some grains and a larger decline is projected in the Central North due to the additional impact of lower beef cattle prices. In southern and eastern Victoria, increased cattle turn-off together with higher sheep, lamb and wool prices are projected to result in a small increase in average farm cash income (Table 3).

Figure 4 Real farm cash income, broadacre industries, average per farm

Note: p Preliminary estimate. y Provisional estimate.

Table 2 Financial performance, Victoria broadacre industries, 2011–12 to 2013–14, average per farm

Performance indicator / units / 2011–12 / 2012–13p / RSE / 2013–14y
Total cash receipts / $ / 303 990 / 279 700 / (9) / 278 000
Total cash costs / $ / 211 680 / 194 200 / (10) / 196 000
Farm cash income / $ / 92 310 / 85 600 / (11) / 82 000
Farms with negative farm cash income / % / 20 / 25 / (18) / 28
Farm business profit / $ / 8 530 / 12 400 / (68) / - 2 000
Profit at full equity excluding capital appreciation / $ / 36 060 / 37 200 / (27) / 22 000
Farm capital at 30 June a / $ / 2 902 350 / 2 820 700 / (10) / na
Farm debt at 30 June b / $ / 278 170 / 252 400 / (15) / 255 000
Equity ratio b / % / 90 / 91 / (1) / na
Rate of returnexcluding capital appreciation c / % / 1.3 / 1.3 / (22) / 0.8
Off-farm income of owner manager and spouse b / $ / 37 960 / 32 200 / (14) / na

Note: a Excludes leased plant and equipment. b Average per responding farm. c Rate of return to farm capital at 1 July. pABARES preliminary estimates. yABARES provisional estimates. na Not available. RSE Relative standard errors, expressed as a percentage of the estimate provided.

Table 3 Farm cash income of Victoria broadacre farms, by region, 2012–13 to 2013–14, average per farm

Region / units / 2012–13p / RSE / 2013–14y
Mallee / $ / 126 100 / (26) / 165 000
Wimmera / $ / 157 400 / (14) / 150 000
Central North / $ / 93 100 / (15) / 50 000
Southern and Eastern Victoria / $ / 55 000 / (26) / 59 000

Note: pABARES preliminary estimates. yABARES provisional estimates. na Not available. Figures in parentheses are standard errors, expressed as a percentage of the estimate provided.

Performance of grains industry farms—Victoria

In 2012–13, crop receipts increased for Victorian grains farms compared to those recorded in 2011–12, as higher crop prices offset reductions in crop production resulting from drier conditions through winter and spring. Farm cash income for Victorian grains industry farms averaged $171000 a farm in 2012–13 (Figure 5).

Overall, in 2013–14, crop receipts for Victorian grains farms are projected to remain similar to those recorded in 2012–13, lower prices for canola, barley and some grain legumes mostly offsetting small increases in overall grain production.

Farm cash income for Victorian grains industry farms is projected to average $151000 a farm in 2013–14, around 35 per cent above the industry average for the previous 10 years (Figure 5). However, farm cash incomes for Victorian grains industry farms were reduced by dry conditions throughout much of this period.

Figure 5 Real farm cash income, grains industry, average per farm

Note: p Preliminary estimate. y Provisional estimate.

Performance of sheep industry farms—Victoria

Farm cash incomes were relatively high in historical terms for Victorian sheep industry farms in the period 2009–10 to 2011–12 (Figure 6). However, in 2012–13, a reduction of 25per cent in average prices received for lambs, a larger reduction in the average price received for adult sheep and an 8 per cent reduction in the average wool price received resulted in farm receipts for Victorian sheep farms falling by 23 per cent. Despite a reduction in average cash costs resulting mainly from reduced expenditure on sheep purchases and interest payments, average farm cash income for sheep industry farms declined to an average of $53000 per farm.

In 2013–14, higher adult sheep and lamb prices, together with a small increase in wool prices are projected to result in an increase in farm cash receipts. Average farm cash income for sheep industry farms is projected to increase to average $68000 per farm, around 12per cent above the industry average of $61000 per farm for the ten-years to 2012–13.

Figure 6 Real farm cash income, sheep industry, average per farm

Note: p Preliminary estimate. y Provisional estimate.

Performance of beef industry farms—Victoria

A much smaller average herd size for Victorian beef industry farms, compared with the Australian average, results in average farm cash income for Victorian beef industry farms typically being well below the national average (Figure 7).

In 2012–13, a reduction of 15 per cent in the average price received for beef cattle sold reduced farm cash receipts and despite a further reduction in expenditure on beef cattle purchases average farm cash income for Victorian beef industry farms declined to average $18000 per farm in 2012–13 (Figure 7).

In 2013–14, a further reduction in the average price received for beef cattle sold is projected to result in average farm cash income for Victorian beef industry farms declining further to average $11000 per farm in 2013–14, less than half the industry average of $36000 per farm for the ten-years to 2012–13(Figure 7).

Figure 7 Real farm cash income, beef industry, average per farm

Note: p Preliminary estimate. y Provisional estimate.

Performance of dairy industry farms— Victoria

In 2012–13, a reduction in farmgate milk prices averaging 7 per cent and a reduction of 3 per cent in average milk production in Victoria, together with an increase in average cash costs of 11per cent driven mainly by a rise in expenditure on fodder and interest payments, resulted in farm cash incomes for Victorian dairy farms declining from $141 790 in 2011–12 to just $31500in 2012–13. An estimated 38 per cent of Victorian dairy farms recorded negative farm cash incomes and farm business profit declined to an average loss of $40 100 per farm (Table 4).

In 2013–14 average farm cash incomes are projected to rebound strongly with an increase in farmgate milk prices of around 20 per cent. Despite a projected reduction in milk production and an increase in total cash costs, resulting mainly from higher fodder expenditure, farm cash income for Victorian dairy farms is projected to increase to an average of $127000 per farm. If achieved, this would be around 39 per cent above the average for the ten-years to 2012–13, in real terms. However, average farm cash income for Victorian dairy farms was low in many years during this period due to drought and reduced availability of irrigation water (Figure 8).

Figure 8 Real farm cash income, dairy industry, average per farm

Note: p Preliminary estimate. y Provisional estimate.

Table 4 Financial performance, Victoria dairy industry, 2011–12 to 2013–14, average per farm