Agriculture, Fisheries and Forestry in the Wheat Belt Region of Western Australia, 2015

Agriculture, Fisheries and Forestry in the Wheat Belt region of Western Australia, 2015 ABARES

Agriculture, Fisheries and Forestry in the Wheat Belt region of Western Australia, 2015

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

About my region 15.42

April 2015

Agriculture, Fisheries and Forestry in the Wheat Belt region of Western Australia, 2015 ABARES

© Commonwealth of Australia 2015

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Cataloguing data

ABARES 2015, Agriculture, Fisheries and Forestry in the Wheat Belt region of Western Australia, 2015, About my region 15.42, Canberra, April. CC BY 3.0.

ISBN 978-1-74323-110-4
ABARES project 43009

Internet

Agriculture, Fisheries and Forestry in the Wheat Belt region of Western Australia 2015 is available at agriculture.gov.au/abares.

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

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

Acknowledgements

ABARES relies on the voluntary cooperation of farmers participating in the annual Australian Agricultural and Grazing Industries Survey, Australian Dairy Industry Survey, and Australian Vegetable Growing Farms Survey to provide data used in the preparation of this report. Without their help, these surveys would not be possible. ABARES farm survey staff collected most of the information presented in this report through on-farm interviews with farmers.

This regional profile was updated by Therese Thompson, Peter Martin, Haydn Valle, Timothy Connolly, Lucy Randall, Kasia Mazur and Sharan Singh.

Contents

1Regional overview

Employment

2Agriculture sector

Value of agricultural production

Number and type of farms

Farm financial performance—Western Australia

3Fisheries Sector

4Forestry Sector

References

Tables

Table 1 Number of farms, by industry classification, 2012–13

Table 2 Financial performance, Western Australia broadacre industries, 2012–13 to 2014–15, average per farm

Table 3 Farm cash income of Western Australia broadacre farms, by region, 2013–14 to 2014–15, average per farm

Table 4 Financial performance, Western Australia dairy industry, 2012–13 to 2014–15, average per farm

Table 5 Physical and financial performance, vegetable growing farm businesses, Western Australia, 2012–13 and 2013–14

Figures

Figure 1 Employment profile, Wheat Belt region, Western Australia, November 2014

Figure 2 Value of agricultural production, Wheat Belt region, Western Australia, 2012–13

Figure 3 Distribution of farms by estimated value of agricultural operations, Wheat Belt region, Western Australia, 2012–13

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, beef industry, average per farm

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

Figure 8 Real farm cash income, vegetable growing farm businesses, Western Australia, 2005–06 to 2013–14

Figure 9 Area of native forest, by tenure

Maps

Map 1 Broad agricultural land use of the Wheat Belt region of Western Australia

Map 2 Agricultural industries of the Wheat Belt region of Western Australia

Map 4 ABARES Australian broadacre zones and regions

1

Agriculture, Fisheries and Forestry in the Wheat Belt region of Western Australia, 2015 ABARES

1 Regional overview

The Wheat Belt region is located in the south-west corner of Western Australia (Map 1). The region comprises 55 local government areas, and the major regional towns of Albany, Merredin, Moora, Northam, Southern Cross, Wagin and York. The region covers a total area of around 197 300 square kilometres or 8 per cent of Western Australia’s total area and is home to approximately 129 400 people (ABS 2011).

Agricultural land in the Wheat Belt region occupies 125 530 square kilometres, or 64 per cent of the region. Areas classified as conservation and natural environments (nature conservation, protected areas and minimal use) occupy 61 110 square kilometres, or 31 per cent of the region. The most common land use by area is grazing modified pastures, which occupies 60 580 square kilometres or 31 per cent of the Wheat Belt region.

Map 1 Broad agricultural land use of the Wheat Belt region of Western Australia

Source: Catchment scale land use of Australia – update March 2014 (ABARES, 2014)

Map 2 Agricultural industries of the Wheat Belt region of Western Australia

Source: Catchment scale land use of Australia – update March 2014 (ABARES, 2014)

Employment

Australian Bureau of Statistics (ABS) data from the 2014 Labour Force Survey indicate that around 65 200 people were employed in the Wheat Belt region. The Wheat Belt region accounts for 5 per cent of total employment in Western Australia and 25 per cent of all people employed in the Western Australia agriculture, forestry and fishing sector.

The health care and social assistance sector was the largest employment sector with 9300 people (Figure 1), followed by agriculture, forestry and fishing sector employed 7700 people, which represented 11 per cent of the region’s workforce. Other important employment sectors in the region were retail trade (7200 people), and public administration and safety (5200 people), education and training (5100 people) and construction (5100 people).

Figure 1 Employment profile, Wheat Belt region, Western Australia, November 2014

Note: Annual average of the preceding 4 quarters.
Source: Australian Bureau of Statistics, cat. no. 6291.0, Labour Force, Australia

2 Agriculture sector

Value of agricultural production

In 2012–13, the gross value of agricultural production (GVAP) in the Wheat Belt region was $3.8 billion, which was 38 per cent of the total gross value of agricultural production in Western Australia ($6.7 billion). This is the most recent year for which ABS data are available.

The Wheat Belt region has an important agricultural sector. The most important commodity in the region based on the gross value of agricultural production was wheat (Figure 2). In 2012–13, wheat contributed 38 per cent ($1.5 billion) to the value of agricultural production in the Wheat Belt region. Canola contributed 14 per cent ($524 million) and barley 12 per cent ($474 million). Wool contributed 11 per cent ($421 million) and sheep and lambs 7 per cent ($272 million).

Figure 2 Value of agricultural production, Wheat Belt region, Western Australia, 2012–13

Source: Australian Bureau of Statistics, cat. no. 7503.0, Value of agricultural commodities produced, Australia

Number and type of farms

ABS data indicate that in 2012–13 there were 6103 farms in the Wheat Belt region with an estimated value of agricultural operations of more than $5000 (Table 1). The region contains 52 per cent of all farm businesses in Western Australia.

Table 1 Number of farms, by industry classification, 2012–13

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. Mixed grain and livestock farms (2017 farms) were the most common, accounting for 33 per cent of all farms in the Wheat Belt region, and 87 per cent of all mixed grain and livestock farms in Western Australia.

There is a large percentage of small farms in the region in terms of their value of agricultural output. Estimated value of agricultural operations (EVAO) is a measure of the value of production from farms and a measure of their business size. Around 21 per cent of farms in the Wheat Belt region had an EVAO of less than $50 000 (Figure 3). These farms accounted for only 1 per cent of the total value of agricultural operations in 2012–13. In comparison, 49 per cent of farms in the region had an EVAO of more than $350 000 and accounted for an estimated 91 per cent of the total value of agricultural operations in the region.

Figure 3 Distribution of farms by estimated value of agricultural operations, Wheat Belt region, Western Australia, 2012–13

Source: Australian Bureau of Statistics

Farm financial performance—Western Australia

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 agricultural 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 Western Australia.

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, farm business profit + rent + interest + finance lease payments – 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—Western Australia

A decline in winter grain production after the record crop production in Western Australia in 2013–14 and lower wheat prices are projected to result in a decrease in average farm cash income in Western Australia (Figure 4 and Table 2), particularly in the Central and South Wheat Belt (Table 3). The impact of the reduction in crop production on receipts is expected to be partly offset by pool payments received in 2014–15 for grain delivered in 2013–14 and by increased receipts from sheep and lambs resulting from higher prices.

In the northern pastoral regions of the Kimberley and Pilbara, increased sales of beef cattle for live export and higher beef cattle prices are projected to increase farm receipts and raise average farm cash income.

Overall, Western Australian broadacre farm cash incomes are projected to decrease to average $211 000 a farm in 2014–15. If achieved, this would still be around 30 per cent above the 10-year average to 2013–14.

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

p Preliminary estimate. y Provisional estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Table 2 Financial performance, Western Australia broadacre industries, 2012–13 to 2014–15, average per farm

a Excludes leased plant and equipment. b Average per responding farm. c Farm capital minus farm debt. d Equity expressed as a percentage of farm capital. e Rate of return to farm capital at 1 July. p Preliminary estimates. y Provisional estimates. na Not Available. Figures in parentheses are standard errors expressed as a percentage of the estimate provided
Source: ABARES Australian Agricultural and Grazing Industries Survey

Table 3 Farm cash income of Western Australia broadacre farms, by region, 2013–14 to 2014–15, average per farm

p ABARES preliminary estimates. y ABARES provisional estimates. na Not available. Figures in parentheses are standard errors, expressed as a percentage of the estimate provided.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Map 4 ABARES Australian broadacre zones and regions

Note: Each region is identified by a unique code of three digits. The first digit identifies the state or territory, the second digit identifies the zone and the third digit identifies the region.

Source: ABARES

Performance of grains industry farms—Western Australia

Total winter crop production in Western Australia increased by 53 per cent in 2013–14 compared with 2012–13 to a record high with well above average yields. As a result, total crop receipts increased by 40 per cent on grains industry farms. On mixed enterprise farms, the large increase in crop receipts were combined with smaller increases in lamb, sheep and wool receipts. Total cash costs also increased in 2013–14 due to higher expenditure on fertiliser, crop chemicals, fuel and higher freight and handling costs associated with harvesting a larger crop than in 2012–13. Expenditure on repairs and maintenance also increased as producers made use of higher cash flow. Farm cash income for Western Australian grains industry farms increased to the historical high of $416 600 a farm in 2013–14 (Figure 5).

In 2014–15, Western Australia winter crop production is estimated to have declined by 16 per cent from the record 2013–14. The impact of lower crop production on farm receipts is expected to be partly offset by pool payments for grain delivered in 2013–14 and by increased receipts from sheep and lambs, on mixed enterprise farms. Total cash costs are also estimated to decrease in 2014–15 due to lower expenditure on fuel, livestock purchases, repairs and maintenance and interest payments compared with 2013–14. Farm cash income for Western Australian grains industry farms is projected to decrease to around $282 000 a farm in 2014–15, still around 27 per cent above the industry average for the previous 10 years.

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

p Preliminary estimate. y Provisional estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Performance of beef industry farms—Western Australia

In 2013–14, higher beef cattle turn-off and a small increase in the average price received for beef cattle sold resulted in a small increase in average farm cash receipts for Western Australian beef industry farms. Higher farm receipts were partly offset by increase in farm cash costs, particularly expenditure on fertiliser, interest payments, crop and pasture chemicals and fuel. As a result, average farm cash income for Western Australian beef industry farms increased only slightly to an average of $60 300 a farm in 2013–14 (Figure 6).

In 2014–15, higher beef cattle prices and a further increase in beef cattle turn-off in the pastoral regions of the Kimberley and Pilbara are projected to result in an increase in average farm receipts of around 10 per cent. In addition, total cash costs are estimated to decline slightly with reduced expenditure on interest payments, fuel and beef cattle purchases. Farm cash income is projected to increase to average $130 000 a farm in 2014–15, around 70 per cent above the average farm cash income for the 10 years ending 2013–14.

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

p Preliminary estimate. y Provisional estimate.
Source: ABARES Australian Agricultural and Grazing Industries Survey

Performance of dairy industry farms— Western Australia

In 2013–14 average farm cash incomes increased in most states as a result of higher milk prices. Nationally, average farm cash income increased from $44 130 in 2012–13 to $163 900 in 2013–14. In Western Australia, there was a small increase in the average milk price received and despite a reduction in milk production, average farm cash receipts increased. The increase in farm receipts was partly offset by higher farm cash costs. Nevertheless, for Western Australian dairy farms, average farm cash income is estimated to have increased from $133 370 in 2012–13 to $161 300 in 2013–14 (Figure 7 and Table 4).