Agriculture in the Shepparton Region of Victoria, 2014

Agriculture in the Shepparton region of Victoria, 2014 ABARES

Agriculture in the Shepparton region of Victoria, 2014

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

About my region 14.22

March 2014

Agriculture in the Shepparton region of Victoria, 2014 ABARES

Ownership of intellectual property rights

Unless otherwise noted, copyright (and any other intellectual property rights, if any) in this publication is owned by the Commonwealth of Australia (referred to as the Commonwealth).

Creative Commons licence

All material in this publication is licensed under a Creative Commons Attribution 3.0 Australia Licence, save for content supplied by third parties, logos and the Commonwealth Coat of Arms.

Creative Commons Attribution 3.0 Australia Licence is a standard form licence agreement that allows you to copy, distribute, transmit and adapt this publication provided you attribute the work. A summary of the licence terms is available from creativecommons.org/licenses/by/3.0/au/deed.en. The full licence terms are available from creativecommons.org/licenses/by/3.0/au/legalcode.

This publication (and any material sourced from it) should be attributed as: ABARES 2014, Agriculture, Fisheries and Forestry in the Shepparton region of Victoria, About my region 14.22, Canberra, March. CC BY 3.0.

Cataloguing data

ABARES 2014, Agriculture, Fisheries and Forestry in the Shepparton region of Victoria 2014, About my region 14.22, Canberra, March.

ISSN TBA

ISBN 978-1-74323-080-0

ABARES project 43009

Internet

Agriculture in the Shepparton region of Victoria 2014 is available at daff.gov.au/abares/publications.

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

Postal address GPO Box 1563 Canberra ACT 2601

Switchboard +61 2 6272 2010|

Facsimile +61 2 6272 2001

Web daff.gov.au/abares

Inquiries regarding the licence and any use of this document should be sent to: .

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 and Johnny Xu.

Contents

1Regional overview

Employment

2Agriculture sector

Value of agricultural production

Number and type of farms

Farm financial performance—Victoria

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, Shepparton region, August 2011

Figure 2 Value of agricultural production, Shepparton region, Victoria, 2011–12

Figure 3 Distribution of farms by estimated value of agricultural operations, Shepparton region, Victoria, 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 Shepparton region of Victoria

Agriculture in the Shepparton region of Victoria, 2014 ABARES

1Regional overview

The Shepparton region of Victoria is located in the north of the state (Map 1). The region comprises the three local government areas of Campaspe, Greater Shepparton and Moira, and the major regional towns of Echuca, Kyabram, Nathalia, Numurkah, Rochester, Shepparton-Mooroopna, Tatura, Tongala and Yarrawonga. The region covers a total area of around 10900square kilometres or 5 per cent of Victoria’s total area and is home to approximately 124900 people (ABS 2011).

Agricultural land in the Shepparton region occupies 9000 square kilometres, or 83 per cent of the region. Areas classified as conservation and natural environments (nature conservation, protected areas and minimal use) occupy 1070 square kilometres, or 10 per cent of the region. The most common land use by area is grazing modified pasture which occupies 2980 square kilometres or 27 per cent of the Shepparton region.

Map 1Shepparton region of Victoria

Employment

Australian Bureau of Statistics (ABS) census data from 2011 indicate that around 54200 people were employed in the Shepparton region. The Shepparton region accounts for 2per cent of total employment in Victoria and 11 per cent of all people employed in the Victorian agriculture, forestry and fishing sector.

Manufacturing was the largest employing sector with 7343 people (Figure 1), followed by health care and social assistance with 7042 people. Other important employment sectors in the region were retail trade (6456 people), agriculture, forestry and fishing (6149 people) and construction (4289 people).

The agriculture, forestry and fishing sector employed 11 per cent of the region’s workforce. Of these, 95 per cent worked in agriculture, and 4 per cent in support services for the agriculture, forestry and fishing sector. In addition, an estimated 4194 people were employed in food product manufacturing and 247 people were employed in wood, pulp and paper manufacturing in the region (included in the manufacturing sector employment).

Figure 1 Employment profile, Shepparton region, August 2011

Source: Australian Bureau of Statistics

2Agriculture sector

Value of agricultural production

In 2011–12 the gross value of agricultural production (GVAP) in the Shepparton region was $1.47billion, which was 13 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 Shepparton region has a diverse and important agricultural sector. In 2011–12, the Shepparton region accounted for the total value of Victorian rice, soybean and prune production. This region also accounted for 96 per cent of the value of the state’s tomato production, and 95per cent of the value of the state’s pear (including nashi) production.

The most important commodity in the Shepparton region based on the gross value of agricultural production was milk (Figure 2). In 2011–12, milk contributed 32 per cent ($466million) to the value of agricultural production in the region. Fruit production accounted for 26per cent ($385 million), with the major crops being apples ($167 million), pears (including nashi pears, $71 million) and peaches ($48 million). Cattle and calves contributed a further 10 per cent ($145 million) to the total value, and wheat accounted for 7 per cent ($97million).

Figure 2 Value of agricultural production, Shepparton region, Victoria, 2011–12

Source: Australian Bureau of Statistics

Number and type of farms

ABS data indicate that in 2011–12 there were 3485 farms in the Shepparton region with an estimated value of agricultural operations of more than $5000 (Table 1). The region contains 11per cent of all farm businesses in Victoria.

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

Industry Classification / Shepparton region / Victoria
no. / % / no. / %
Dairy / 1,083 / 31 / 5,027 / 15
Beef Cattle / 519 / 15 / 8,178 / 25
Mixed grains and livestock / 347 / 10 / 2,373 / 7
Fruit and nuts / 318 / 9 / 2,375 / 7
Grain growing / 222 / 6 / 2,621 / 8
Sheep / 214 / 6 / 3,984 / 12
Other livestock / 189 / 5 / 1,493 / 5
Other Crop growing / 121 / 3 / 514 / 2
Vegetable / 39 / 1 / 730 / 2
Other / 434 / 12 / 5,158 / 16
Total Agriculture / 3,485 / 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. Dairy (1083 farms) was the most common, accounting for 31 per cent of all farms in the Shepparton region, and 22 per cent of all dairy farms in Victoria.

A significant 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 35 per cent of farms in the Shepparton region had an EVAO of less than $50000 (Figure 3). These farms accounted for only 2 per cent of the total value of agricultural operations in 2011–12. In comparison, 26 per cent of farms in the region had an EVAO of more than $350000 and accounted for an estimated 78per 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, Shepparton region, Victoria, 2011–12

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

Performance indicator / units / 2011–12 / 2012–13p / RSE / 2013–14y
Total cash receipts / $ / 583 330 / 523 500 / (14) / 629 000
Total cash costs / $ / 441 540 / 492 000 / (15) / 502 000
Farm cash income / $ / 141 790 / 31 500 / (52) / 127 000
Farms with negative farm cash income / % / 16 / 38 / (29) / 14
Farm business profit / $ / 67 030 / - 40 100 / (32) / 51 000
Profit at full equity excluding capital appreciation / $ / 130 310 / 27 100 / (58) / 115 000
Farm capital at 30 June a / $ / 2 988 710 / 3 371 100 / (11) / na
Farm debt at 30 June b / $ / 644 610 / 747 800 / (10) / 754 000
Equity ratio b / % / 79 / 78 / (3) / na
Rate of returnexcluding capital appreciation c / % / 4.3 / 0.8 / (54) / 3.5
Off-farm income of owner manager and spouse b / $ / 20 020 / 22 800 / (20) / na