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Beyond the Bale : March 2016
30 ON FARM “T he top 20 per cent of livestock producers are earning more than three times as much the average producers.” So says farm business economist Paul Blackshaw who gave a presentation at last year’s BESTWOOL/BESTLAMB conference on what the top farmers do consistently well. For those who missed it, his presentation – along with 15 other presentations from the conference – was recorded and is available free from the BESTWOOL/BESTLAMB website to anyone across the country. Mr Blackshaw works for the Victorian Department of Economic Development, Jobs, Transport and Resources (DEDJTR) based out of Rutherglen in north-eastern Victoria. One of his roles is to manage the Livestock Farm Monitor Project, delivered jointly by DEDJTR and Rural Finance, which analyses the financial and production performance of participating livestock farms (wool, lamb, beef or a mix of some or all) across Gippsland, south-west Victoria and northern Victoria. To provide an insight into farm practices that contribute to profitability, the project also looks at the characteristics of the top-performing farms (top 20 per cent of farms), ranked on earnings before interest and tax (EBIT) per hectare, compared with 'average' farms. HIGHER STOCKING RATES GENERATE MORE GROSS INCOME The results in the table below outline some of the key characteristics of 'average' and 'top 20 per cent' farms in the three examined regions of Victoria, averaged over the past 10 years to 2014. The results show that the top 20 per cent made more than three times as much money as the average farm. It should be stressed that these are averages, and there is a large variation in climatic and land attributes within any region, so care should be taken in over-analysing the dollar figure results. Also, the top 20 per cent of farmers are not the same farmers every year – some farms hit the top 20 per cent in some years and not others, and very few consistently stay in the top 20 per cent. However Mr Blackshaw points out some interesting trends that contribute to profitability across the three examined regions. “The top-performing farms generate considerably more gross income, primarily through higher stocking rates – per hectare, and per hectare per 100 mm of rainfall,” he said. “Enterprise and variable costs are actually a bit higher for the more profitable farmers – but this basically means they are spending money to make money. WHAT THE TOP FARMERS DO CONSISTENTLY WELL Everyone wants to make their farm more profitable. Is there something you can learn from the ‘better’ operators in the business? Read on for some useful insights from Victoria. Average farm Top 20% farm Gross income ($/ha) $516 $762 Enterprise/variable costs ($/ha) $209 $243 Overhead costs ($/ha) $121 $126 Owner/operator allowance, ie labour ($/ha) $91 $85 Earnings before interest and tax ($/ha) $94 $308 Return to assets 1.7% 4.9% Stocking rate (DSE/ha) 12.7 16.3 10 YEAR AVERAGES ACROSS ALL INDUSTRIES STATEWIDE (VICTORIA)
In the Shops - March 2016