The newly released 2006-2007 BankWest Benchmarks highlight how significantly the harsh drought affected rural and regional Western Australia over the last year.
Western Australia's 2006-2007 broadacre farm financial performance was at -0.9 per cent, the lowest since 2000, compared to the previous five year average of 3.0 per cent.
The 2006-2007 season generally saw significant reductions in average yields across the state. Broadacre crop yields averaged 0.4 to 0.6 tonnes per hectare less than in 2005, and 0.2 to 0.4 tonnes per hectare less than the previous five year average.
Farm input costs declined for the second year in a row from the 2004 operating cost high of $194 /ha to $186 /ha, as farmers responded to the poor seasonal outlook by trimming inputs.
Despite tight cost control, operating costs as a percentage of farm income increased to 86 per cent, the highest level observed in our survey since 2000.
BankWest Rural and Regional State Manager Jim Watson said it was clear that it had been a tough year for many farmers.
"The 2006-2007 Benchmarks clearly highlight that it has been a difficult year, and 2007 is displaying similarities, however we do have higher grain prices this year which may make a significant difference at sale time," he said.
"It's important to remember that drought is cyclical and I have confidence in Western Australia's agricultural sector."
"We are committed to working with, and understanding, rural and regional Western Australia and that has never been more important than during difficult times," he said.
Other key findings from the 2006-2007 BankWest Benchmark Survey include:
- Farm businesses operating profit decreased $18 per effective ha from last year with a state average of $31 per ha. This figure is 52 per cent of the previous 5 year state average. Operating profit was boosted by the grain payments from the 2005 harvest that impacted during 2006.
- Debt levels across the state continue to climb, with this year's survey showing an average of $362 per effective hectare. Farm debt increased 19 per cent while reported total assets increased 7 per cent, contributing to a decline in farm equity from 82 per cent to 80 per cent.
- The top 25 per cent of farms within the state achieved a return on capital of 7.1 per cent compared to the state average of -0.9 per cent.
- The top 25 per cent achieved an operating return, after allowance for machinery replacement, of $113 per hectare, which was $82 higher than the state average. They achieved this with impressive operating cost as percentage of income at 58 per cent compared to the 86 per cent average across all farms.
Full details of how farm businesses really shaped up in 2006-2007 will be available at the Dowerin GWN Field Days from 29 August - 30 August 2007.
