Not all gloom for WA farmers
WA's biggest survey of farm financial performance has revealed that it is far from gloom and doom for many farmers despite what industry leaders are calling one of the most challenging periods in the sector's history.
The Planfarm Bankwest Benchmarks Survey of more than 500 farmers showed that even in low rainfall zones north of Bencubbin some farmers had been able to grow their equity over the past six years.
Planfarm consultant Graeme McConnell said the top 25 per cent of farmers in low rainfall zones in the north-eastern Wheatbelt increased their equity by an average of $3.9 million.
Equity growth in the region averaged $2.1 million.
"That has been the standout region in the State in that particular measure," he said. "There have been substantial equity gains over what has been a very tough period for farming when you look at the type of seasons we have had."
Mr McConnell said the region was set to take a hit this season because of lack of rain, but local farmers had capitalised on two good years in the past six.
"The key has been not to lose money in the bad years and to pick up gains in good years," he said. "It is easy to say but much harder to do. It involves cutting costs while still managing to get fair yields and managing the investment into crops relative to what they are likely to return."
Across all regions, the survey highlighted that return on capital in 2012 was not good enough to sustain the industry.
The average return was 1.07 per cent, with the top 25 per cent of farmers at 5.26 per cent.
"Given that earnings on bank deposits would have been 4 per cent at low risk, average farm ROC of 1.07 per cent is just not good enough given the capital at risk," the survey authors said.
"Improving this result in the current climate must be an industry wide priority."
Bankwest State manager rural and regional John Sgambelluri said it should be noted that since 2007 there had been three years of returns of more than 6 per cent, with returns hitting 20.12 per cent among the top bracket of farmers in 2008.
Mr McConnell said it appeared climate change was starting to have an impact. He said anecdotal evidence from the Bureau of Meteorology showed a trend toward at least one very dry month during winter and increased incidence of frost in some areas.
Farmers in all low rainfall zones had a negative return on capital last year.
"In some low rainfall zones I have clients who had 10-year yield averages up until the early 2000s of around 2.2 tonnes a hectare," he said. "They are now looking at a 10-year average of about 1.35t/ha."
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