WA agriculture doing well

Jo FulwoodThe West Australian

Western Australia's top 25 per cent of farmers are skilled at pre-season planning, making hard decisions in poor seasons and capitalise on good conditions when opportunities arise.

In WA's largest agricultural survey, released last week by Planfarm and Bankwest, 566 mixed broadacre farm businesses were surveyed, showing key differences between the business structures of the top 25 per cent of performers, and the bottom 25 per cent.

According to Planfarm consultant Graeme McConnell, the top 25 per cent of farm business were achieving 7 per cent return on capital over the past six years of data, compared with just over 3 per cent for average and low-performing farm businesses.

Mr McConnell said despite this, the top bracket of farmers was not consistently achieving better grain prices than the average.

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"Interestingly, for two regions last year - the northern high and medium rainfall regions - the six-year average wheat price achieved by the top 25 per cent was less than what was achieved by the region's average," he said.

But Mr McConnell said the top performers consistently saw small yield improvements every year, in the order of between 0.08 to 0.1 t/ha.

He said the most successful farm businesses paid attention to small details, considered their efficiency and timing of fertiliser and chemical application, and did everything they could to shift major decisions out of stressful periods such as seeding and harvest.

"In terms of operating costs, they are typically spending a bit more on chemicals, between $4 and 5 /ha, but they are obviously achieving greater efficiency out of that.

"The top 25 per cent of farmers are better able to adapt to the seasons, making decisions within the season, so in a tougher year they are reducing their spending when things aren't looking great, but increasing their spending, and chasing yield when things are looking good."

According to the survey data, WA farm businesses are in a strong financial shape, with average farm equity now sitting at 80 per cent. Mr McConnell said farm business equity levels, which in 2011 were down to 75 per cent on average across the State, were now improving.

"Just under 10 years ago a run of tough seasons started and over the course of the next few years placed equity percentages under pressure," he said.

"Following the 2014 season we are up to 80 per cent and that is trending upwards which is the most important thing, showing that the vast majority of businesses in the State are in healthy position.

"This outcome is on the back of little change in land values."

However, he cautioned the data was an average across all agricultural regions.

"Clearly these statistics do not acknowledge the situation in the low rainfall zones, such as the eastern Wheatbelt, where many farm businesses have really struggled," Mr McConnell said.

"In this area, if you've had rain, the businesses have done well, if you haven't had rain, the businesses have done poorly, and rainfall in these areas has had a bigger influence than management skills."

According to Bankwest rural and regional banking State manager John Sgambelluri, the research from the survey allowed farmers to better understand their businesses and identify how they could improve their performance, challenge industry norms and help lift the profile of the agricultural sector.

"The 2014 season reminded us again that it is rare for the whole State to achieve an outstanding result in a single year," he said.

"The best-performing regions were located in a diagonal band through the central Wheatbelt, stretching from Northam to Jerramungup.

Mr Sgambelluri said the top 25 per cent of farm businesses in the survey were not necessarily the same businesses each year.

"Ten or 15 per cent might have stayed in those parameters, but the total top 25 per cent changes year on year, which is important for farmers to know. It can give them hope that they can join this 25-club also," he said.

Mr Sgambelluri said the top-performing 25 per cent of farm business did not see themselves as just a family farm, but a business enterprise.

"They have monthly meetings, they look ahead and plan for the future, they make business decisions around revenue and expenses and will look at leasing rather than just land acquisition," he said.

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