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In this section you will find detailed information, including national overviews and state and regional level assessments, from the 2000-2002 National Land and Water Resources Audit theme assessments.
People - Adjustment - Farm land controlled by economically large farms
Farm land controlled by economically large farms
Background
Compression of farmers' terms of trade are an ongoing aspect of most agricultural industries. To remain competitive farm businesses must generate productivity increases at a rate which Recent research has consistently shown that generally only the largest of farms (as measured by gross income) generate sufficient productivity gains to stay ahead of the compression of farmers' terms of trade. Work published by Australian Bureau of Agricultural and Resource Econoics compared the productivity performance of the top, middle and bottom thirds of Australian agriculture. This work concluded that generally only farms in the top third of the farm size distribution achieved productivity increases greater than the compression terms of trade (Ha & Chapman 2000; Knopke, Strappazzon, & Mullen 1995). In 1996 the top third of farms were those with an Estimated Value of Agricultural Operations greater than $190,000 (using 1996 dollars).
Research commissioned by RIRDC compared the return to capital of Australian broad acre farms grouped by percentile of farm cash receipts. Only those farms in the top 20 per cent of gross receipts generated an average positive return to capital. The top 5 per cent of farms generated returns to capital almost double those generated by farms between the 80th and 95th percentile (Australasian Agribusiness Services 1997). In 1986 the 80th percentile corresponded with farms with an Estimated Value of Agricultural Operations of $250,000 or greater and the 95 percentile with an Estimated Value of Agricultural Operations of $420,000 (using 1996 dollar values).
Data source
Farm size is measured by the Australian Bureau of Statistics generated Estimated Value of Agricultural Operations measure. This is an estimate of gross farm income created from agricultural commodity sales reported to the Australian Bureau of Statistics farm census. Custom tables were purchased from the Australian Bureau of Statistics that cross-tabulated total area of farm establishment by categories of farm Estimated Value of Agricultural Operations. Data for 1986 is presented.
Indicator construction
Figure 1 shows the percentage of farms in each Statistical Local Area with Estimated Value of Agricultural Operations greater than $5,000 (in 1996 dollars) which have an Estimated Value of Agricultural Operations greater than $300,000 (in 1996 dollars). Figure 2 shows the establishment area controlled by farms with an Estimated Value of Agricultural Operations greater than $300,000 as a percentage of the total establishment area reported to the agricultural census.
Indicator limitations
- In 1986 farms with an Estimated Value of Agricultural Operations greater than $300,000 managed 63 per cent of the agricultural landscape. This is approximately 30 per cent of the total Australian landscape.
- Figures obtained from Australian Bureau of Statistics on actual farm sizes were provided in aggregate form based on 1986 Statistical Local Area boundaries. This data was concorded to 1996 boundaries that are presented in this section. This concordance based upon area of agricultural land introduces some unavoidable errors in Statistical Local Areas whose boundaries have changed. Major boundary changes occurred in Victoria between 1986 and 1991.
- Data based upon a single year will be influenced by exceptional conditions prevailing in some regions and industries.
Observations
- Australia has a large tail of small farms. In 1986 half of Australia's farms with an Estimated Value of Agricultural Operations of greater than $32,000 had an Estimated Value of Agricultural Operations of less than $160,000. This does not take account of those farms with Estimated Value of Agricultural Operations less than $32,000. If these are included, half of Australia's farms had Estimated Value of Agricultural Operations of less than $70,000.
- Smaller farms dominate the hill country and coastal strips. Farms with Estimated Value of Agricultural Operations less than $300,000 dominated the landscapes of the eastern seaboard and Great Dividing Range. Larger farms control much of the establishment area of the rangelands and the west Australian wheat belt. Few farms of this size are found on the eastern seaboard or the eastern Great Dividing Range. The Murray Darling Basin and the eastern wheat zone are intermediate in structure between the two extremes.
- Disparity in regional capacities to maintain agricultural competitiveness. This uneven distribution of larger farms suggests that capacity to achieve productivity increases sufficient to keep pace with the compression of terms of trade is also unequally distributed across the farming landscape. In particular, farm businesses in areas dominated by smaller broadacre farms will have far less capacity to generate a return sufficient to fund land purchase.
Table 1 Distribution of farm establishments by Estimated Value of Agricultural Operations in 1986.
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Figure 1 Percent of farms with Estimated Value of Agricultural Operations greater than $300,000 (in 1996 dollars) by Statistical Local Area in 1986.
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See appendix figures 48-49 for further geographic detail.
Figure 2 Area of farm establishment controlled by farms with Estimated Value of Agricultural Operations greater than $300,000 (in 1996 dollars) as a per cent of total establishment area by Statistical Local Area in 1986.
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See appendix figures 50-51 for further geographic detail.
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