A SnapShot into southern Australian farm businesses

The 2020/21 production season provided many surprises to producers across the country with many regions seeing a better than average start to the season and the advent of the COVID-19 outbreak.

The perfect storm was created for many regions and businesses in the 2020/21 production year, with high commodity prices and average to above average yields supporting good returns to farm businesses.

The Combined Report collates data collected from farm businesses regarding the previous 12 months management performance around key profit areas. This report sees 143 data sets collected, of which a majority saw positive levels of profit coming out of what was widely considered a tough season in 2019/20.

Regions which had faced tough conditions over the previous few seasons were allowed a breather in 2020/21, with a good, early start to cropping and pasture programs and a decent finish in spring. Hay suffered due to the wet spring, but decile 9 pricing across commodities and average to above average cropping yields were just what many businesses needed to see a level of financial recovery.

The largest surprise of the report is how the low rainfall zone in the Northern Mallee fared given the challenging previous three seasons. All six of the businesses included from the Northern Mallee achieved results that placed them in the top 20% of producers by return on equity for that season.

The report also showed which regions consistently show results that place them within the top 20% of producers. Reliability of rainfall and ability to grow high value crop types are key drivers of consistent inclusion into the Top 20%, with the Yorke Peninsula, Lower EP, Southern Mallee and Upper South East regions accounting for a majority of these businesses.

Many businesses saw an increase in net worth due to increasing land values across agricultural districts. Part of this is due to the level of confidence in the ag sector and that average return on equity is 4.3% across the dataset included, which is better than current interest rates. This means that as an investment, agriculture is making good returns.

These positive results, across many of the businesses benchmarked have also led to many discussions around growth opportunities, both internal and external for agricultural businesses to look at. With the approach of you can’t manage what we don’t measure, this report and the discussion around the results has helped shape land purchase, machinery purchase or succession discussions.

The 2020/21 report is the 12th Combined Report published by Pinion Advisory and features new discussions around consistently performing areas and productive land values. The report is now available to purchase, with insights into businesses across South Australia and into Victoria.

Interested in a financial and management health check on your business in 2022? Get in contact with your agribusiness consultant or Pinion Advisory to request your input sheets.