MEDIA RELEASE State Findings Embargoed until 20 August

Size: px

Start display at page:

Download "MEDIA RELEASE State Findings Embargoed until 20 August"

Owen Sanders
7 years ago
Views:

1 Farm equity up in strong times for WA grain sector Key findings from the Planfarm Bankwest Benchmarks Western Australia s farm businesses are in strong financial shape, buoyed by good seasons, higher farm equity levels and stable land values. According to the state s largest agricultural survey, the Planfarm Bankwest Benchmarks, average farm equity is now at 80 per cent, indicating a turnaround for the grain belt after a run of tough seasons. The survey is a comprehensive annual farm business analysis compiled from Planfarm, Bankwest, Bedbrook Johnston Williams, Business Ag and Ag Asset clients. It gives a broad summary of information collected from 566 farm businesses throughout WA s broadacre farming regions. Bankwest Rural and Regional Banking State Manager, John Sgambelluri, said the research 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 state s agricultural sector. With average farm equity at 80 per cent (net of liquid assets) and continuing to improve to a level that is indicative of a strong financial position, we are now starting to see some of the concerns we had through being resolved, Mr Sgambelluri said. Add to this that land values have not yet shown large increases, and we re at a very positive point in Western Australian agriculture. The 2014 season reminded us again that it is rare for the whole state to achieve an outstanding result in a single year. The best performing regions were located in a diagonal band through the Central Wheatbelt, stretching from Northam to Jerramungup. The southern regions generally experienced a very good season, while the north of the state was below average. The net effect over the whole state was an average season in terms of profitability a little better than average when you consider total state grain receivals of 14.5mmt. Agriculture and Food Minister Ken Baston said yields on broadacre crops overall were above 10-year averages. This certainly gives the sector renewed confidence, Mr Baston said. It s great to see such positive results, following on from a strong season, in most of our grain-growing regions. 1

2 As well as being the nation s largest grain-producing region, Western Australia is well placed to supply sustainably produced, premium products domestically and to export these commodities throughout Asia and many other countries throughout the world. Recent rainfall has benefitted the majority of the Wheatbelt so I look forward to observing a further boost in confidence this season. The State Government is committed to supporting the success of Western Australian farm businesses right across the state. The Planfarm Bankwest Benchmarks survey is split into two sections: a single year analysis which aims to highlight farm performance over the past year and a long term performance analysis which examines the highest performing farms over the past six years. Planfarm consultant Graeme McConnell said a high level of management skill was consistently required in order to maintain a ranking in the top 25 per cent of farm businesses. The achievement of the top 25 per cent is significant when you consider that those operators generate double the profit of the average performers, he said. The average farm business is still generating very good returns, where the bottom 25 per cent hover around breakeven. 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. We found that some of the top 25 per cent of performers were outstanding in terms of production, but were perhaps less effective marketers of their grain. Key findings: The season produced above average results for most zones. The key outcomes for last season were characterised by: Significant early rains through much of the state s south, combined with good seeding rainfall, established the potential for a better than average season. This rainfall was followed by limited, yet well-timed rains and very few frosts. While early spring heat took the cream off yields in some parts, 2014 was a very sound season for most in these areas. The North East and Eastern Wheatbelt missed out on much of the early and seeding rains, unfortunately resulting in limited capacity to benefit from the smaller late season rainfalls. The 2014 state average crop yield results were positive, with wheat, barley, canola and lupin yields all finishing above 10-year state averages. Grain pricing remained solid through harvest, allowing decile 5 or higher prices to be achieved, which continued well into the post-harvest period. The average operating profit was $184ha and the top 25 per cent of the survey group achieved $318ha. Average return on capital reached 5 per cent - above the long term average of just under 4 per cent. The average Debt to Income ratio improved to 1:1. Average farm equity is at 80 per cent and continues to improve, returning to a level that is indicative of a strong financial position for the WA grain belt as a whole. 2

Another above average season has resulted in solid profits which have returned liquidity to the sector enabling farm businesses to expand, upgrade aged plant, reduce debt and invest in new

3 Another above average season has resulted in solid profits which have returned liquidity to the sector enabling farm businesses to expand, upgrade aged plant, reduce debt and invest in new technologies and efficiencies. - ENDS - Figure 1: Historical debt to income ratio Relatively high farm incomes from recent strong seasons, combined with a reduction in debt has seen the state debt to income ratio fall back to the 1:1 target. Figure 2: Farm debt and equity

Figure 3: Crop yields 10 year average vs 2014 The following chart shows what is reflected in the state s grain deliveries that 2014 was overall a good production

4 Figure 3: Crop yields 10 year average vs 2014 The following chart shows what is reflected in the state s grain deliveries that 2014 was overall a good production year with yields on all crops above their 10-year averages. When compared to longer term yields, the result also stands up very well. Map: Regions of the survey 4

5 Media Invite: We invite you to join us for the Planfarm Bankwest Benchmarks Launch Date: Thursday, August 20, 2015 Time: 7.30am 9am Location: Bankwest Place, Level 1, 300 Murray Street, Perth Dress: Business attire RSVP: To register go to Alternatively, you can register to attend one of the below events: Narrogin // Duke of York Friday, August 21, breakfast, 8am Northam // Country Club Friday, August 21, breakfast, 8am Merredin // Northside Tavern Friday, August 21, breakfast, 8am Kojonup // Kodja Place Community Room Friday, August 21, morning tea, 10am Geraldton // Masters Builders Function Rm Friday, August 28, breakfast, 7.30am Media Enquiries For further media enquires or a full copy of the survey, please contact Andree McIntyre, McIntyre Management & Marketing, andree@mcintyremarketing.com.au or For more information about the products and services offered by Planfarm Pty Ltd and Bankwest Agribusiness Centre, our contact details are: Bankwest Agribusiness Centre Planfarm Pty Ltd Level 1, 1215 Hay St 22/350 Cambridge Street West Perth WA 6005 Wembley WA 6014 Garry Harvey Graeme McConnell Director Corporate Agribusiness Consultant (08) (08) garry.harvey@bankwest.com.au graeme@planfarm.com.au PLANFARM BANKWEST BENCHMARKS SURVEY The Planfarm Bankwest Benchmarks Survey is the largest of its kind in Australia and provides valuable information about the financial and production performance of Western Australian broad-acre farm businesses. The survey includes data from clients of Planfarm and Bankwest and delivers high quality and highly valued information to agribusiness across the wheatsheep belt of WA. The Planfarm Bankwest Benchmarks allow farm businesses to compare their financial and production performance to other farmers in their district and region. This allows farmers to compare the strengths and weaknesses of their operations and, in this respect, help improve farm profitability. There is often a significant difference between the top performing farms and other farms. The Planfarm Bankwest Benchmarks help to identify the factors that help lift the top performing farms above the others. 5

6 ABOUT BANKWEST Bankwest provides personal and business banking solutions for more than 1.3 million retail and business customers across Australia. Bankwest customers enjoy access to an extensive network of stores and business centres, direct and third party distribution channels, agencies and electronic banking facilities, as well as 24-hour telephone and internet banking. For two years running, Bankwest has been named Business Bank of the Year in the AFR Smart Investor Blue Ribbon Awards, first in 2013 and again in Bankwest is a division of the Commonwealth Bank of Australia ABN AFSL/Australian credit licence Any advice given is of general nature and is not based on any consideration of specific objectives, financial situation or needs. The key findings above and in the survey contain material provided directly by third parties and while such material is published with permission, Bankwest accepts no responsibility for the accuracy or completeness of, or endorses any such material. Except where contrary to the law, Bankwest does not accept any liability for such material.. 6

Rural Business Development Corporation

Division 49 Part 11 Rural Business Development Corporation Minister for Agriculture and Food; Fisheries Appropriations, Expenses and Cash Assets d DELIVERY OF SERVICES Item 64 Net amount appropriated to