Average statewide farm profits were the highest in over a decade according to the 2016-17 Livestock Farm Monitor Report.
Agriculture Victoria Farm Business Economist Paul Deane said sheep producers experienced the greatest improvement in economic performance, with merino wool prices outperforming red meat prices.
“The Livestock Farm Monitor Report analyses the financial performance of 75 farms in Victoria’s key livestock regions of south-west, Gippsland and northern Victoria.
“We found that Victorian livestock farm profitability improved markedly in 2016-17, with some farms achieving record profits.
“High commodity prices for wool, lamb and cattle coupled with above average rainfall and pasture growth in parts of the state resulted in a strong increase in gross farm incomes and profits,” he said.
“Victoria’s south-west and northern regions experienced a greatly improved pasture growing season, however seasonal conditions were varied in Gippsland.
“Sheepmeat, wool and beef cattle production are vital to Victoria’s strong and growing economy, with approximately one third of the gross value of all agricultural production in Victoria coming from sheep and beef cattle industries,” he said.
Mr Deane said the outlook was for another potentially very good year for sheep producers in 2017-18, with both lamb and merino wool prices closing 2017 around 30 per cent higher, compared with December 2016.
“Consecutive years of strong cash flows for sheep and cattle producers provides an opportunity to re-invest in the farm business, rebuild the farm balance sheet by reducing debt, considering Farm Management Deposits (FMDs) or other off-farm investments to diversify wealth and investment risk.”
Mr Deane said there is good evidence that re-investing in the farm business can achieve a high return on investment as a direct result of increasing the productive capacity of the existing farming system.
The Livestock Farm Monitor Report provides industry and government with detailed technical, economic and financial metrics from 75 farms across Victoria. Agriculture Victoria has conducted the Livestock Farm Monitor Project survey in south-west Victoria since 1971 and statewide in its current format since 2009. The report is available here.