2019 Farm Gross Margin and Enterprise Planning Guide

Published: 26 Feb 2019

The South Australian Grains Industry Trust, in association with Primary Industries and Regions SA (PIRSA) and the South Australian Sheep Industry Fund (SIF) are pleased to produce this annual publication on expected Gross Margins for broadacre cropping and livestock enterprises in South Australia. It incorporates latest information on input and output pricing to give estimates of the relative profitability of different farm enterprises, as an aid to decision making in enterprise selection. With funding from SASIF, the livestock and pasture gross margins have been reviewed with three additional livestock and two pasture gross margins added.

Each year farmers are confronted with an array of challenges brought on by the vagaries of weather, production and marketing. In 2018, growing season rainfall was highly variable with very much below average rainfall in all agricultural districts except the South East, Southern Yorke Peninsula and Lower Eyre Peninsula. With below average summer rainfall there was limited opportunity to conserve soil moisture. Patchy and late opening rains, limited early crop growth in many districts. Average to above average rainfall in August gave some optimism, however extremely dry conditions with numerous frosts in September and early October, severely impacted yields in many districts. Large areas of crop were cut for hay, due to frost damage or drought. Livestock returns have generally remained strong, however the lack of pasture feed and the shortage of pasture and grain have impacted many enterprises.

There have been subtle but significant changes in crop diversity over the past decade. Traditionally, virtually all rotations in SA were cereal based, with wheat largely king. However, recently we have seen the emergence of the concept of wheat as a break crop to more valuable alternatives. Examples of this are canola on Lower Eyre Peninsula and lentils on Yorke Peninsula. Integral to this evolution has been the adoption of new and/or cheaper technologies such as herbicide tolerant varieties and cheaper fungicides.

This reclassification of alternative crops from ‘break crops’ to ‘rotation crops’ has come from continued evidence as to their profitability, even in lower rainfall districts.

Under this new regime, it has become even more critical to assess the potential profitability of alternatives when making enterprise selection decisions. Clearly, while this remains an area for individual decision making for each farm business, it is also clear that tightening margins are driving the need for a more robust examination of the risks and rewards of the various alternatives.

We believe that a healthy examination of gross margins of alternative enterprises is an effective tool in assisting with the process. To this end, we are pleased to be involved in the evolution of the Excel based version of the Farm Gross Margin Guide. This tool has all the normal practices for enterprises pre-loaded into an editable version which can be quickly and easily adjusted to represent individual farmer circumstance. This allows the incorporation of individuals own beliefs and judgements in producing their relevant numbers to aid decision making.

In farm business management, the focus is on getting the most from existing land and assets. The partners in this publication have important roles in this process. The South Australian Grain Industry Trust (SAGIT) provides local solutions to local problems, investing more than $2 million each year in supporting SA centric grains research. Rural Solutions SA’s purpose is to assist primary industries and regions to grow, innovate and maximise their economic growth potential. The South Australian Sheep Industry Fund (SIF) supports programs that deliver benefit to South Australia’s sheep producers, investing over $3 million in these programs in 2018-19.

This guide is one of few publications that provide gross margins for both crops and livestock enterprises across the range of South Australian rainfall zones.

The South Australian Grain Industry Trust has pleasure in partnering with PIRSA’s Rural Solutions SA and the South Australian Sheep Industry Fund to produce and distribute this guide as a valuable aid in your decision making.

Interactive gross margin guide

These excel spreadsheets contain an interactive version of the Farm Gross Margin Guide publication below

Link to this publication

Use https://grdc.com.au/FarmGrossMarginGuide to ensure your link remains current and up-to-date!

Region: South

ISSN: 2207-2349 (print)

ISSN: 2207-2357 (Online)