The comments were made by Rhonda Treadwell, Manager, Farm Surveys and Analysis Branch, ABARE.

"Most Australian farms entered 2006-07 with relatively high farm equity and cash reserves. However, a large increase in the proportion of farms recording negative farm cash incomes in 2006-07 is likely to result in significant increases in farm debt," Ms Treadwell added.

"On the positive side, continued strong prices for major commodities, particularly grains and beef, together with high levels of farm investment in recent years, will help farm incomes recover once the drought breaks," said Ms Treadwell.

Wayne Carlson, General Manager, NAB Agribusiness, told the conference that small broadacre farms are expected to record a cash loss in 2006-07, which will be covered by liquid assets and non-farm income.

"While a majority of middle and large farms are forecast to generate positive cash income, it will be somewhat reduced as a result of the continuing drought conditions," Mr Carlson stated.

Mr Carlson went on to say that despite ongoing drought conditions, economic reality combined with factors such as climate change will make the astute producer review their enterprise suitability, or even the location of their farm, and make plans to manage the changes they need to make.

The third speaker, John Hamparsum, a crop producer from Breeza, on the Liverpool Plains of northern NSW, commented that a successful farmer needs to be resilient, look for new opportunities, be willing to change and critically examine all spending.