Australian vegetable growing farms: an economic survey, 2007-08

Executive summary

This report presents results from the second of three surveys of Australian vegetable growers conducted by ABARE on behalf of Horticulture Australia Limited (HAL). Comprehensive data on the physical, financial and socioeconomic characteristics of vegetable growing farms in 2007-08 and some preliminary data for 2008-09 were collected as part of this survey. A comparison of results from the first survey funded by HAL conducted in 2008 and a survey conducted in 2007 by ABARE, funded by the Australian Government Department of Agriculture, Fisheries and Forestry on behalf of the Australian Vegetable Industry Development Group (AVIDG), was also undertaken.

During 2007-08, there were an estimated 3781 commercial vegetable farms operating in Australia with an estimated value of agricultural output (EVAO) of at least $40 000. These farms accounted for 73 per cent of all vegetable growing farms. The average area sown to vegetables was 29 hectares a farm in 2007-08. However, half of Australian vegetable growers produced vegetables on areas of less than 9 hectares in 2007-08.

The main results from the report are:

• An estimated 57 per cent of vegetable growers experienced drought or below average seasonal conditions in 2007-08. This proportion was around the same as in the previous financial year. Reflecting continued adverse seasonal conditions for vegetable growing for some parts of Australia, crop yields are estimated to have fallen for tomatoes, onions, carrots and broccoli.
• Total cash receipts for vegetable farms in 2007-08 are estimated to have been $570 100 a farm on average, of which 83 per cent was from the sale of vegetables. Vegetable receipts are estimated to have fallen by 6 per cent on average between 2006-07 and 2007-08 because of lower vegetable sales even though there was a rise in the average price received for vegetables sold. Despite the fall in vegetable receipts, total cash receipts increased slightly in 2007-08 because of higher receipts from other enterprises.
• Total cash costs were just less than $404 000 a farm on average in 2007-08, which was an increase of 2 per cent from the previous financial year. The largest share of average cash costs per farm in 2007-08 was accounted for by hired labour.
• Despite the rise in total cash receipts between 2006-07 and 2007-08, average farm cash income is estimated to have fallen by 3 per cent because of higher costs. The average farm cash income for vegetable farms in 2007-08 was $166 100 a farm.
• The proportion of vegetable farms realising negative farm cash income fell from 17 per cent in 2006-07 to 13 per cent in 2007-08.
• Vegetable farms had an estimated rate of return to capital, excluding capital appreciation, of 4 per cent on average in 2007-08. This was superior, on average, to that of broadacre farms (sheep, beef and grain farms) of 0.8 per cent in 2007-08. Larger farms, with more than 70 hectares of vegetables sown, realised a higher rate of return to capital, excluding capital appreciation, of 9 per cent, on average.
• The equity ratio (business assets as a percentage of total farm capital) of vegetable farms remained high in 2007-08, at 87 per cent, despite higher average debt. Only an estimated 1 per cent of vegetable farms had both an equity ratio of less than 70 per cent and a negative farm cash income.
• Almost all vegetable growers were concerned with pests and diseases. An estimated 91 per cent of growers followed a set pest and disease monitoring program. Additionally, 78 per cent of vegetable growers rated pest and disease management as a high or very high research and development priority in 2007-08.
• At the time of the survey, an estimated 72 per cent of vegetable growers expected to still be engaged in vegetable production in five years time. Additionally, 31 per cent of vegetable growers intended to expand vegetable production in the next three to five years.
• The most common factor highlighted by growers as an impediment to future viability of vegetable farms was increased farm input costs. The majority of vegetable growers also highlighted marketing costs, low vegetable prices and availability of irrigation water as other impediments to future viability. Compared with the previous survey, access to and cost of labour was no longer highlighted by the majority of vegetable growers as an impediment facing future viability.