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Agriculture and Forestry in the Hume region of Victoria, 2014

Research by the Australian Bureau of Agriculturaland Resource Economics and Sciences

About my region 14.19March 2014

Agriculture and Forestry in the Hume region of Victoria, 2014 ABARES

© Commonwealth of Australia 2014

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This publication (and any material sourced from it) should be attributed as: ABARES 2014, Agriculture, Fisheries and Forestry in the Hume region of Victoria 2014, About my region 14.19, Canberra, March. CC BY 3.0.

Cataloguing dataABARES 2014, Agriculture, Fisheries and Forestry in the Hume region of Victoria 2014, About my region 14.19, Canberra, March.

ISSN TBAISBN 978-1-74323-076-3 ABARES project 43009

InternetAgriculture and Forestry in the Hume region of Victoria 2014 is available at daff.gov.au/abares/publications.

Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES)Postal address GPO Box 1563 Canberra ACT 2601Switchboard +61 2 6272 2010|Facsimile +61 2 6272 2001Email [email protected] daff.gov.au/abares

Inquiries regarding the licence and any use of this document should be sent to: [email protected].

The Australian Government acting through the Department of Agriculture, Fisheries and Forestry represented by the Australian Bureau of Agricultural and Resource Economics and Sciences, has exercised due care and skill in the preparation and compilation of the information and data in this publication. Notwithstanding, the Department of Agriculture, Fisheries and Forestry, ABARES, its employees and advisers disclaim all liability, including liability for negligence, for any loss, damage, injury, expense or cost incurred by any person as a result of accessing, using or relying upon any of the information or data in this publication to the maximum extent permitted by law.

AcknowledgementsThis regional profile was updated by Tim Caboche, Peter Martin, Therese Thompson, Sonja Nikolova, Johnny Xu and Sharan Singh.

mailto:[email protected]

mailto:[email protected]


Contents1 Regional overview.................................................................................................................................. 1

Employment.............................................................................................................................................. 12 Agriculture sector................................................................................................................................... 3

Value of agricultural production......................................................................................................3Number and type of farms.................................................................................................................. 3Farm financial performance—Victoria..........................................................................................5

3 Forestry sector.......................................................................................................................................11

References........................................................................................................................................................... 12

TablesTable 1 Number of farms, by industry classification, 2011–12......................................................4

Table 2 Financial performance, Victoria broadacre industries, 2011–12 to 2013–14, average per farm..................................................................................................................................... 6

Table 3 Farm cash income of Victoria broadacre farms, by region, 2012–13 to 2013–14, average per farm..................................................................................................................................... 7

Table 4 Financial performance, Victoria dairy industry, 2011–12 to 2013–14, average per farm....................................................................................................................................................... 9

Table 5 Selected estimates, vegetable growers, Victoria, average per farm..........................10

FiguresFigure 1 Employment profile, Hume region, August 2011...............................................................2

Figure 2 Value of agricultural production, Hume region, Victoria, 2011–12...........................3

Figure 3 Distribution of farms by estimated value of agricultural operations, Hume region, Victoria, 2011–12.................................................................................................................... 4

Figure 4 Real farm cash income, broadacre industries, average per farm................................6

Figure 5 Real farm cash income, grains industry, average per farm............................................7

Figure 6 Real farm cash income, sheep industry, average per farm............................................8

Figure 7 Real farm cash income, beef industry, average per farm................................................8

Figure 8 Real farm cash income, dairy industry, average per farm..............................................9

Figure 9 Area of native forest, by tenure...............................................................................................11

MapsMap 1 Hume region of Victoria.....................................................................................................................1


1 Regional overviewThe Hume region of Victoria is located in the north-east of the state (Map 1). The region comprises the 10 local government areas of Alpine, Benalla, Indigo, Mansfield, Mitchell, Murrindindi, Strathbogie, Towong, Wangaratta, Wodonga, and parts of Greater Shepparton and Yarra Ranges. The Hume region includes the major regional towns of Wangaratta and Wodonga. The region covers a total area of around 34 000 square kilometres or 15 per cent of Victoria’s total area and is home to approximately 159 300 people (ABS 2011).

Agricultural land in the Hume region occupies 14 450 square kilometres, or 43 per cent of the region. Areas classified as conservation and natural environments (nature conservation, protected areas and minimal use) occupy 7810 square kilometres, or 23 per cent of the region. The most common land use by area is grazing modified pasture which occupies 12 200 square kilometres or 36 per cent of the Hume region.

Map 1 Hume region of Victoria

EmploymentAustralian Bureau of Statistics (ABS) census data from 2011 indicate that around 73 700 people were employed in the Hume region. The Hume region accounts for 3 per cent of total employment in Victoria and 10 per cent of all people employed in the Victorian agriculture, forestry and fishing sector.

Health care and social assistance was the largest employing sector with 9106 people (Figure 1), followed by manufacturing with 8395 people. Other important employment sectors in the region were retail trade (7939 people), public administration and safety (6656 people), and construction (6208 people).

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The agriculture, forestry and fishing sector employed 5695 people, representing 8 per cent of the region’s workforce. Of these, 90 per cent were employed in agriculture, 5 per cent in support services for the agriculture, forestry and fishing sector, and 3 per cent in forestry and logging. In addition, an estimated 2211 people were employed in food product manufacturing and 992 people were employed in wood, pulp and paper product manufacturing in the region (included in manufacturing sector employment).

Figure 1 Employment profile, Hume region, August 2011

- 2 4 6 8 10

OtherMining

Information Media and TelecommunicationsElectricity, Gas, Water and Waste Services

Rental, Hiring and Real Estate ServicesArts and Recreation Services

Financial and Insurance ServicesAdministrative and Support Services

Wholesale TradeProfessional, Scientific and Technical Services

Transport, Postal and WarehousingAccommodation and Food Services

Education and TrainingAgriculture, Forestry and Fishing

ConstructionPublic Administration and Safety

Retail TradeManufacturing

Health Care and Social Assistance

Employed total ('000 )

Source: Australian Bureau of Statistics

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2 Agriculture sectorValue of agricultural production In 2011–12 the gross value of agricultural production (GVAP) in the Hume region was $660 million, which was 6 per cent of the total gross value of agricultural production in Victoria ($11.3 billion) for 2011–12. This is the most recent year for which data are available from the ABS on GVAP for this region.

The Hume region has a diverse and important agricultural sector. In 2011–12, the Hume region accounted for around 61 per cent of the total value of Victorian capsicum production and 35 per cent of the total value of cherry production.

The most important commodity in the Hume region based on the gross value of agricultural production was cattle and calves (Figure 2). In 2011–12, cattle and calves contributed 28 per cent ($183 million) to the value of agricultural production in the region. Sheep and lambs accounted for 17 per cent ($114 million), milk accounted for 13 per cent ($83 million), fruit accounted for 11 per cent (69 million), and wool contributed 10 per cent ($63 million).

Figure 2 Value of agricultural production, Hume region, Victoria, 2011–12


Number and type of farmsABS data indicate that in 2011–12 there were 4671 farms in the Hume region with an estimated value of agricultural operations of more than $5000 (Table 1). The region contains 14 per cent of all farm businesses in Victoria.

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Table 1 Number of farms, by industry classification, 2011–12Industry Classification Hume region Victoria

no. % no. %Beef Cattle 2,109 45 8,178 25 Sheep 615 13 3,984 12 Dairy 334 7 5,027 15 Fruit and nuts 324 7 2,375 7 Mixed livestock 231 5 1,347 4 Other livestock 191 4 1,493 5 Mixed grains and livestock 132 3 2,373 7 Grain growing 83 2 2,621 8 Other 652 14 5,055 16 Total Agriculture 4,671 100 32,452 100

Note: Where the estimated value of agricultural operations is more than $5000.Source: Australian Bureau of Statistics

Farms are classified in Table 1 according to the activities that generate most of their value of production. Beef cattle (2109 farms) were the most common, accounting for 45 per cent of all farms in the Hume region, and 26 per cent of all beef cattle farms in Victoria.

A large proportion of farms in the region are small in terms of their business size. Estimated value of agricultural operations (EVAO) is a measure of the value of production from farms and a measure of their business size, and is somewhat similar to turnover. Around 45 per cent of farms in the Hume region had an EVAO of less than $50 000 (Figure 3). These farms accounted for only 7 per cent of the total value of agricultural operations in 2011–12. In comparison, 10 per cent of farms in the region had an EVAO of more than $350 000 and accounted for an estimated 52 per cent of the total value of agricultural operations in the region in 2011–12.

Figure 3 Distribution of farms by estimated value of agricultural operations, Hume region, Victoria, 2011–12

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

< $50k $50k to $150k $150k to $350k $350k to $500k $500k to $1 m > $1 m

Share of farms Share of value of agricultural operations


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Farm financial performance—VictoriaEach year, ABARES interviews Australian broadacre, dairy and vegetable producers as part of its annual survey program. Broadacre industries covered in this survey include the grains, grains–livestock, sheep, beef and sheep–beef industries. The information collected is a basis for analysing the current financial position of farms in these industries and expected changes in the short term. This paper uses data from the ABARES Australian agriculture and grazing industries survey (AAGIS), Australian dairy industry survey (ADIS), and Australian vegetable growing industry survey to report estimates of financial performance indicators (Box 1) for broadacre, dairy and vegetable farms in Victoria.

Box 1 Definitions

Major financial performance indicators

Total cash receipts: total revenues received by the business during the financial year.

Total cash costs: payments made by the business for materials and services and for permanent and casual hired labour (excluding owner manager, partner and family labour).

Farm cash income: total cash receipts – total cash costs

Farm business profit: farm cash income + changes in trading stocks – depreciation – imputed labour costs

Profit at full equity: return produced by all the resources used in the business, farm business profit + rent + interest + finance lease payments – depreciation on leased items

Rate of return: return to all capital used, profit at full equity * 100 / total opening capital

Equity ratio: Farm capital minus farm debt expressed as a percentage of farm capital

Industry types

Grains: farms mainly engaged in producing broadacre crops such as wheat, coarse grains, oilseeds and pulses, and including farms running sheep and/or beef cattle in conjunction with substantial broadacre crop activity.

Sheep: farms mainly engaged in running sheep.

Beef: farms mainly engaged in running beef cattle.

Dairy: farms mainly engaged in milk production.

Vegetable: farms mainly engaged in growing vegetables.

Performance of broadacre farms—VictoriaFarm cash income for Victorian broadacre farms declined from an estimated average of $92 310 per farm in 2011–12 to an average of $85 600 per farm in 2012–13, mainly as a result of lower livestock prices and reduced grain production (Table 2).

In 2013–14, receipts from sheep, lambs and wool are projected to increase as a result of higher prices. However, despite increased turnoff of beef cattle, lower saleyard prices are projected to result in little change in beef cattle receipts. Receipts from cropping are projected to remain similar to 2012-13, with only a small increase in winter crop production and lower prices for

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canola, barley and some grain legumes. On average, farm cash income for broadacre farms in Victoria is projected to decline slightly to $82 000 per farm in 2013–14, around 12 per cent above the ten-year average to 2012–13 of $73 000 per farm.

Overall, farm cash incomes are projected to increase in the Mallee region, although farm cash incomes vary greatly within this region. Farm cash income is projected to decline slightly in the Wimmera mainly as a result of lower prices for some grains and a larger decline is projected in the Central North due to the additional impact of lower beef cattle prices. In southern and eastern Victoria, increased cattle turn-off together with higher sheep, lamb and wool prices are projected to result in a small increase in average farm cash income (Table 3).

Figure 4 Real farm cash income, broadacre industries, average per farm

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13p

2013-14y

0

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Australia Victoria

2013–14$'000

Note: p Preliminary estimate. y Provisional estimate.

Table 2 Financial performance, Victoria broadacre industries, 2011–12 to 2013–14, average per farm

Performance indicatorunit

s 2011–12 2012–13p RSE 2013–

14yTotal cash receipts $ 303 990 279 700 (9) 278 000Total cash costs $ 211 680 194 200 (10) 196 000Farm cash income $ 92 310 85 600 (11) 82 000Farms with negative farm cash income % 20 25 (18) 28Farm business profit $ 8 530 12 400 (68) - 2 000Profit at full equity excluding capital appreciation $ 36 060 37 200 (27) 22 000Farm capital at 30 June a $ 2 902 350 2 820 700 (10) naFarm debt at 30 June b $ 278 170 252 400 (15) 255 000Equity ratio b % 90 91 (1) naRate of return excluding capital appreciation c % 1.3 1.3 (22) 0.8Off-farm income of owner manager and spouse b $ 37 960 32 200 (14) na

Note: a Excludes leased plant and equipment. b Average per responding farm. c Rate of return to farm capital at 1 July. p ABARES preliminary estimates. y ABARES provisional estimates. na Not available. RSE Relative standard errors, expressed as a percentage of the estimate provided.

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Table 3 Farm cash income of Victoria broadacre farms, by region, 2012–13 to 2013–14, average per farm

Region units 2012–13p RSE 2013–14yMallee $ 126 100 (26) 165 000Wimmera $ 157 400 (14) 150 000Central North $ 93 100 (15) 50 000Southern and Eastern Victoria $ 55 000 (26) 59 000

Note: p ABARES preliminary estimates. y ABARES provisional estimates. na Not available. Figures in parentheses are standard errors, expressed as a percentage of the estimate provided.

Performance of grains industry farms—VictoriaIn 2012–13, crop receipts increased for Victorian grains farms compared to those recorded in 2011–12, as higher crop prices offset reductions in crop production resulting from drier conditions through winter and spring. Farm cash income for Victorian grains industry farms averaged $171 000 a farm in 2012–13 (Figure 5).

Overall, in 2013–14, crop receipts for Victorian grains farms are projected to remain similar to those recorded in 2012–13, lower prices for canola, barley and some grain legumes mostly offsetting small increases in overall grain production.

Farm cash income for Victorian grains industry farms is projected to average $151 000 a farm in 2013–14, around 35 per cent above the industry average for the previous 10 years (Figure 5). However, farm cash incomes for Victorian grains industry farms were reduced by dry conditions throughout much of this period.

Figure 5 Real farm cash income, grains industry, average per farm

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13p

2013-14y

0

50

100

150

200

250

Australia Victoria

2013–14$'000


Performance of sheep industry farms—VictoriaFarm cash incomes were relatively high in historical terms for Victorian sheep industry farms in the period 2009–10 to 2011–12 (Figure 6). However, in 2012–13, a reduction of 25 per cent in average prices received for lambs, a larger reduction in the average price received for adult sheep and an 8 per cent reduction in the average wool price received resulted in farm receipts for Victorian sheep farms falling by 23 per cent. Despite a reduction in average cash costs resulting mainly from reduced expenditure on sheep purchases and interest payments, average farm cash income for sheep industry farms declined to an average of $53 000 per farm.

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In 2013–14, higher adult sheep and lamb prices, together with a small increase in wool prices are projected to result in an increase in farm cash receipts. Average farm cash income for sheep industry farms is projected to increase to average $68 000 per farm, around 12 per cent above the industry average of $61 000 per farm for the ten-years to 2012–13.

Figure 6 Real farm cash income, sheep industry, average per farm

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13p

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Australia Victoria

2013–14$'000


Performance of beef industry farms—VictoriaA much smaller average herd size for Victorian beef industry farms, compared with the Australian average, results in average farm cash income for Victorian beef industry farms typically being well below the national average (Figure 7).

In 2012–13, a reduction of 15 per cent in the average price received for beef cattle sold reduced farm cash receipts and despite a further reduction in expenditure on beef cattle purchases average farm cash income for Victorian beef industry farms declined to average $18 000 per farm in 2012–13 (Figure 7).

In 2013–14, a further reduction in the average price received for beef cattle sold is projected to result in average farm cash income for Victorian beef industry farms declining further to average $11 000 per farm in 2013–14, less than half the industry average of $36 000 per farm for the ten-years to 2012–13 (Figure 7).

Figure 7 Real farm cash income, beef industry, average per farm

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13p

2013-14y

0

50

100

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Australia Victoria

2013–14$'000

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Performance of dairy industry farms— VictoriaIn 2012–13, a reduction in farmgate milk prices averaging 7 per cent and a reduction of 3 per cent in average milk production in Victoria, together with an increase in average cash costs of 11 per cent driven mainly by a rise in expenditure on fodder and interest payments, resulted in farm cash incomes for Victorian dairy farms declining from $141 790 in 2011–12 to just $31 500 in 2012–13. An estimated 38 per cent of Victorian dairy farms recorded negative farm cash incomes and farm business profit declined to an average loss of $40 100 per farm (Table 4).

In 2013–14 average farm cash incomes are projected to rebound strongly with an increase in farmgate milk prices of around 20 per cent. Despite a projected reduction in milk production and an increase in total cash costs, resulting mainly from higher fodder expenditure, farm cash income for Victorian dairy farms is projected to increase to an average of $127 000 per farm. If achieved, this would be around 39 per cent above the average for the ten-years to 2012–13, in real terms. However, average farm cash income for Victorian dairy farms was low in many years during this period due to drought and reduced availability of irrigation water (Figure 8).

Figure 8 Real farm cash income, dairy industry, average per farm

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13p

2013-14y

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50

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Australia Victoria

2013–14$'000


Table 4 Financial performance, Victoria dairy industry, 2011–12 to 2013–14, average per farm

Performance indicator units 2011–12 2012–13p RSE 2013–14yTotal cash receipts $ 583 330 523 500 (14) 629 000Total cash costs $ 441 540 492 000 (15) 502 000Farm cash income $ 141 790 31 500 (52) 127 000Farms with negative farm cash income % 16 38 (29) 14Farm business profit $ 67 030 - 40 100 (32) 51 000Profit at full equity excluding capital appreciation $ 130 310 27 100 (58) 115 000Farm capital at 30 June a $ 2 988 710 3 371 100 (11) naFarm debt at 30 June b $ 644 610 747 800 (10) 754 000Equity ratio b % 79 78 (3) naRate of return excluding capital appreciation c % 4.3 0.8 (54) 3.5Off-farm income of owner manager and spouse b $ 20 020 22 800 (20) na

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Note: a Excludes leased plant and equipment. b Average per responding farm. c Rate of return to farm capital at 1 July. p ABARES preliminary estimates. y ABARES provisional estimates. na Not available. RSE Relative standard errors, expressed as a percentage of the estimate provided.

Performance of vegetable industry farms— VictoriaThe number of vegetable growing farms in Victoria increased from 529 farms in 2010–11 to 601 in 2011–12 (Table 5). The majority of farms grew only one vegetable type (76 per cent of vegetable growing farms) in 2011–12 while a small proportion grew five or more vegetable types (4 per cent). The most common vegetables grown were potatoes (323 farms), broccoli (86 farms) and tomatoes (56 farms). Vegetable growing farms were predominately located around Melbourne as well as Gippsland and irrigated regions along the Murray River. In 2011–12, the average area operated by a vegetable growing farm in Victoria was 160 hectares, of which 49 hectares were sown to vegetables with around 75 per cent of vegetable growers planting less than 43 hectares to vegetables.

Farm cash income for vegetable growing farms averaged $114 300 per farm in 2011–12, much lower than the average of $190 580 recorded for 2010–11. The reduction in average farm cash income was partly a result of the entry of additional, mainly smaller, farms to vegetable production in 2011–12. However increased average total cash costs, particularly expenditure on contracts, freight, packing charges, and materials, also contributed significantly to the reduction.

In 2012–13, despite drier seasonal conditions through summer and autumn, higher vegetable yields are estimated to have resulted in vegetable receipts increasing by around 9 per cent. However, reductions in other farm receipts, particularly receipts from livestock and broadacre crops resulted in lower average total cash receipts and a decline in farm cash income to an average of $90 000 per farm.

Table 5 Selected estimates, vegetable growers, Victoria, average per farm

Selected estimates units 2010–11 2011–12p RSE 2012–13yNumber of growers no. 529 601 601– Vegetable receipts $ 764 270 881 700 (13) 962 000Total cash receipts $ 916 200 1 042 300 (11) 1 014 000Total cash costs $ 725 620 928 000 (11) 924 000Farm cash income $ 190 580 114 300 (46) 90 000Rate of return a % 2.8 0.9 (101) 0.2Total area operated June 30 ha 103 160 (16) naArea sown to vegetables ha 52 49 (14) 46Total vegetables sold t 1137 1089 (16) 1191Total area of vegetables irrigated ha 45 45 (16) naVolume of irrigation water applied ml 126 89 (20) naNote: a Excludes capital appreciations. p Preliminary estimate y Provisional estimate. na Not available. Figures in parentheses are standard errors expressed as a percentage of the estimate. Updated data for Vegetable farms will be available November 2014.Source: ABARES Australian vegetable growing farms survey

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3 Forestry sectorIn 2010–11, the total plantation area in the Hume region was approximately 66 000 hectares, comprised of approximately 6000 hectares of hardwood plantations and 60 000 hectares of softwood plantations. The main hardwood species planted is blue gum (Eucalyptus globulus) and the main softwood species planted is radiata pine (Pinus radiata).

In 2011, there were approximately 1.8 million hectares of native forests in the Hume region, comprised mainly of Eucalypt medium open (999 000 hectares), Eucalypt tall open (486 800 hectares) and Eucalypt medium woodland (161 600 hectares) forest types. The majority of the native forests are multiple-use public forest available for timber production (958 700 hectares), approximately 494 500 hectares are in nature conservation and approximately 293 500 hectares are privately managed (Figure 9). Major sawmills are located at Benalla, while wood-based panel mills are located at Myrtleford and Wangaratta.

Figure 9 Area of native forest, by tenure

Leasehold forest (407 ha―0.02%)

Multiple-use public forest (958 658 ha―53.8%)

Nature conservation reserve (494 539 ha―27.8%)

Other Crown land (33 190 ha―1.9%)

Private land (including Indigenous) (293 494 ha―16.5%)

Unresolved tenure (307 ha―0.02%)

Total sales and service income in the Victorian forest and wood product industry was estimated at approximately $6.7 billion in 2011–12, of which $3.9 billion was from the sale of paper and paper products, and the remaining $2.8 billion was generated from other wood product sales. Victoria is also the third largest exporter of woodchips in Australia, exporting approximately 1.1 million bone dry tonnes in 2010–11, valued at $197 million. In 2011–12, both the volume and value of woodchip exports increased to 1.5 million tonnes and $271 million respectively. Victoria is the only state that reported an increase in woodchip exports between 2010–11 and 2011–12. In 2011, Victorian forestry sector employed 21 826 workers (0.9 per cent of the total employed workforce) compared with 23 672 (1.1 per cent) in 2006 (number of people employed includes forestry support services and timber wholesaling).

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ReferencesABS 2011, Census of Population and Housing, Australian Bureau of Statistics, Canberra.

ABS 2012, Agricultural Commodities, Australia, 2010–11, cat. no. 7121.0, Australian Bureau Statistics, Canberra.

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