The results of the 2003 WA Farm Business Survey show record profit levels for farm businesses across the state. Not surprisingly, the record 2003 grain harvest was a key factor behind the results.

Wheat yields in the low rainfall regions averaged 2.2 t/ha. This was the first time in the 24 year history of the survey that yields had exceeded 2 t/ha in this region. Similarly, wheat yields in the northern medium rainfall areas were 400kg/ha higher than the previous record of 2.55 t/ha set back in 1993.

The impact of the record yields was partially offset by softening commodity prices. AWB Ltd’s estimate for the 2003 APW wheat pool was more than 10% lower than the returns from the previous two seasons. A similar trend was observed with wool prices.

Regardless, farm income levels in medium and low rainfall regions were at record levels. The exception was the high rainfall region where income levels were not as high as those achieved in 2002. This was a reflection of softer commodity prices and the fact that crop yields in the high rainfall areas were not as far ahead of previous records as they were in other regions.

The operating profit in the high rainfall regions averaged $129/ha. This result is below what was achieved in 2001 and 2002 however the only other time average profits had exceeded $100/ha in this region was in 1989. This highlights how successful farm businesses in the higher rainfall environments have been in the past few seasons.

The average profit in the northern half of the medium rainfall region was the highest recorded for all parts of the state in the history of the survey.
The low rainfall regions recorded an average profit of $135/ha. When expressed as a percentage of the capital employed in the business, this gave an income return on capital of just under 10%. By comparison, the average return on capital in the high rainfall regions in 2003 was only 3%. So whilst farmers in lower rainfall regions have suffered in the recent droughts, they also have the capacity to generate the best returns when conditions are favourable. However, it should be noted that these figures do not include the capital gain on farm land which forms a major part of the total returns from farming.

In addition to the record operating profits, the survey revealed strong growth in net business equity across all regions. In the higher rainfall areas, this was largely due to increasing land values. Moving inland, the effect of rising land values was less pronounced and the operating profits became the main factor driving the increase in business worth. The average equity at the start of 2003 of all businesses surveyed was $3.38m.

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