THE notion that production equals profit is a misconception, says independent farm-management contractor Bruce Gardiner.
Mr Gardiner hosted several farm-management information sessions across the Darling Downs recently, and is set to conduct a number of farm-management courses over the coming months.
After returning from service in Vietnam, he studied a Bachelor of Agricultural Resource Economics. He worked at ABARES for a number of years, and runs a beef cattle property between Uralla and Walcha in NSW.
From a decade of farm business-related training in northern NSW, Mr Gardiner has made a number of observations.
He found in a sample size of 2800 NSW farmers, about 95 per cent did not have the tools to objectively assess farm-business performance.
Despite Australian farms more than doubling production over the past 45 years, 85pc of Australian farm businesses are not making a profit. Over the same time period, the trend of real gross cost of production has almost doubled and real gross value has fallen by 10pc.
The real net value (and profitability per farmed hectare) has also fallen by 80pc.
Mr Gardiner said no fat was left in the system, and as such there was no room for mistakes. As productivity gains drove agriculture closer and closer to the margins of productive capacity, he said, it took increasingly smaller shocks to seriously impact on-farm performance.
He said it was also necessary to understand that there was unprofitable country - some areas were profitable but other areas returned a loss.
Mr Gardiner said he was concerned by Australia's international branding as a 'clean, green' food producer.
"I've always worried about the idea of 'clean, green' because the three things Australia leads the world in are greenhouse gas production, soil erosion and species extinction, which is hardly a great green image," he said.
"The other thing is because agriculture is such a tough business to be in, in terms of making money, farmers tend to run down their natural resources to make ends meet. It's one of those sources of outside income that farmers can draw on to help them get through tough times."
Mr Gardiner said for too long farmers had been looking outside their businesses for excuses for failure rather than looking inside their businesses for reasons to succeed.
The rate at which regional communities were declining was also concerning, he said.
“Over the history of farming in Australia we’ve lost somewhere between 50 and 60pc of our organic carbon, 40pc of our topsoils and a whole lot of things that aren’t really great outcomes for the country,” he said.
“If they look inside the business for reasons to succeed, control the things that they can control - the stuff that goes on outside the business doesn't really matter.
“There is nothing out there that we have to do if it means that agriculture and regional communities continue to run down as a result of that.”
Mr Gardiner described farmers as the salt of the earth and said they were sometimes doing it tougher than they had to.
“I think there are things that they can do with their businesses and with their lives that means farming is a lot better business to be in,” he said.
“The flipside of more profitable farm businesses is we can have a lot more of them and we can start bringing people back to the bush rather than sending them away.”