Successful farmers are not better educated or luckier than their neighbours, but their performance is apparently helped by an appreciation of new technology and a robust use of farm inputs.
Farmers making good money in good seasons are likely to have adopted consistent annual systems for inputs such as fertiliser or chemical use, rather than making decisions which fluctuate markedly with seasons and commodity markets.
Farm survey research by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) has found the bottom performing 25 per cent of Australia’s graingrowing enterprises actually spend significantly more on variable costs to make the most of a good season than those in the top performing quartile.
“Top performers tend to stick to their fixed production system and keep costs under control in good years, but also overall employ higher levels of inputs year after year,” said ABARES economist, Tom Jackson.
He told this year’s Outlook 2017 conference top quartile wheat croppers spent roughly between $225 a hectare and $275/ha on variable costs between 2011-12 and 2016-17 – with the most recent season costing them about $250/ha.
During this financial year’s exceptionally good cropping season, which produced a big 35 million tonne national wheat crop, farms in the bottom profitability quartile spent almost $300/ha as they made a big effort to build soil nutrition and catch up on weed management.
Their costs had averaged just under $200/ha in the previous three seasons.
“Increased spending on variable inputs did deliver better yields for farmers chasing extra yield in good seasons, but rates of return for these farmers still worked out lower on average,” Mr Jackson said.
“That’s something I wasn’t expecting.”
Both categories averaged about the same wheat yields this season – 2.5t/ha – which was at least a tonne more than previous years for the bottom 25pc of operations.
The top performers had averaged from 2.1t/ha and 2.6t in previous seasons.
Mr Jackson said it was widely acknowledged really good seasons only occurred a couple of times in a decade and farmers had to make the most of those big years to generate cash and fodder reserves and reduce debt.
This would become even more important if climate change reduced the frequency of big yields and grazing opportunities, especially as Australian farmers faced more competition from other grain, horticulture and meat producers overseas.
In fact, while this year’s farm incomes were “as good as they have ever been”, according to ABARES acting executive director, Peter Gooday, the national commodity forecasting body warns crop and livestock prices are not likely to rise in real terms in the next five years and profit increases will need to come from greater productivity.
“Innovation across the supply chain will be critical to achieving that productivity gain, including making the most of new technologies, regardless of what purpose they were originally developed for,” Mr Gooday told Outlook 2017.
The ability adapt to new technologies which helped farmers interpret weather or soil data or better plan their financial management were just as important as labour-saving machinery or electronic innovations in dairies, on grain farms or on remote cattle stations, said Mr Jackson.
He noted success also depended on simply being ready to spot opportunities when markets and seasons allowed.
However, many years of ABARES farm surveys had never been able pinpoint a reliable pattern which identified what characteristics made some farmers more successful than others.
“Success does not necessarily correlate with age, experience, geography or education, or even luck,” he said.
“It’s one of the great unknowns in agriculture - some farmers do better when good years come along.”
Mr Jackson said similar unknown characteristics probably also defined a successful motor mechanic or hairdressing business.
However, farming in Australia required an extra complex mix of skills ranging from conservative expectations to an ability to know when to take risks in the face of seasonal and market variability.
“It hard to measure those inherent skills,” he said.
“Success in farming quite possibly also comes down to how hard you plan ahead and how hard you work.”