The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) estimates farm incomes in Australia will fall 41% on average across the country’s broadacre farms in 2023/24. Nationally, farm incomes are forecast to average $197,000, falling in a range of $156,000 – $231,000, with regional variability due to forecast drier and warmer conditions and falling prices. Below average farm profits are likely for parts of southern Victoria, Tasmania, South Australia and WA in areas affected by adverse seasonal conditions and falling livestock and crop prices. Meanwhile, some input costs including fuel, fertilisers and chemicals are forecast to fall in 2023/24, however, the declining costs are expected to be more than offset by reductions in receipts from the sale of all major farm outputs, which will lead to an overall decrease in farm cash income. ABARES highlights fertiliser prices as one of the major contributors to higher farm input costs during the pandemic, forecast to ease in 2023/24. Meanwhile, drier conditions are also expected to lead to reduced use of inputs and lower overall costs.
The average fall in incomes will affect the ability of some farm to service debt in the current financial year, according to ABARES. Farm debt has lifted significantly in recent years as strong incomes and low interest rates made debt affordable, and debt serviceability is expected to be challenged by lower farm incomes in 2023/24. At the same time, the interest coverage ratio is expected to lift in 2023/24 after trending down for a decade with the proportion of income consumer by interest payments projected to increase to around 30% on average.