June 19, 2009

More rains, larger herds and better prices have increased Australian beef producers' profits by an average of 50 percent in the past year, and the trend is likely to continue, according to economic research agency ABARE.

In Northern Australia, farm business profits increased fivefold to sixfold, after a poor 2007-08 season.

The trend is likely to continue because of the combination of good prices and strong investment in capital which should enable producers to increase production and as a result boost farm profitability and income, said ABARE's principal research economist Stephen Hooper.

But while profits are strong for large producers, the same cannot be said for smaller operators, he said.

Hooper noted that small and medium producers have continued to struggle financially in 2008-09, with most of those producers seeing significant losses or marginal profits.

However, the large and very large producers have seen their profitability strengthen thanks to the rebuilding of animal numbers and improvement in farm cash flow in the past two years, he said, adding that in 2008-09, an average very large producer is expected to post a farm business profit of nearly A$800,000 (US$640,000).