Realised Farm Income

IBISWorld forecasts realised farm income to decrease by 38.0% in 2023-24, to $12.9 billion. This represents a sharp fall on the previous year when consecutive bumper crops in Australia coincided with very high commodity prices because of global supply chain issues. This trend sent farmers incomes soaring over the two years through 2021-22. However, as prices eased in 2022-23, global supply chain issues also sent costs higher, which led to a sharp fall in realised farm incomes. This trend is expected to continue in 2023-24, as prices continue to ease, but the persistence of high inflation will keep a number of costs high and prompt further declines in realised farm income.

Turmoil in global commodity markets, combined with volatile weather conditions, has generated significant volatility in realised farm incomes in Australia over the past decade. Weather conditions, such as the level of annual rainfall, have a significant effect on production volumes and, in turn, farm earnings. For example, the level of annual rainfall was high in 2016-17, which increased the production of commodities such as grain, which boosted realised farm income. Severe drought conditions that occurred in 2018 and 2019 across the country constrained production volumes, particularly in New South Wales and Queensland. Lower production volumes reduced farm earnings over the three years through 2019-20. Conversely, multiple La Nina weather events in 2020-21 and 2021-22 drastically reversed these trends, resulting in multiple bumper crops. Production volumes soared in these years, while turmoil in global supply chains fostered a surge in prices. Together, these trends generated an unprecedented surge in realised farm incomes.