Crops and Farming Systems in the Australian Wheatbelt

Although referred to as the Wheatbelt, farms in the region produce a range of arable crops in addition to wheat and the majority of farms also incorporate livestock as part of the enterprise mix. In recent years wheat accounted for over half of the land area planted to grains (58% in 2011-12).

The range of arable crops grown in the Australian Wheatbelt in addition to wheat include:

  1. Coarse grains – Barley, oats, sorghum, maize (i.e. corn), triticale, millets/panicums, cereal rye and canary seed.
  2. Oilseeds – Canola (i.e. rape seed), sunflower, soybean, safflower and linseed.
  3. Pulses / legumes – Lupins, field peas, chickpeas, faba beans, vetch, peanuts, mung beans, navy beans, pigeon peas, cowpeas and lentils.

Australian production ratio for grain and oilseed (2011-12 tonnage produced)

Whilst wheat is usually the most reliable earner for farmers and is the mainstay of most cropping enterprises, long-term farm output is optimised by rotational cropping of different grain types. Crop rotation is practiced to assist with pest and disease management, enhance soil health and nutrition and spread the risk of crop failure.

Barely (averaging 20% of grain production between 2007-08 and 2011-12) is the most common rotational crop grown as an alternative to wheat but the nitrogen fixing capabilities of pulses are also beneficial, with lupins being the most popular rotational pulse. Besides the agronomic benefits, diversifying production over different types of grains can also have the benefit of hedging farmers’ exposure to fluctuating commodity prices and stabilising farm income.

Although most farms have a stronger emphases on grain production (due to the higher return on capital it offers), most Wheatbelt farmers operate an integrated cropping-livestock farming system. This often produces a whole-farm financial outcome that is more effectively buffered against fluctuations in input prices, commodity prices and weather.

The physical and financial stability of mixed cropping-livestock production systems arises from the complementary interactions between components of the production systems (e.g. crop waste can be used to feed livestock) and the fact that producers are afforded greater flexibility to respond to market conditions. Mixed systems also help in the management of weed and disease build-up and undesirable soil conditions such as reduction in organic matter content and increases in salinity and acidity. The resurgence of livestock prices in recent years has also helped to enhance the overall financial benefits.

The optimal cropping to livestock balance varies depending on the specific conditions associated with each enterprise (in particular, with respect to soil type and rainfall). But where conditions allow, high intensity cropping enterprises with a greater focus on food and feed crops generally produce better returns. As such, farms with soil types allowing more intensive cropping regimes generally command a premium.

Over the past two decades new crop varieties, improved machinery and agronomic management practices have allowed Australian farmers to increase the area sown to arable crops at the expense of livestock production (particularly sheep). These developments have also allowed a gradual migration of cropping enterprises into more marginal areas that would have been considered unsuited to crop production only 20 years ago.

The overall impact has been a rise in the area planted to crops and a steady increase in grain production. Annual cropping area over the last decade (1991-92 to 2000-01) averaged 23 million hectares, up from a level of 19 million hectares in the previous decade. Over the same period Australia’s sheep herd decreased from 125 million to 88 million.

Trends in cropping area and sheep numbers, 1991-92 to 2010-2011

References and data sources:

  • Australian Bureau of Statistics, Livestock and Livestock Products Data Series, 2012
  • Australian Bureau of Statistics, Crops and Pastures Data Series, 2012
  • Australian Bureau of Statistics, Agricultural Land Use and Selected Inputs Data Series, 2012
  • Australian Government Department of Agriculture, Fisheries and Forestry, Australian Bureau of Agricultural and Resource Economics and Sciences, Agricultural Commodities Statistics, 2012

Investment returns

Farming is like any other business: all other things being equal, income is dictated by the quality of the management team. Even enterprises with similar soil, climate and business model can show a high degree of variance. This means tenant / manager selection is a critical component of the agricultural investment process.

Read More

Investment style

Inefficiencies in the farmland pricing mechanism are one of least exploited opportunities to increase returns as a farmland investor. When it comes to buying agricultural assets, we are able to help our clients beat the market because of our unconventional approach to acquiring farms and the information advantage we have in the markets in which we specialise.

Read More

Investing in Australian agriculture

Australia’s robust economy, strategic location and investment friendly business environment have made the country one of the world’s top destinations for foreign investment, with FDI inflows of over twice the OECD average (% of GDP basis, 2011).

Read More

Geographic and sector focus

For investors, the choice of agricultural sector will be driven by your risk tolerance and overall investment objectives. As a general rule, arable agriculture (i.e. the cultivation of annual crops, in particular grain) is the least volatile farming sector.

Read More