Australian peak vegetable and potato grower body Ausveg is encouraged by a recent report showing increases in farm production values, but a steep increase in costs poses a significant risk to many businesses, particularly smaller-sized farms.

The survey conducted by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) found the average farm cash income of Australian vegetable growing operations is estimated to have increased to around AUD$254,100 (US$192,887).

The rise is attributed to increased vegetable production and higher prices.

The ABARES report, which was a strategic levy investment using the Hort Innovation Vegetable Fund, indicated the value of the Australian vegetable industry increased to around AUD$3.6 billion in 2015-16, accounting for around 6% of  the gross value of agricultural production. 

The survey also indicated that in the same time total cash costs continued to rise, with average cash costs rising by 29% to an average of more than AUD$1 million (US$759,200) per farm due to rises in all cost categories captured in the report.

“The rising value of the industry and the increasing trend for Australian vegetable exports shows that our industry has a bright future as a supplier of high quality fresh vegetables to consumers in Australia and around the world,” Ausveg CEO James Whiteside said in a release.

"Large-scale farms have been mostly responsible for the increase in average farm income, as they can benefit from increased efficiencies and economies of scale. 

"This has resulted in increased re-investment into these businesses, including in technological and operational improvements so that they can continue to innovate and develop their businesses to supply vegetables for local and international consumers.

"The increased production and demand for a wide variety of vegetables, particularly Asian vegetable varieties that were considered niche products not too long ago, shows growers are responding to Australians’ increasing appetite for a larger variety of fresh and value-added vegetables, which can demand a higher value at a retail level."

Between 2006-07 to 2015-16, the number of vegetable growing farms fell 37%, while the proportion of vegetable growers (60%) who recorded a negative farm business profit remained at a similar level to the 10-year average.

“The costs of doing business, particularly for hired labour, seed, freight and fertiliser, have increased significantly over the last 12 months, so while larger businesses are able to increase production and cover these increases, smaller growers often struggle to be competitive, which is driving increased consolidation,” Whiteside said.

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