People - Adjustment - Farm family income
Farm family income
Figure 1 Farm family income compared to Australian family incomes: 1996
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Figure 2 Australian farm family income distributions for 1986, 1991 and 1996 expressed in 1996 dollars (Source Australian Bureau of Statistics Population and Housing Census)
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Figure 3 Median farm family income averaged from 1986,91 and 96 censuses using 1996 dollars by Statistical Local Area
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See appendix figures 38-39 for further geographic detail.
Data Source
The Australian Bureau of Statistics Population and Housing Censuses in 1986, 1991 and 1996 were used as sources of data on farm family income. Family incomes are for those families where at least one member described himself or herself on the Population and Housing Census form as a farmer or farm manager. These incomes include both farm and non farm income.
Australian Bureau of Statistics provides income data aggregated at Statistical Local Area level and aggregated to predetermined income categories. These income categories change with each census. In 1996 category divisions for weekly income were 0, $40, $80, $120, $160, $200, $300, $400, $500, $600, $700, $800, $1000, $1200, $1500 and $2000.
Indicator Construction
Median incomes were estimated by assuming a uniform distribution across the income category within which the median fell. Median incomes for the 1986 and 1991 censuses were inflated to 1996-dollar terms using the Australian Bureau of Statistics estimate of the consumer price index for each inter-censal period. The three median income estimates for 1986,1991 and 1996 were then averaged to obtain a smoothed estimate of median farm family income over the period 1986-96. This averaging was undertaken to reduce the effect of fluctuations in income caused by seasonal and price variability. For example, 1990/91 was a poor income year in parts of eastern Australia due to widespread drought across the basin. 1996 was a good year in this same area due to high grain prices and good seasonal conditions.
Indicator limitations
- The self-definition of the farmer used in the Population and Housing Census may lead to ambiguity or uncertainty over who is being defined as a farmer.
- Error is introduced into the estimates of median family incomes and in the comparison of family incomes across census years by the assumption of uniform distribution within Australian Bureau of Statistics income categories.
Observations
- In a year of favourable seasons, farm family income in Australia is similar to incomes earned by all Australian families. In 1995/96 the distribution of family income on Australian farms was quite similar to the distribution of family income for Australia as a whole (see Figure 1). Nil or negative incomes were recorded by 3.5 per cent of family farms but by fewer than one per cent of Australian families. There was little difference in the percentage of families achieving each of the higher income categories above $50,000. This income profile was achieved in a year in which drought was almost absent from Australia. Rainfall deficiencies were experienced only in parts of central and west Queensland, central Australia and parts of coastal south-west Australia. Australian Bureau of Agricultural and Resource Economics reported this as the first season since 1989/90 that average broadacre farming profit was positive. This return to profitability was driven by an almost doubling of farm cash income in the grains industry (Martin 1996). This observation of similarity in incomes inside and outside the farming sector should not be interpreted as arguing that there low farm family incomes are not worthy of concern, but rather that the extent of family income poverty is similar in farming and in the rest of Australian society.
- The impact of volatile commodity prices on farm family incomes is muted by off farm income and other risk management strategies. During the season leading up to the 1991 census there were significant falls in wool, wheat, sugar and dairy prices. Large areas of eastern Australia also entered a period of drought (Hall et al. 1991). The year of the 1986 census was less severe on farm businesses. Grain prices were depressed and this was exacerbated by rain damage to wheat in some parts of Eastern Australia. Wool prices were firm. Dairy and sheep meat prices were falling (Hall, Backhouse, & Fraser 1986). Despite these less favourable conditions, the impact on farm family incomes was less than might be expected. Figure 2 compares the distribution of these incomes over the three census years. The distributions for 1986 and 1993 were calculated using an assumption of uniform distribution across the income cohorts. The major impact of less than favourable commodity prices is seen in the increase in the number of farm families earning less than $5,000 per annum (8.3% compared to 4.7% in 1996). Between 1986 and 1991 off farm income assumed increasing importance as a means of smoothing the income fluctuations caused by commodity prices variations and changes in seasonal conditions.
- Larger farm sizes and proximity to major population centres increases farm family income. Farm family incomes are highest in Statistical Local Areas close to the major population centres of Sydney, Melbourne, Canberra, and to a lesser extent around major provincial centres. Farm family incomes have been higher also in the northern rangelands and the west Australian wheat belt, reflecting larger farms rather than off farm income. In eastern Australia, farm family incomes generally decline with distance from the coast, reflecting increased dependence upon farm incomes. The lowest average incomes were in regions such as the Gascoyne-Murchison, the Eyre Peninsula, the woody rangelands surrounding Cobar and Cape York (see Figure 3).
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