People - Adjustment - Median farm financial size
Median farm financial size
Figure 1 Median farm Estimated Value of Agricultural Operations by Statistical Local Area in 1986 (expressed in 1996 $'s)
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Data source
Farm size is measured by the Australian Bureau of Statistics generated Estimated Value of Agricultural Operations measure. This is an estimate of gross farm income created from agricultural commodity sales reported to the Australian Bureau of Statistics farm census. Data for 1986 is used to describe the structure at the commencement of the period under study.
Indicator construction
The median was created from a data set which included Estimated Value of Agricultural Operations estimates for all farms with an Estimated Value of Agricultural Operations greater than $30,000 (indexed to 1996 dollars). The median was created from a table of 15 income categories using assumptions of uniform distribution of cases across each income category.
Indicator limitations
- Figures obtained from Australian Bureau of Statistics on actual farm sizes were provided in aggregate form based on 1986 Statistical Local Area boundaries. This data was concorded to 1996 boundaries that are presented in this section. This concordance based upon area of agricultural land introduces some unavoidable errors in Statistical Local Areas whose boundaries have changed. Major boundary changes occurred in Victoria between 1986 and 1991.
- Assumptions of uniform distribution within Estimated Value of Agricultural Operations categories are made to enable estimates of median Estimated Value of Agricultural Operations. This will also introduce error into median estimates.
- Estimated Value of Agricultural Operations estimates are created using average commodity values prevailing through the financial year. Significant variations in prices received due to seasonal differences or differing marketing skills of producers will not be captured by this statistic.
Observations
- In 1986 the median farm Estimated Value of Agricultural Production was $127,000 (using 1996 dollars and including only those farms with an EVAO greater than $30,000).
- Australian agriculture can be characterised by a 50/10 rule. If one considers all farms with an EVAO greater than $5,000, then the smallest 50 per cent of farms produce 10 per cent of the total value of agricultural production. The largest 10 per cent produce between 45 and 50 per cent of the total value of agricultural production.
- In 1986 there was a clear relationship between distance from the populated coastal fringe and economic size of farms. The smallest farms were in the coastal fringe and great divide stretching from Brisbane south to Melbourne, and along the West Australian coast from Perth to Albany. Competition from other land uses such as amenity values have historically reduced the capacity of farm businesses in these districts to increase productivity through expansion based upon land purchase. The availability of off farm work has also reduced the pressure on owners of small farms to follow a productivity strategy based upon land purchase.
See appendix figures 44-48 for further geographic detail.
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