A new report has revealed that economic productivity of Australian grains industry farms in 2001-02 and 1998-99 was greater on average in Western Australia than in the eastern states.

The report, Productivity in the Australian Grains Industry, was released today by Dr Brian Fisher, Executive Director of ABARE.

‘The differences between Western Australia farms, and farms in the eastern states could be explained by farm size, levels of soil moisture available for winter grain production and the level of production intensity,’ stated Dr Fisher.

The report uses total factor productivity (TFP) as a measure of on-farm economic productivity that compares output with the combined use of all inputs. Research undertaken by ABARE investigates the factors influencing the differences in TFP between farms in the Australian grains industry.

‘It was found that minimum or reduced tillage methods were associated with increased TFP but, in contrast, the level of income earned off-farm from wages or investments as a share of the farm’s total cash receipts had a negative relationship with productivity,’ said Dr Fisher.

Significant degradation problems reported by farmers were also found to be related to farm productivity. For example, in the northern region of Australia as soil acidity increased TFP decreased. In contrast, TFP was found to increase with soil acidity in the southern region.

Unit costs of sowing a crop declined as farm productivity increased, and sowing costs also declined as the size of the farm operation increased, indicating that there are economies of size operating in the grains industry.

In releasing the report Dr Brian Fisher acknowledged the Grains Research and Development Corporation for funding this latest stage of research.

For copies of the report Productivity in the Australian Grains Industry please visit the ABARE website www.abareconomics.com or contact (02) 6272 2010.