YOUR BUSINESS
Report sheds light
on profitability of WA vegetable growers BY BRYN EDWARDS BENCHMARK LEAD, VEGETABLESWA
T
he third annual vegetable industry financial and production benchmark report has been released by vegetablesWA and partners Planfarm, revealing important data on the profitability and key financial performance of Western Australian growers.
The benchmarking initiative assesses the financial performance of the vegetable industry across WA, while also providing individual growers with a financial analysis of their business. The project has led to striking increases in the profitability of some participating businesses, which span across the full length of WA, from Carnarvon, Geraldton, Gingin and Metro Perth, right through to Myalup and Manjimup. vegetablesWA Benchmarking Lead Bryn Edwards said the financial and production benchmark report analysed data from the full range of vegetable crops grown during the 2018–19 financial year. “What is really powerful this year is that in addition to the single financial year 2018–19 results, we’ve also been able to produce three-year averages across the key financial measures and metrics,” Mr Edwards said.
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WA Grower WINTER 2020
“Having access to three years of financial data from growers now provides a new level of rigorous insight that has not been available to growers previously. “Producing this level of data around return on capital, operating profit and operating efficiency measures, provides clear insights about just how viable vegetable growing is compared to other asset investment options.
“Having access to these detailed insights plays a role that will begin to set the WA vegetable industry apart from any other state,” Mr Edwards said. According to the data, an average return on capital for the financial year 2018–19 was 8% (see Figure 1), and the three-year average is 9% (see Figure 2). Planfarm Director Paul Omodei said the third-year results revealed again that the most profitable growers [as measured by vegetable operating profit per hectare] were not those from a particular area, of greater scale or a particular vegetable type.
An average return on capital for the 2018–19 financial year was 8%.
“It also highlights areas of potential growth in terms of future profitability to be gained.” Mr Edwards explained that having a more rigorous, longer term understanding of the industry is an extremely important step towards providing vegetable growers with key information that will empower them to make shorter and longer-term business decisions with confidence.
“We found that the most lucrative growers were focused on driving a higher income per hectare, through increased saleable yield and a strong focus on marketing their product, while actively managing costs,” Mr Omodei said.
