THE days of the veggie-growing hobby farmer could be numbered. An Ausveg-commissioned discussion paper has found smaller scale vegetable growers are financially worse off than their bigger counterparts. Entitled, Analysing Australian vegetable growers' financial performance by farm size, the report shows that the larger a farm, the more profitable that farm is likely to be. The information is based on Australian Bureau of Statistics (ABS) and the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) data. The paper analyses the financial performance of vegetable growing farms by farm size (in hectares), for the period 2011-12 through to 2013-14. The paper states the costs to receipts ratio (average farm costs as a proportion of their receipts) is notably higher for farms of less than 5 hectares compared to all other vegetable growing farms. Larger scale vegetable growers are found to be in a better position due to cash receipts increasing by a higher proportion than cash costs as farm size increases, which is exemplified by the costs to receipts ratio. The report says smaller sized farms incur greater cash costs per tonne of output, which they would be able to dilute by increasing scale of operations. But it warns "going big" needs plenty of homework. "Any farm looking to remain financially viable, or increase their productivity and profitability, will require a long term investment strategy to ensure they can effectively reduce costs and increase revenue sources," the report said. Ausveg spokesperson Shaun Lindhe said Australian vegetable growers are struggling with the heavy burden imposed by high costs of production. "We know that their average profit has been on a continuous decline since 2010,” he said. “However, the vegetable industry is made up of businesses ranging widely in size, so looking at absolute financial indicators such as average profit or cash costs across the entire industry can give a misleading picture of how farms of particular sizes are faring. “For example, while the average profit across all vegetable-growing farms dropped to $39,000 in 2013-14, smaller operations – those under 5ha, and those between five and 20ha– actually lost money." The idea behind the discussion paper is to allow vegetable growers to compare their own financial performance to that of other operations within the same size category. Interestingly, the relative expenditure on particular cash costs as a share of total cash costs stays relatively the same for all farm sizes. This is particularly true in the area of labour where costs tend to constitute about a 17-20 per cent share of total cash costs for all farm sizes. The paper also encourages larger producers to invest in research and technology in order to lower costs in some areas, such as decreasing labour costs through new technology. "However, by embracing emerging technologies, exploring new avenues for revenue raising and having a forward outlook on business viability, vegetable growers should be able to improve upon their business outcomes," the paper said. Source - farmweekly.com.au