Although rainfall patterns vary between states from year to year the impact on yields averages out over longer time periods such that average long-term yields are roughly equal for all states, having averaged approximately 1.6 tonnes per hectare over the last decade (2001-02 to 2010-11).
Average wheat yield by Australian state, 2001-02 to 2010-11
The primary reason Australian wheat yields are relatively low by international standards is the fact that Australian farmers have become highly specialised in low rainfall farming techniques. As a result, the Australian Wheatbelt has extended inland over time to areas where rainfall is lower. Indeed, the majority of the Wheatbelt receives low to medium rainfall, with the largest single category of farms by land area being in the low rainfall areas.
Because yields are lower on lower rainfall farms, this depresses average yields for the country as a whole. High rainfall farms in Australia show yields more in line with global averages (2.86 tonnes per hectare over the last decade, 2001-02 to 2010-11).
It is the timing and reliability of rainfall (as opposed to extent) that determines the variability of yields and there is wider yield variability between Australian states than is suggested by the average long-term yield figures. Western Australia benefits from the most timely and reliable rainfall of the Australian states with distinct wet winter growing seasons and dry summer harvest periods. As a result, variability in yields is lowest in Western Australia, with New South Wales and Victoria having the highest degree of variability.
Variability of wheat production and area sown by Australian state, 2001-02 to 2010-11
(Note: Variability in the above graph has been calculated using the coefficient of variation, a statistical measure that describes the degree of divergence from the average. The larger the value, the more variation there was in wheat production and area sown over the ten year period.)
It is important to note, however, that given the diversity of climate conditions within each sate, state-wide yield averages and variability data are not sufficient to assess individual farming districts within each state. For instance, in any given state grain yields generally decline and yield variability generally increases for farms further from the coast. Due to differences in rainfall reliability and timing, even districts with the same average annual rainfall extent can exhibit widely differing yield profiles.
Since yield reliability (rather than average yield level) is one of the most important determinants of farm profits, rainfall reliability and extreme weather events have a major impact on investment returns. For a more detailed analysis on the relationship between yield variability and investment returns, download our free report, Comparative Analysis of the Australian Wheatbelt. The document also addresses the key question: which region of Australia has delivered superior returns to agricultural investors in the past and is most likely to offer superior risk adjusted returns in the future?
References and data sources: