Banana enterprise performance comparison (BA09037)

This is a final research report from Hort Innovation’s historical archives. Please note that as these reports may date back as far as the 1990s, the content and recommendations within them may be superseded by more recent research.

What was it all about?

BA09037 was a banana benchmarking project (Banana BM), which provided business and economic comparative performance data for 46 banana growers in Australia. In addition, the project documents key production, packing and marketing systems was in use by each grower. The purpose of this project was to assist banana growers achieve better business practices to improve their economic performance.

Growers involved in the project were from Queensland, New South Wales and Western Australia. A range of business sizes were included (<$250k to >$10 million turnover). Both Cavendish (97 per cent of production) and Lady Finger (3 per cent of production) varieties were included.

The growers participating in this project represent 22.0% of the estimated area under banana production in Australia based on the average estimated area of production made by the Australian Bureau of Statistics from 2007 to 2009 as provided by the ABGC.

The average net farm profit margin for all growers in the project was 10.7 per cent (not inclusive of depreciation and amortization). The average net profit was $5,026 per hectare.

The key observations from the analysis of the collective data for the Top 10 farms compared with the remainder were that they:

1. were 39.6 per cent more productive (in terms of cartons per hectare).
2. Generate net sales returns that were 7.1% higher per carton.
3. Had 25.9 per cent lower on-farm costs production costs per carton.
4. Had labour costs (owners, employees and contractors) 25.5 per cennt lower per carton.
5. Had freight costs that were 14.1 per cent lower per carton.
6. Overall, had net profit of $16,064 per hectare compared with an average of $3,114 for the whole group.

The criteria used to determine if a farm was inside or outside the Top 10 farms was on the basis of net profit per planted hectare. Other measures did not adequately take into consideration the combined impacts of yield, net returns and production costs.

The Top 10 growers comprised businesses from every business size group (<50k, 50-<75k, 75k-<150k, >150k cartons), although proportionally there were less growers in the smallest group size. However, generally business size played little role in the potential to be included in the Top 10. Two ‘groups’ of growers were not in the Top 10, those who supplied central packhouses and corporate growers.

This project highlighted significant differences in the farm management activities of individual growers which in turn were leads to a wide variation in business profitability. However, the data compiled relates to a single year, 2008/09, and was not necessarily indicative of industry performance across multiple years.