INPUT costs have been a key contributor to major changes in farming in the past 20 years.
At a recent GRDC farm business update at the Adelaide Convention Centre, farm consultant Ed Hunt, Wharminda, said farming was costing a lot more but margins were smaller.
"The biggest costs are from inputs and machinery while finance costs have virtually doubled," he said.
"But looking at productivity from the late 1990s to now, there hasn't been that much growth."
A study by quarterly journal Organizational Research Methods on a sample of farmers in the Vic Mallee showed costs had virtually doubled from the 1997-98 season to that in 2011-12.
Mr Hunt said the past two decades, the number of farms had decreased and the average cropping area had increased.
"The income-to-cost ratios have declined and there's been a shift away from running livestock to cropping," he said.
"Meanwhile, land values have increased two to three times and debt levels and the interest being paid are at record levels.
"The investment in machinery has also increased."
He said the interest paid for each business as a percentage of total farm costs had been at record levels.
The shift away from livestock to cropping is said to have increased risks.
Mr Hunt said sheep were cheaper to run than cropping, and the move to continuous cropping was a high-risk business.
* Full report in Stock Journal, November 20, 2014 issue.