Farm spending leaps as good seasons pay dividends

Farm spending leaps as good seasons pay dividends


News
Aa

Farmers are flat out building fences, yards, sheds, new dams or other water infrastructure, or buying new tractors and farm machinery.

Aa
Commonwealth Bank of Australia’s acting agribusiness head, Tim Harvey, says bullish farm investment intentions reflect confidence following rain and a run of good cashflow years for mixed livestock and crop producers.

Commonwealth Bank of Australia’s acting agribusiness head, Tim Harvey, says bullish farm investment intentions reflect confidence following rain and a run of good cashflow years for mixed livestock and crop producers.

Farmers are flat out building fences, yards, sheds, new dams or other water infrastructure, or buying new tractors and farm machinery.

The trend is particularly pronounced in South Australia and NSW.

Latest research from the Commonwealth Bank of Australia (CBA) has reported the strongest farmer spending on fixed infrastructure improvements since the bank began its twice-yearly Agri Insights surveys in early 2014.

Spurred on by generally good rainfall across most rural areas in the past six months the latest Agri Insights report shows 36 per cent of farmers intended to upgrade farm assets such as sheds fencing and dams within 12 months, while a quarter intended to invest in more plant and equipment.

Fixed infrastructure spending intentions have increased from 32pc six months ago.

Strongest activity is in NSW and SA where 42pc of farmers are planning capital improvements, while 29pc in the same two states intend buying new farm machinery or other plant.

Western Australian farmers also have strong plant and machinery spending plans with 28pc looking to upgrade gear, and WA leads the nation’s rural property acquisition intention rankings.

About 11pc WA producers want to buy more land in the year ahead, while 9pc of SA farmers and 5pc of NSW and Queensland producers have similar plans.

CBA’s agribusiness acting executive general manager, Tim Harvey, said the bullish farm investment intentions reflected confidence following rain and a run of good cashflow years for mixed livestock and crop producers, notably in SA and central and southern NSW.

“SA has been in a good position thanks to several big cropping seasons and mixed farm producers have also able taken advantage of strong livestock prices.

“The chance to build up cash reserves has been similar in much of NSW, while Queensland is still rebuilding momentum after several dry years.

“Victorian activity has probably been subdued by dry conditions last year and the dairy market downturn.”

Industry sectors where increased investment trends were most notable were horticulture, cotton, beef cattle, prime lamb and summer grain cropping.

Mr Harvey said more water supply certainty, rising export opportunities and a lower Australian dollar had helped expansionary plans in horticulture, with almost 20pc of producers planning to increase production – double the number of just six months ago.

Irrigation water availability and good soil moisture conditions were driving cotton and summer grain production investment increases among 18pc and 10pc of respective producers in those industries.

In the beef and lamb sectors investment is up among 14pc of producers, while 4pc of woolgrowers are also now expanding compared with static or shrinking production in the wool sector in April.

However, farmers with dairy and sugar industry growth intentions have almost vanished from the radar in the past six months.

CBA agri commodities analyst, Tobin Gorey, said despite upbeat global sugar prices, cane growers were unsettled after too much winter rain reduced sugar milling returns and industry restructuring had disrupted investment confidence.

However, while Australian dairy farmers copped the full force of depressed global milk markets this year, Mr Gorey said there had not been much of a material shift towards industry contraction – “a sign perhaps of long term confidence in the industry as world markets make some recovery”.

Nationally, the Agri Insights report showed technology, innovation and off-farm investment plans recovering towards levels of a year ago, as SA farmers again led the pack with 28pc looking to spend on new technology.

In fact, record-high intentions in several survey categories put SA at the top of the Agi Insights investment index with a score of 14.1, while Victoria was lowest at 6.4.

SA farmers are also three times more likely to say they will hire more staff, or twice as likely to use contractors than the national average.

The story Farm spending leaps as good seasons pay dividends first appeared on Farm Online.

Aa

From the front page

Sponsored by