Farmers rushing to buy new tractors and equipment

Farmers say time is right to borrow for new tractors and equipment

Machinery
HEY BIG SPENDER: Big rural lender NAB says farmers are on a shopping spree to buy new tractors and equipment.

HEY BIG SPENDER: Big rural lender NAB says farmers are on a shopping spree to buy new tractors and equipment.

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Latest data from big rural lender NAB show farmers are borrowing heavily to update tractors and equipment.

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Latest data from big agribusiness lender NAB has underlined the present rush by farmers to borrow to update tractors and equipment in response to rain and the federal government's instant asset write-off scheme.

Loans to NAB customers for farm equipment finance soared 132 per cent year-on-year from 2019 to 2020.

NAB executive for regional and agribusiness Julie Rynski said the trends in equipment finance were indicative of the overall confidence in the farm sector.

"Lending for tractors has increased 146pc while lending for equipment such as sprayers and headers has risen 142pc," Ms Rynski said.

"Farmers looking to boost their on-farm grain storage have also driven a 140pc increase in lending for grain silos.

"After a record breaking 2020-21 harvest and with subsoil moisture conditions looking good across much of the south-east and south-west of the country following summer rain, the figures are reflective of our customers' intentions to capitalise on the turnaround in seasonal conditions."

Ms Rynski said one of the biggest growth areas had been in lending for irrigation plant and equipment which was up 217pc.

"Investment in irrigation plant and equipment is occurring throughout a range of production areas off the back of the La Nina event delivering more surety in irrigation water supply," Ms Rynski said.

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"Farmers are also investing in energy efficiency practices and technology to generate renewable energy with lending for on-farm solar power infrastructure increasing 142pc.

"We expect investment in that category will grow further as our customers continue to focus on sustainable agricultural practices and also look to save on energy costs."

Ms Rynski said with the end of the financial year approaching, agribusinesses were making the most of the government's instant asset write-off scheme to buy new machinery and make other on-farm investments.

"The instant asset write-off scheme applies to eligible assets used or installed by the end of June next year, so there is still a good window of opportunity for farmers to capitalise on the scheme," Ms Rynski said.

"Assets which can be written off are the same as those deemed eligible under the existing depreciation rules."

Ms Rynski said the bank did not expect current demand for equipment finance lending would ease any time soon.

"If we continue to have favourable seasonal conditions, we expect this level of investment in agricultural equipment to continue for the next 15 months," Ms Rynski said.

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The story Farmers rushing to buy new tractors and equipment first appeared on Farm Online.

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