Farmer investment plans hit new highs

Farmer investment plans hit new highs as ag sector mood lifts


About 25 per cent of Australian farmers are looking to invest in new machinery and farm equipment and 30pc want to spend on emerging ag technology initiatives.

About 25 per cent of Australian farmers are looking to invest in new machinery and farm equipment and 30pc want to spend on emerging ag technology initiatives.

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Farmers are investing in new equipment, extra labour and off-farm assets at a record levels

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Farmers are investing in new equipment, extra labour and off-farm assets at a record levels as optimism across the sector makes the most of good seasons and some bullish commodity prices.

Agriculture is also regaining its appeal with next generation farming family members, according to research by the Commonwealth Bank of Australia (CBA).

CBA’s latest barometer of farmer investment intentions is at its highest point since the bank began compiling its Agri Insights data three years ago.

The livestock sector is particularly optimistic, with a record 18 per cent of sheepmeat and wool producers and 15pc of beef producers intending to expand their enterprises in the year ahead.

Most notably, expansion intentions by dairy farmers have leapt to 12pc –  up from just one per cent in September last year when global milk prices were bottoming after a three-year collapse.

The research also suggests farmers are making the most of market and seasonal opportunities by hiring more staff, getting their families more involved in the business and using more outside contractors and advisory help.

CBA said investment in the beef, wool and lamb sectors looked likely to strengthen significantly on the back of strong prices, with 18pc of woolgrowers now making serious physical investment plans after years of market doldrums.

A year ago their intentions had been stagnant, with 2pc of producers actually divesting their wool interests.

Lamb producer investment indications have doubled from 9pc a year ago.

Nationally 30pc of farmers want to spend more on new technology to lift production efficiency.

Everything from solar panels to satellite positioning system gear, soil monitoring fixtures and remote stock watering processes is on the shopping list, according to CBA’s regional and agribusiness executive general manager, Grant Cairns.

Fixed infrastructure projects (fencing, sheds, etc) and farming equipment purchase intentions are similar to six months ago at 35 and 25pc respectively.

Commonwealth Bank of Australia agribusiness executive general manager, Grant Cairns.

Commonwealth Bank of Australia agribusiness executive general manager, Grant Cairns.

Enthusiasm for buying extra farmland has also continued to rise, now at 6pc nationally –  up from 4pc a year ago.

In South Australia interest in land acquisitions has hit record highs with one in 10 farmers wanting to expand their farm area.

Queensland and Western Australian producers follow at 8pc and 7pc respectively.

Almost a fifth of Australian farmers are also looking at off-farm investment options to diversify their earnings, with NSW, Victorian and Queensland leading that category at 21pc, 18pc and 17pc respectively.

The upbeat investment mood has pushed CBA’s Agri Insights Index to its highest level, up 2.8 points on a year ago to 12.3.

On a state basis Tasmania leads the index at 15.8pc, followed by both WA and SA on 14.4.

Mr Cairns said sustained high prices in several commodity sectors were clearly helping drive optimism and spending intentions.

He said strong market conditions and investment sentiment were also set to translate into more farm employment opportunities and was encouraging younger family members to step up and take a more active role in the farm business.

Tasmanians were leading the rebound in next generation interest (18pc), followed by WA and Queensland (12pc).

Mr Cairns believed the increasing “ag tech” investment trend was also encouraging new farm sector interest from younger generation family members, while a record 7pc of farmers were also using more specialist advisors to help make the most of new technology and management strategies.

Nationally about 10pc are increasing use of contractors, particularly in NSW (14pc), while 9pc of farmers will take on extra workers –  up from 5pc last year.

Countering the strong livestock spending plans are more restrained intentions in the cropping sector, where depressed global cereal markets have restrained graingrower ambitions for winter, although pulse cropping plans are strong.

Mr Cairns said Ag Insights’ results reflected the sort of feedback and discussion topics he encountered with farmers and farm sector supply chain businesses, including the optimistic sentiment across the much of industry.

“The level of interest in new technology investment is hard to ignore –  roughly a third of farming businesses want to boost their technical investment.”

“Overall, we’re looking at a very buoyant Australian agri sector and we look forward to supporting customers to achieve their business goals.”

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