Farmers plan investments on the back of growth

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New research finds Australian farmers intend to increase investment across multiple aspects of farm business over the next 12 months.

Farmers plan investments on the back of growth
Commonwealth Bank Executive General Manager Regional and Agribusiness Banking Geoff Wearne

A Commonwealth Bank research initiative launched tody reveals farmers are optimistic overall about growth, which they plan to fuel with increased investments in fixed farm infrastructure, plant and equipment.

The Commonwealth Bank biannual Agri Insights report, which surveyed 1400 Australian Farmers about their business intentions for the coming year, explores several aspects of agribusiness management such as production scale, land size, financial tactics and issues around farm personnel.

The research shows 31 per cent of farmers will increase investment in fixed infrastructure and 11 per cent in plant and equipment.

The Agri Insights report also finds technology and education are key investment priorities for Australian farmers.

On the financial side, 41 per cent of farmers intend to increase investment in farm inputs and 14 per cent will invest more in farm technology and innovation.

Fifteen 15 per cent will increase investment in further education and training.

According to the research, many farmers plan to increase the scale of production in existing operations in the next 12 months, particularly in sectors like horticulture (15 per cent), sugar cane (10 per cent), winter grains (10 per cent) and prime lamb (7 per cent).

At the same time, some cotton growers (23 per cent) and beef producers (9 per cent) say they will decrease production over the next year, although this is not expected to indicate a long term downturn in these sectors.

The research also indicates there will be a significant increase in the level of investment in farm inputs (41 per cent).

Commonwealth Bank Executive General Manager Regional and Agribusiness Banking Geoff Wearne says the results indicate farmers are focused on improving operations to increase productivity and profitability.

"Australian farmers are optimising their operations by upgrading infrastructure and equipment, adopting new farm technologies to increase production efficiencies and increasing their focus on education and training," Wearne says.

"The overall trend indicates farmers are investing on-farm to improve sustainability and drive growth, with a lesser focus on expanding into new landholdings and off-farm investments."

Wearne adds low irrigation reserves in some areas will drive a short-term contraction in cotton, and seasonal conditions for beef have been very difficult.

"Survey responses were influenced by these recent conditions but we’re confident the long-term outlook for beef and cotton remains positive," he says.

 "The fact that so many farmers plan to increase their investment in inputs is a reflection of the ongoing challenge of input cost management, but it also indicates that as farmers scale up production, their input requirements will increase."

Survey respondents were also asked about drought management planning.

Nationally, 69 per cent of farmers say they were either prepared or very prepared for a two-year drought.

Farmers across Australia were more likely to say they were prepared rather than unprepared for drought, including in NSW (68 per cent prepared or very prepared) and Queensland (61 per cent prepared or very prepared) where many farms have been operating in drought conditions for several seasons.

"This is partly a reflection of the diversity of conditions across the country and partly demonstrates the industry’s resilience and optimism, although of course the challenges of drought and natural disasters are real and serious, and a number of areas continue to do it tough," Wearne says.

Regional highlights of the first Commonwealth Bank Agri Insights Report

  • Tasmanian farmers (7 per cent) are the most likely to invest in land acquisition over the next year.
  • Tasmanian (17 per cent) and South Australian (17 per cent) farmers have the strongest intentions to invest in plant and equipment over the next year.
  • South Australian (20 per cent) and Victorian (17 per cent) farmers have stronger intentions to invest off-farm than farmers in other states.
  • Intentions to increase investment in education and skills are strongest in South Australia (21 per cent).

The full report can be downloaded here.

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