Farmer investment intention hits all-time high

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Farmers are more likely than ever to increase their spending on-farm over the next 12 months, according to a new research released yesterday.

Farmer investment intention hits all-time high
More farmers are looking at increasing their spending on technology and innovation.

The Commonwealth Bank bi-annual Agri Insights survey measures farmers’ spending intentions every six months. The Agri Insights Index now sits at 10.3 points, which is the highest result since the survey was launched a year ago.

The research shows Australian farmers are taking a more proactive approach to farm profitability by actively adjusting their farm management strategy to meet market needs.

More specifically, farmers aged between 35 to 44 years are the most driven to try new innovations, with almost half of that group reporting they are usually among the first in their farming region to try out new ideas. Women are also found to be slightly more likely than men to adopt new practices and technology.

The survey also reveals most farmers use a combination of sales approaches to get the best return for their product, with a smaller number preferring to stay with tried and true methods.

Commonwealth Bank regional and agribusiness banking executive general manager Geoff Wearne says the results indicate a good balance between proactive management and risk mitigation.

"Innovation is essential to keeping the industry globally competitive and sustainable, but a measured approach helps manage risk," he says.

"What Agri Insights has revealed is a healthy mix of both in Australian agribusiness."

He adds famers are continually improving production outcomes through continual crop and livestock improvement programs, as well as a more flexible product marketing strategy.

Production across most sectors in the industry is expected to grow over the coming year, with dairy and prime lamb producers most likely to expand operations this year.

Beef intentions have recovered strongly, with six per cent of farmers indicating a possible increase in investment – a 15 per cent improvement over this time last year.

Cotton is the only sector likely to experience reduced production, with 10 per cent of growers saying they will decrease their scale of operation in the next 12 months. However, this is a significant improvement from October 2014, when 51 per cent of growers said they would cut back on spending.

"The sound results in the latest survey reflect improved seasonal conditions, stronger commodity prices in global markets and a weaker Australian dollar, all of which are driving positive agribusiness intentions for the next 12 months," Wearne adds.

"Dairy intentions are buoyed by a steep increase in the world dairy price index since the start of the year, coupled with a bullish outlook for 2015 thanks to solid demand from Asian markets and strong investment from China.

"Likewise, strong global demand is driving livestock intentions, with expected tighter supply and higher prices also contributing to intentions around flock and herd rebuilding."

For the April 2015 Agri Insights survey, Commonwealth Bank surveyed 1,600 farmers in January and February 2015 on 14 aspects of farm operation, covering physical aspects (production scale, land size etc) , financial investment intentions and people aspects (regarding people working in and for the farm business).

Some other key findings of the report are:

  • 69 per cent of farmers surveyed say they use a combination of methods to sell products to the right market at the right time, with 31 per cent sticking to the same method each year by taking the price on offer.
  • 42 per cent of women are more likely to try new products or approaches compared to 38 per cent of men.
  • 69 per cent say maximising production and quality is most important to profitability while 31 per cent say managing costs is most important.
  • 20 per cent of farmers are looking to increase investment in farm technology and innovation, 31 per cent intend to increase investment in fixed infrastructure and 16 per cent intend to increase spending on plant and equipment.  

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