Favourable weather conditions across many parts of Australia has seen a 50 per cent increase in financing for farm machinery as farmers fast track expansion plans, according to Commonwealth Bank’s Regional and Agribusiness division.
Commonwealth Bank’s Executive General Manager Regional and Agribusiness Grant Cairns says New South Wales had led the growth, with lending up more than 100 per cent in the state, compared to the same time last year.
“For many of Australia’s farmers, this year has been a rebound from drought with favourable growing conditions, a successful winter crop in many regions and strong optimism about yields and quality of harvest,” Cairns says.
“Over the past few months we’ve seen financing in the sector increase dramatically – largely driven by farmers purchasing agricultural machinery for this year’s crop season.
“We’ve seen asset finance for ag machinery, particularly tractors and harvesters, increase significantly. Across the country, new asset financing for tractors is up 119 per cent – the highest volumes with seen in the past three years, and financing for harvesters is up 108 per cent.”
Cairns says the Government’s expansion of the instant asset finance write off scheme is providing further incentive for farming businesses looking to take advantage of the positive outlook and expand for the future.
“Agriculture confidence is at an all-time high for a number of reasons – nationally, farm values are up, commodity prices are holding firm, interest rates are at record lows, seasonal conditions have been good, there is strong consumer and retail demand for fresh produce, and there’s Government incentives like the instant asset write off scheme.
“The trends we’ve been seeing signals a higher confidence across the farming sector, and that’s good for everyone – for the regional towns where the farms are located, for the whole supply chains that support our food and fibre, for the markets they sell to, and for all of us who enjoy fresh Australian produce.
“Though the international trade environment remains volatile, it’s positive to see so many agribusinesses turn a corner and enter a period of expansion – and it’s important banks support them to unlock these growth opportunities,” Cairns says.
Case in point
One business that has seen a noticeable difference is Simon Codemo from Griffith-based farm equipment supplier Codemo Machinery Services.
“We’ve seen a really big change in NSW over the past 12 months – obviously the weather and improved seasonal conditions is a big part of this. This weather, combined with low rates, stable commodity prices and the instant asset write off scheme has boosted farmer confidence,” Codemo says.
“I’ve definitely seen a boom in sales because of this confidence – we’ve seen demand for both new and used equipment increase across the board.
“For the first time in many years, our customers are harvesting above average yields – Many of our customers are in the process of harvesting their crops right now and yields are looking really good.”