DESPITE challenges in the global supply chains, Australia’s agriculture industry is harvesting strong rates of investment as it experiences an abundant season for farmers and the broader economy, which has seen financing demand surge.
According to Commonwealth Bank’s Regional and Agribusiness division, the agriculture sector is bringing in healthy returns that are boosting the nation’s economy at large and confidence in regional communities.
“Despite the widespread disruptions that we’ve seen over the past year, it’s positive to see the agriculture industry expanding and adapting to take a leading role in the nation’s economy,” said Paul Fowler, executive general manager of regional and agribusiness.
Beyond just positive seasonal conditions, resulting in generous crops, the sector is also being buoyed by increasing rural property prices, low interest rate and government incentives, all of which are enabling farmers themselves to invest into their own growth.
Rabobank recently reported shrinking agricultural land availability, excellent seasonal conditions and commodity pricing, are expected to push up land prices for at least the next five years, with the sharpest growth to 2023.
“We’re seeing agribusinesses take the opportunities that have come from the past year and examine their operations, implement new ideas and innovative solutions to support their business goals,” said Fowler.
So far in FY22, financing for agriculture machinery has increased by 25% when compared to the same time last year, led by the Northern Territory which saw a 138% increase, Victoria which was up 60% and Queensland which was up 49%.
“Although there have been challenges getting new assets into the country due to global shipping delays, businesses have remained optimistic and we expect the high confidence to continue into 2022 and beyond,” added Fowler.
Likewise, financing for wine making equipment has risen by 152% over the same period, with headers up 101%, ag bins up 65% and all-terrain vehicles up 46%.
“Over the past 18 months, we’ve needed to make some adjustments to how we operate, incorporating more forward planning to manage the surge of demand we’ve seen for ag machinery,” said Drew Hawkins, CEO of Total Ag Solutions Pty Ltd.
“With delays in overseas production and shipping, we’ve done more advance ordering to ensure we’re able to meet the incredible investment taking place across the industry,” added Hawkins.