New data from the Commonwealth Bank shows asset financing for equipment and machinery across Australia’s booming agriculture sector is currently sitting at a seven year high.
Commonwealth Bank’s Executive General Manager of Regional and Agribusiness, Grant Cairns, said this record funding was being driven by farmers investing in transport equipment, sowing and cropping equipment, tractors and harvesters.
According to the data, March 2021 was the third largest month for purchases of agriculture machinery since 2014. Tractor purchases are up 78 per cent and harvesters up 88 per cent, compared to the same time last year.
Farmers in Western Australia have led the demand with new machinery purchases up 83 per cent, followed by Queensland up 47 per cent, and NSW up 30 per cent compared to the same time last year.
“As farmers prepare for what is expected to be a significant winter crop production, upgrading old machinery has become a priority, with customers seeking to maximise productivity and take advantage of current government investment incentives,” Mr Cairns said.
While many in the food and fibre sector were unaffected by border closures and lockdowns, the availability of equipment tested the sector’s agility. Logistical challenges and supply chain disruptions saw delays in new machinery, as well as spare parts for repairs and upgrades, coming into the country.
Despite the challenges presented by the COVID-19 pandemic, high confidence is being felt throughout the sector, supported by good weather conditions in many parts of the country, low interest rates, and high commodity prices.
Mr Cairns said it was positive to see shared optimism and growth amongst both cropping and pastoral operations, with new purchases of cattle stock crates also significantly up this year. The beef industry is just one of the sectors experiencing a significant uptick in confidence following several difficult years of drought and other challenging conditions.
“The recent La Nina weather has delivered rain to most pastoral regions, which has really helped grazing conditions across the country. While it has taken some time, Australia’s herd rebuild is firmly underway, and that’s helping prices due to high demand and ongoing competition between farmers and processors.
“Border closures internationally also mean more people are taking the opportunity to explore their own backyard and that includes Australia’s many wonderful restaurants and eateries ensuring a consistent, undisrupted market for beef producers.
“In saying that, we know many primary producers are still doing it tough and have also been impacted by the recent floods and cyclones and we are working with our customers who have been affected to ensure they are supported.” Many of Australia’s producers are in Rockhampton this week for ‘Beef 2021’ – Australia’s leading Beef Expo – running from 2-8 May in Queensland, where CBA’s Regional and Agribusiness bankers are onsite to discuss investment opportunities and lending solutions to back the industry’s growth.