Ag sector starts 2016 in upbeat mood

07 Feb, 2016 01:00 AM
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Westpac national agribusiness manager, Steve Hannan, says agriculture is set for
Westpac national agribusiness manager, Steve Hannan, says agriculture is set for "a decade of really positive growth".

Rarely, if ever, do all the seasonal and marketing stars align to make it a bonanza time for agriculture, but as the industry heads into 2016 the mood in the bush is remarkably upbeat say increasing numbers of farmers and leading service providers.

Despite much of droughty northern Queensland still hanging out for a decent wet season and the grain sector being hemmed in by lacklustre global price signals, rain relief in many parched regions and the promise of wetter weather trends in the year ahead have sent optimism climbing.

"It hasn't been a drought-breaking start to the year, yet, but there's definitely a lot more pasture growth and summer cropping activity than we've seen in many parts of eastern Australia for a while," said Ruralco managing director, Travis Dillon.

"Livestock prices are strong across the board, the currency situation is pretty heartening for farm exports and the mood on the ground is pretty optimistic, especially with talk of more rain events around.

One headache may be a widespread downturn in cattle numbers available for sale if the season keeps improving.

"Saleyard operators, meat processors and stock agents might have a leaner year than 2015, but it's unlikely to be for long, and it's for the best,” Mr Dillon said.

"Producers badly need that chance to rebuild herds to take full advantage of these good markets."

Strong export demand and herd rebuilding after a run of dry season destocking episodes in NSW and Queensland sent weaner cattle prices soaring $300 to $400 a head above January 2015 prices at last month's Victorian sales, topping at $1400-plus.

While sheep and lamb values are down slightly on last year, southern NSW agents point to grown sheep averaging $140-plus a head in the past month, while the same animals would have topped around $40/head 15 to 20 years ago.

Agribusiness bankers report a generally optimistic outlook and growing appetite for investment in equipment and property, seasonal conditions permitting.

Westpac's national agribusiness manager, Steve Hannan, tipped agriculture was set for "a decade of really positive growth".

"Conditions are always patchy, but overall our customer base is very positive," he said.

"I think quite a lot of the sector has built up a bit of resilience, helped by the dollar dropping to US70 cents, very strong demand for beef and some reasonably good years for croppers in areas like Western Australia, and even NSW.

"We're seeing croppers and mixed farmers willing to spend on infrastructure, and showing agility and determination to take ownership of the challenge to lift productivity or find new markets.”

However "headwinds", included disappointing wheat prices and Australia's ability to satisfy the volume expectations of our increasingly enthusiastic export meat buyers, particularly where graziers had limited funds to restock at current high prices.

Long-serving former GrainCorp boss and current Australian Agricultural Company director Tom Keene said farmers he knew seemed to genuinely feel good about the way agriculture's fundamentals were translating into stronger longer term markets.

"Some rain and the low currency has certainly helped lift the the mood," he said.

"Farmers generally don't measure success on an annual P and L sheet, they want the business to build up long-term capacity to be withstand droughts or floods.

National Farmers Federation president Brent Finlay said the federal government's strong efforts on trade reform deals in Asia had "opened the gate to a whole lot of market access" which helped boost confidence in the agribusiness sector in the past 18 months.

"There are always challenges, but really it's a great time to be in agriculture," he said

"The trade landscape has started to free up, our exchange rate and interest rates are low and the federal government is making the right noises about supporting innovation and agriculture's value to the economy.

"There's still some room for the government to deliver more than talk about its support for agriculture before this year's election, but the signs are hopeful."

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FarmOnline
Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media

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And this would ring a free market economy in a democracy. To bad so sad.
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Why don't farmers demand cash on delivery from any trader they have no record of performance
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I am in no position to comment on the issues between Culleton and the ANZ or the other farmers