Farmers' fortunes faring well

23 Feb, 2015 05:00 AM
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The outlook is the best in a long, long time, probably more than a generation

THE outlook for Australian farming, production and markets is the best in more than 30 years, and is raising hopes land prices and transactions will increase, according to rural property agents, farmers and consultants.

Good rains in south-east Australia, falling fuel costs, a depreciating dollar and rising incomes are coalescing to revive farmers' fortunes after years of decline, drought and debt, said National Farmers' Federation president Brent Finlay, who owns a sheep and cattle farm in Queensland.

"The outlook is the best in a long, long time, probably more than a generation," Mr Finlay said.

Nick Myer, an agent for Elders Real Estate in south-east Australia, said improved commodity prices had boosted confidence, which should lead to improved land prices over coming months.

Garry Nash, principal of Garry Nash First National, added: "Momentum is improving and there is a new wave of players, particularly from overseas."

Neil Clark, principal of Neil Clark Business Intelligence, says debt-to-income ratios have dropped during the past five years from 1.32 to 1.08, and aggregate revenues are up by 27 per cent to more than $53 billion.

Farm management deposits are at a record high of more than $4 billion.

"This indicates surplus cash is available for investments and deposits," Mr Clark said. There has also been a "very good" improvement in the value of product, despite the possibility of a slight fall this year, he added.

"This leads to increasing interest in the purchase of additional land for farmers to grow their wealth."

Water storage levels ranged from 80 per cent in Queensland to 72 per cent and 66 per cent in Victoria and South Australia respectively.

It was 35 per cent in NSW.

Drought remains a significant issue in other parts of Australia, particularly the far north, and there are pockets of debt in rural Queensland.

"I am very positive," Mr Clark said. "If the overall improvement continues, we are likely to see a sustainable improvement in land values in most areas."

Low interest rates, a weaker dollar and rising investor interest create financing alternatives, such as owner-operators taking advantage of sale and leaseback arrangements, according to Colliers International.

Producers, such as Bulla Dairy Foods, are employing consultancies to develop networks in China to take advantage of the elimination of dairy tariffs under the free-trade agreement.

Agreements have also been negotiated with Korea and Japan.

Rabobank warns the rising US dollar was a "double-edged sword" for Australian agriculture because it is likely to increase the cost of imported machinery and inputs and lead to lower global commodity prices.

"Interventionist foreign-trade policies and technical barriers are often unpredictable," said Rabobank.

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READER COMMENTS

Percy
23/02/2015 6:16:29 PM

Just too bad for that generation that have carried the country while a generation walked away from the hard life of farming and keeping the country ticking along. Hopefully this pending boom will not be just a drop in the pan and young farmers keep hanging in there. Otherwise we may as well sell it all to overseas interests and become tenants in our own land.

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