Rural rebound on the way

01 Sep, 2014 05:45 AM
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The rural industry is on a cusp of a buying and investment spree

KEY rural indicators point to a rebound across major markets that is expected to boost ­confidence and investment, says Neil Clark Business Intelligence, which provides performance ­analysis for banks and rural institutions.

Neil Clark, principal, said ­serious drought and debt problems in northern Australia, highlighted by a rise in foreclosures, had ­overshadowed rising production, falling debt and growing ­confidence across most of the rest of the country.

"There are a lot of myths out there," said Mr Clark, who has been analysing the market conditions for 25 years.

"Queensland has been facing stress but the rest of the country has been in great form."

The rural industry was "on a cusp of a buying and investment spree" based on record levels of savings, adequate water supplies and robust demand, he said.

Fears about the rising median age of farmers over-stated the demographic threat because it failed to acknowledge the ­prospects of an emerging "young, dynamic" generation.

But many farmers, particularly in the central wheat belt in south-west Australia, were less sanguine about prospects and warn that this weekend's forecast rains could make a big difference in output.

"It's a mixed bag," said Jeff Hooper, a wheat farmer and spokesman for the Muntadgin Farming Alliance, who claimed eroding profits, rather than reduced output, was the key issue.

Farm debt, foreclosures, ­profitability and output would be discussed at a rural debt ­round table being held in Canberra by the federal government later this month.

Mr Clark said farm management deposits, which allowed pre-tax income to be set aside in years of high income to be drawn on in lean years, was at a record high of more than $4 billion, a rise of more than 10 per cent from last year.

In addition, dams were near full in key rural regions for cotton, rice, horticulture and dairy, which "should lead to another good ­harvest," he said.

The farm debt-to-income ratio, the percentage of a consumer's monthly gross income that went toward paying debts and an ­important barometer of economic health, was back to pre-global financial crisis levels.

"Positive seasonal conditions in the south and west should lead to another good harvest," he said.

AFR
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READER COMMENTS

Cynic
2/09/2014 5:09:46 AM

Gee Neil, this is a rosy outlook - totally at odds with the comprehensive Rabo bank survey. You wouldn't be hopelessly conflicted by your cosy relationship with the Banks would you?
Qlander
2/09/2014 5:27:50 AM

If that "young dynamic" is going to come back from the mines, farming will have to offer return that are at least close to what their getting now. And that, will require a rebound bordering on the miraculous. Where I am you can count the people under 30 on the fingers of one hand.
MEGATRON
8/09/2014 12:26:42 PM

Many of the people coming back from the mines will not necessarily expect to get paid mine wages, as many are looking to return to the farm and work towards the family business and possible succession plans. Also the value added to the farm business from skills and experience learned at the mines is huge, from OH&S to heavy machinery operation, personal responsibility and work ethic to people and project management.
Qlander
8/09/2014 2:55:05 PM

They might not expect mine wages, but they won't work for nothing either, and those skills are highly transportable.
MEGATRON
10/09/2014 7:39:22 AM

That comes down to the individual producer or business. If affordability is a problem, what else could you offer people other than money? There is an emotional and lifestyle component here that is being over overlooked. Furthermore, strong rural communities with sporting clubs, a social scene and solid support for local businesses are also attractive.
Qlander
11/09/2014 7:33:35 AM

MEGATRON: You can spin it anyway you like - Fact is, almost an entire generation have voted with their feet.
Cocky
11/09/2014 8:17:10 AM

Working 80/100 hours a week, for on average less than $7 an hour pushes most farmers way outside the realms of lifestyle, MEGATRON. Maybe 20 or 30 years of watching your life's work become virtually valueless might change your tone, it's defiantly changed mine. PS What farmer these days has time for a social life?
farmed
11/09/2014 8:29:26 AM

dairying in wa on the other hand is still declining to an alarming rate. just ask your local service provider how many people owe them money for how long. things arent good are looking worse for the future. just because a newspaper article says things are looking good doesnt mean it is in fact true. while the people who make decisions dont listen things wont change. milk processors need to start listening to their farmers.
dave-oh
11/09/2014 10:35:15 AM

Lets hope the mindset of those from mining backgrounds doesn't come back to the farm. If equipment got treated the same way, applied the same OH & S standards, made as many stuffups and paid even half the wages, we would be broke in a flash.
farmed
12/09/2014 8:38:14 AM

megatron- im afraid emotion doesnt pay the bills. for too long corporates have used emotion to screw farmers. now we have very few left.
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