Farmers to invest in 2020: Rabo

Farmers to invest in 2020: Rabo

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Findings from the recent Rabobank Rural Confidence Survey found that Western Australians have a heightened desire to increase their farm investments in the next 12 months, with most planning to purchase more on-farm infrastructure, followed by property, new technologies, livestock numbers and plant/machinery.

Findings from the recent Rabobank Rural Confidence Survey found that Western Australians have a heightened desire to increase their farm investments in the next 12 months, with most planning to purchase more on-farm infrastructure, followed by property, new technologies, livestock numbers and plant/machinery.

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Appetite for investment has remained strong among Western Australian farmers despite most of the State enduring a tough season.

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APPETITE for investment has remained strong among Western Australian farmers despite most of the State enduring a tough season.

According to the latest quarterly Rabobank Rural Confidence Survey, 26 per cent of WA farmers surveyed reported they intended to invest in their farm business within the next 12 months.

This desire for investment was up on the previous quarter by four percentage points.

Their intention to invest was the highest compared to other States, followed rather closely by those in South Australia and Tasmania, respectively, and it was more than the national average of 17pc.

While WA farmers reflected a strong desire to grow their business, the survey also found that there were few, 11pc, who planned to decrease their investments, compared to the national average of 19pc.

Those planning to keep investment assets the same was close to the national average of 62pc, with WA farmers at 63pc.

Of those who expressed a desire to invest, 70pc said they would be looking into increasing their on-farm infrastructure, which has doubled since the last quarter.

Purchasing new land looks to be the plan for less farmers, at 37pc which is down from 48pc.

Other investment options that saw a jump were new technologies at 35pc, up from 25pc and increasing livestock numbers with 27pc, up from 18pc.

The desire to purchase new plant/machinery was down to 24pc from the previous 54pc.

Rabobank regional manager for WA Steve Kelly said investment in infrastructure was a sign of farm business strength and signalled long-term confidence in agriculture.

But the survey found confidence levels among farmers was at its lowest since 2013, which Mr Kelly said was a direct response to the dry season and hard finish.

Farmers expecting conditions to worsen increased to 35pc from last quarter's 18pc, while those with optimistic outlooks reduced from 23pc to 16pc.

Seasonal conditions were found to be the biggest concern for 93pc of farmers, compared to 18pc who were worried about commodity prices and 11pc concerned about overseas markets/economies.

"There's no surprise farmer sentiment is down, with a warmer-than-usual spring, with many days above 30 degrees, coupled with below average rainfall and a catastrophic frost in the South East, proving the end of hopes for a reasonable crop," Mr Kelly said.

Despite the disappointing season for most, Mr Kelly said there would still be some areas which would have enjoyed a reasonable season.

"This year has certainly not been average across all regions, rather a mixed bag," he said.

"In some cases, farmers in the Great Southern and South Coast will enjoy a fair outcome, while the dry, warm spring significantly impacted the central and northern regions.

"Adding to disappointment, parts of the South East also suffered catastrophic September frosts around Esperance, which significantly downgraded production."

Sentiment in the beef sector was down with 42pc of producers anticipating conditions to deteriorate in the coming 12 months, a significant jump from 9pc in the previous quarter.

Mr Kelly attributed this apprehension to the dry spring causing worry among farmers in regards to feed and water availability.

"From a pastoral point of view, feed on offer is generally low, with pastoralists hopeful of a wet summer," he said.

Confidence was also down among sheep and wool producers, however sheep graziers had the most positive outlook compared to other local sectors.

"The livestock sector is expected to remain positive price wise, so this planned rise in infrastructure spending may also suggest a slight shift towards an increase in livestock capacity in parts of the State," Mr Kelly said.

"Many graziers have identified that they're in a strong position to put money into the farm, which is a really positive indicator of long-term confidence."

After last year's record breaking season, WA producers largely lowered expectations for gross farm incomes over the coming 12 months, but Mr Kelly believed all sectors were remaining financially robust.

"Western Australian farmers enjoyed an enormous 2018," he said.

"It was a record income year thanks to the second-highest level of grain production recorded combined with outstanding commodity prices.

"There was a large consolidation of debt and generally balance sheets are in a position to withstand the current season."

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