Australian farmers have expressed optimism for the year ahead, with intentions to increase investment across most aspects of their farming operations including infrastructure, technology and education, according to the first Commonwealth Bank Agri Insights report.
Agri Insights, a biannual research initiative launched today, surveyed 1,400 Australian farmers about their business intentions for the coming year. The research explored multiple areas of managing an agribusiness, across the physical aspects (including production scale and land size), financial investment intentions and the people aspects (regarding people working in and for the farm business).
The research shows 31 per cent of farmers will increase investment in fixed infrastructure and 11 per cent in plant and equipment. On the financial side, 41 per cent of farmers are intending to increase investment in farm inputs and 14 per cent will invest more in farm technology and innovation, while on the people side, 15 per cent will increase investment in further education and training.
According to Geoff Wearne, Executive General Manager Regional and Agribusiness Banking, Commonwealth Bank, the results indicate farmers are focused on improving operations to increase productivity and profitability.
"Australian farmers are optimising their operations by upgrading infrastructure and equipment, adopting new farm technologies to increase production efficiencies and increasing their focus on education and training. The overall trend indicates farmers are investing on-farm to improve sustainability and drive growth, with a lesser focus on expanding into new landholdings and off-farm investments,” said Mr Wearne.
According to the research, many farmers plan to increase the scale of production in existing operations in the next 12 months, particularly in sectors like horticulture (15 per cent), sugar cane (10 per cent), winter grains (10 per cent) and prime lamb (7 per cent). At the same time, some cotton growers (23 per cent) and beef producers (9 per cent) say they will decrease production over the next year, although this is not expected to indicate a long term downturn in these sectors.
"We know that irrigation reserves are low in some areas, which will drive a short-term contraction in cotton, and seasonal conditions for beef have been very difficult. Survey responses were influenced by these recent conditions but we’re confident the long-term outlook for beef and cotton remains positive," said Mr Wearne.
The research also indicates there will be a significant increase in the level of investment in farm inputs (41 per cent).
“The fact that so many farmers plan to increase their investment in inputs is a reflection of the ongoing challenge of input cost management, but it also indicates that as farmers scale up production, their input requirements will increase,” said Mr Wearne.
Survey respondents were also asked about drought management planning. Nationally, 69 per cent of farmers said they were either prepared or very prepared for a two-year drought. Farmers across Australia were more likely to say they were prepared rather than unprepared for drought, including in NSW (68 per cent prepared or very prepared) and Queensland (61 per cent prepared or very prepared) where many farms have been operating in drought conditions for several seasons.
"This is partly a reflection of the diversity of conditions across the country and partly a reflection of the industry’s resilience and optimism, although of course the challenges of drought and natural disasters are real and serious, and a number of areas continue to do it tough," said Mr Wearne.
Notes to editors:
About the Commonwealth Bank Agri Insights report: