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Media Release

Agri investment intentions hit record levels

Agri investment intentions hit record levels

Investment intentions among Australian farmers are at record levels, according to new research from Commonwealth Bank.

The research, part of Commonwealth Bank’s bi-annual Agri Insights survey, shows farmers are preparing to boost spending and realise opportunities by hiring more staff, getting their families more involved and by using more contractors and advisers.

Investment in the beef, wool and lamb sectors in particular is expected to strengthen dramatically on the back of strong prices and record grain harvests, and intentions in the dairy sector have rebounded, too.

This sentiment has pushed the CommBank Agri Insights Index to its highest level since the research began in 2014. The current National Index is 12.3, up 2.8 points on this time last year and two points ahead of the previous high, recorded in May 2015.

Commonwealth Bank’s Executive General Manager of Regional and Agribusiness Banking Grant Cairns says sustained high prices in several commodity sectors are helping drive optimism and spending intentions, with livestock producers leading the charge.

“Our survey shows that record numbers of beef, wool and lamb producers intend to expand operations this year, while dairy intentions have recovered strongly in the past six months. The results are likely underpinned by continuing high prices for wool and lamb, plus ongoing strong demand for Australia’s high quality beef,” he said.

The survey found 15 per cent of beef producers plan to expand their enterprise in the coming year, up from 12 per cent this time last year and setting a new record for the measure. At the same time, a record 18 per cent of wool producers say they’ll expand their enterprise. This is up 20 per cent on this time last year, when overall intentions in the sector were contractionary. Meanwhile, 18 per cent of lamb producers plan to expand their enterprise, twice as many as at the same time last year (9 per cent) and again setting a new record.

Dairy intentions have rebounded strongly, with 12 per cent of dairy farmers saying they’ll expand their enterprise, compared with just one per cent six months ago.

While livestock intentions are strong, they are somewhat offset by intentions in the cropping sector, with summer and winter grain producers forecasting an overall lower level of production.

Mr Cairns says the strong general investment sentiment will not stop at the farm gate.

“We’re expecting to see a solid knock-on effect as farmers implement their investment plans. Strong market conditions look set to translate into increased employment opportunities and farmers are also looking at off farm investment in addition to boosting their spend on their farming operations,” he said.

A record seven per cent of farmers say they will increase their use of consultants and advisers, compared with five per cent this time last year, while 10 per cent say they will increase their use of contractors. Additionally, a record nine per cent say they will increase employee numbers, nearly double the five per cent who said they would do so at this time last year.

Nearly a third of farmers (29 per cent) plan to boost tech investment and one in four (25 per cent) will increase investment in plant and equipment. At the same time, 18 per cent plan to increase off farm investment, up seven percentage points on this time last year.

“Overall, our survey points to a very buoyant Australian agri sector and we look forward to supporting our customers to achieve their business goals,” Mr Cairns said.

Notes to editors:

  • Agri Insights surveys farmers in relation to 14 key areas of farm business operation, including physical, financial and people components to create an index measuring investment intentions for the next 12 months.
  • Agri Insights asks respondents if they intend to increase, decrease or maintain their level of investment across a range of measures in the coming 12 months. A ‘net change’ measurement is used to evaluate the likely overall impact of farmers’ intentions. 
  • Questions are divided into three categories: physical (land, plant & equipment, farm infrastructure, commodities), financial (farm inputs, off-farm employment, off-farm investment, technology) and people (education & training, contractors, advisers, employees, family members and the farmers’ personal involvement in the farm business). 
  • Physical, Financial and People indices are calculated by averaging the net change for all variables within each category. These indices are then averaged to calculate the overall Agri Insights Index.
  • The research was conducted among 1,600 Australian farmers during January and February 2017. Research was conducted by Kynetec.

For more details about Agri Insights, see the full report here.