Dairy investment intentions rebound

20 May, 2017 04:00 AM
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Rebekah Tyler from Dornauf Dairies in Tasmania.
12 per cent of dairyfarmers say they’ll expand their enterprise...
Rebekah Tyler from Dornauf Dairies in Tasmania.

Investment intentions in the dairy sector have rebounded, according to the new research from the Commonwealth Bank.

Investment intentions among Australian farmers across all sectors are at record levels, according to the 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.

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 said sustained high prices in several commodity sectors were 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," he said.

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

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.

"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.

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," he said.

"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.

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