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Australian farmers to increase investment in future growth

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article image Australian farmers intend to increase investment in their farming operations in the coming year

Agribusiness banking specialist Commonwealth Bank reports that Australian farmers intend to increase investment in their farming operations in the coming year.

Agri Insights, a biannual research initiative 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, financial investment and people aspects.

According to the first Commonwealth Bank Agri Insights report, 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.

The research reveals 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.

Mr Wearne explains 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 rather than expanding into new landholdings and off-farm investments.

According to the research, many farmers plan to increase the scale of production in existing operations in the next 12 months, particularly in sectors such as horticulture (15 per cent), sugar cane (10 per cent), winter grains (10 per cent) and prime lamb (7 per cent). However, some cotton growers (23 per cent) and beef producers (9 per cent) indicated they will decrease production over the next year.

Mr Wearne attributes this to low irrigation reserves in some areas, which will drive a short-term contraction in cotton, while seasonal conditions for beef have been very difficult.

The research also indicates there will be a significant increase in the level of investment in farm inputs (41 per cent). While this is a reflection of the ongoing challenge of input cost management, it also indicates that as farmers scale up production, their input requirements will increase.

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. 

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