Farmers set to dig deep

Commonwealth Bank has released its first Agri Insights survey results for 2017, which shows investment intentions among Australian farmers hitting a record high.

The current CommBank Agri Insights Index is 12.3, the highest it has ever been since the research started in 2014. It is up 2.8 points on this time last year and two points ahead of the previous high, recorded in May 2015.

The bi-annual research reveals farmers in the beef, wool and lamb sectors are more likely to loosen their purse strings on the back of strong farm gate prices and record harvests last year. Investment intentions in the dairy sector have also rebounded.

The survey also shows farmers are likely to spend their money on business expansion; hiring more staff and consultants; and buying more tech and equipment.

"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," says Commonwealth Bank’s Executive General Manager of Regional and Agribusiness Banking, Grant Cairns.

"The results are likely underpinned by continuing high prices for wool and lamb, plus ongoing strong demand for Australia’s high quality beef."

According to the Agri Insights survey, 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.

A record 18 per cent of wool producers say they’ll expand their enterprise, up 20 per cent on this time last year, while 18 per cent of lamb producers plan to boost spending on their business, which is double that of 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.

Cairns adds the strong investment intentions will not stop at the farm gate.

“We’re expecting to see a solid knock-on effect as farmers implement their investment plans," he says.

"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."

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. 18 per cent of farmers plan to increase off farm investment, up seven per cent on last year.

Commonwealth Bank's Agri Insights survey for the first half of 2017 was conducted among 1,600 Australian farmers during January and February, 2017.

The next report is scheduled for release in October, 2017.