Agribusiness confidence on the way up
Story Added : 22nd April 2011
Following challenging weather conditions and a lull after the Government's investment allowance grant expired, there has been a 10 per cent surge in asset finance this year, compared with the first quarter 2010.
NAB Agribusiness general manager Khan Horne said this was a reflection of a general improvement in farmers’ financial returns and optimism in the 2011 season.
“Despite rain damaging last year’s winter crop and ongoing drought in Western Australia, this year agribusinesses have already sought more than $158 million in asset finance for agricultural equipment from NAB Agribusiness alone,” he said.
“Improved production conditions, high commodity prices and the strong Australian dollar reducing input costs have put farmers in a strong position to upgrade machinery and equipment.
“We’re expecting even more capital expenditure activity in the lead up to the end of financial year."
Mr Horne said that avoiding a repeat of last year’s harvest, when many farmers were left with grain in the field, is also driving sales.
“Farmers were left waiting on contractors when they were held up on previous jobs due to weather conditions and we believe many farmers are looking at buying equipment to ensure more control over the timing of significant activities.
“It is important to realise that buying equipment outright is not the only option. Farmers should consider leasing and hire purchase as well as borrowing, and determine which is the most tax effective strategy for their business and cashflow.
“It’s also essential to explore the pros and cons of locking in interest rates prior to delivery, hedging currency movements and matching payment cycles against cashflow.