10/11/2008 - 09:31

WA agribusiness performing well

10/11/2008 - 09:31

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Western Australian agribusiness improved in the September quarter with further improvement expected in the December quarter.

Western Australian agribusiness improved in the September quarter with further improvement expected in the December quarter.

According to reports from the Westpac and Charles Sturt University (CSU) Agribusiness Index the economic performance rose strongly thanks to an unexpected boost to capital expenditure and better employemnt.

Good climatic conditions across a number of important regions in WA and strong consumer demand led to imporved business performance.

Western Australia's Economic Performance Index (EPI) lifted into positive territory to +0.08 in September up from an even 0.0 in June, producing the second best result across Australia.

The Index results were positive in four of the six statistical divisions: Central, Upper Great Southern, Lower Great Southern and Midlands. Central division recorded the best EPI at +0.22, helped in part by the good rains in the past 3 months.

In contrast, the South-Western division recorded a negative result with the EPI falling from +0.03 to -0.06. Rainfall in this region has been well below average.

 

Full announcement below:

 

Western Australian agribusinesses reporting strong conditions
Conditions for Western Australian agribusiness improved in the September quarter with further improvement expected in the December quarter reports the Westpac and Charles Sturt University (CSU) Agribusiness Index.
"The economic performance of the agribusiness sector in Western Australia rose strongly this quarter, helped by an unexpected boost to capital expenditure and better employment," Westpac's Chief Executive, Agribusiness Banking, Graham Jennings, said.
"Good climatic conditions in a number of regions and strong consumer demand has led to improved business performance around Western Australia, encouraging agribusinesses to lift their capital expenditure," he continued.
Western Australia's Economic Performance Index (EPI) lifted into positive territory to +0.08 in September up from an even 0.0 in June, producing the second best result across Australia. The EPI is based on the average of results for business performance, employment and investment indicators.
"The recent strong commodity prices have no doubt been a contributor to the improvement in business conditions and the capital investment in Western Australia," Mr Jennings said. "While the survey was taken before the full effects of the global credit squeeze were felt in Australia, the much lower A$ will help support prices paid to Western Australian producers."
Westpac and CSU Agribusiness Index survey co-ordinator and CEO of CSU's Western Research Institute, Tom Murphy, notes that the results improved in a number of areas this quarter.
"The primary producer and farming sector saw the most significant changes, increasing their capital expenditure, their employment and their stock levels. The upstream sector (providing inputs to agribusiness) increased their capital expenditure but cut back on their employment, while the downstream sector (agriculture-related transport, manufacturers, wholesalers and retailers) reduced their investment but increased their employment."
"While agribusinesses reported less than satisfactory profitability, the latest results show a significant improvement since June. Operating costs, which hit record levels in the June quarter, increased at a much slower pace in this period which helped to improve profit," Mr Murphy said.
All three sectors surveyed reported positive EPIs, with the EPI of producers at +0.06 (compared with -0.03 in June), the upstream sector at +0.13 and the downstream sector reporting an EPI of +0.14.
Mr Jennings said "The good news is that 82% of all Western Australian agribusinesses who sought finance in the past 12 months reported having no trouble obtaining it. This demonstrates the clear support and confidence we have in the future of Western Australian agribusiness,"
"After such a positive result in the September, it is good to see Western Australian agribusinesses expecting an improvement again in the December quarter, anticipating a lift in both investment and employment," Mr Jennings concluded.

 

State Summary

- The Index results were positive in four of the six statistical divisions, Central, Upper Great Southern, Lower Great Southern and Midlands. Central division recorded the best EPI at +0.22, up from -0.06 in the June quarter, and the highest business confidence of at 77%. This has been helped in part by the good rains in the past 3 months.
- In contrast, the South-Western division recorded a negative result with the EPI falling from +0.03 to -0.06. Rainfall in this region has been well below average.
- The Upper Great Southern and Lower Great Southern divisions both recorded positive EPIs of +0.13 and +0.02 respectively, although both were lower than the June quarter results of +0.18 and +0.09. Agribusinesses in the Upper Great Southern reported that their profitability went from better than satisfactory to satisfactory in the quarter.
- The Midlands and South-Eastern divisions both reported a significant turnaround in performance over the quarter, helped by the mostly above average rainfall during the July-September period. After reporting an EPI of -0.16 and only 25% confidence, agribusinesses in the South-Eastern division saw an improvement in their EPI to -0.02 and confidence of 75%.

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