09/12/2019 - 12:27

WA farm businesses remain strong

09/12/2019 - 12:27

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WA farm businesses remain strong
Rabobank says 98 per cent of WA farmers are reporting business viability despite the recent downturn.

The investment intentions of Western Australian farmers remain the highest in the country despite sentiment dropping to multi-year lows, according to Rabobank Australia’s latest rural confidence survey.

More than a quarter of WA farmers indicated they intend to increase their investment over the coming 12 months, with on-farm infrastructure spending intentions surging from 35 per cent to 75 per cent over the quarter.

Further, 98 per cent of  WA farmers surveyed (around 1,000) had reported business viability.

Rabobank regional manager for WA Stephen Kelly said intentions for reinvestment into farm business, such as for grain storage, machinery and water infrastructure, was a strong sign of farmers’ long-term confidence in the industry.

However, the slump in sentiment across all regions surveyed was in direct response to the season’s hard finish, he said.

“There’s no surprise farmer sentiment is down, with a warmer-than-usual spring, with many days above 30 degrees, coupled with below-average rainfall and a catastrophic frost in the south-east, proving the end of hopes for a reasonable crop,” Mr Kelly said.

Mr Kelly said the early winter rain in parts of the state – bringing the third wettest June on record – was a short-lived rebound, with the warm, dry spring lowering hopes of an above-average season.

He said WA’s production was expected to be around two thirds of last year.

Primary producers expecting conditions in the agricultural sector to worsen rose from 18 per cent to 35 per cent in the previous quarter, while the number of those optimistic about the outlook edged lower to 16 per cent (from 23 per cent).

WA’s beef sector endured the biggest hit in confidence, with 42 per cent of producers expecting conditions to deteriorate over the next year – a significant jump from 9 per cent last quarter.

Within the grains sector, 41 per cent of growers are negative towards the coming year (up from 22 per cent in the last survey) and only 19 per cent anticipate improvement.

29 per cent of growers expect similar conditions to last year’s strong result (down from 56 per cent in the previous quarter).

In a crop report from Grain Industry Association of Western Australia, the state produced a final grain yield of 17.9 million tonnes in 2018, compared with the most recent eight-year average of 15 million tonnes.

Rabobank said the high-yielding 2018 season continued to drive investment appetite in WA, despite the recent season finish.

Expansionary appetites, particularly towards on-farm infrastructure, were strongest among sheep graziers, with 31 per cent looking to increase investment in the coming 12 months (up from 14 per cent last quarter).

“The livestock sector is expected to remain positive price wise, so this planned rise in infrastructure spending may also suggest a slight shift towards an increase in livestock capacity in parts of the state,” Mr Kelly said.

“Many graziers have identified that they’re in a strong position to put money into the farm, which is a really positive indicator of long-term confidence.”

Mr Kelly believed financial health across all sectors remained strong on the back of last season.

“WA farmers enjoyed an enormous 2018,” he said.

“It was a record income year thanks to the second-highest level of grain production recorded combined with outstanding commodity prices.

“There was a large consolidation of debt and generally balance sheets are in a position to withstand the current season.”

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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