Farmers enjoy the good times by stocking up on equipment
A generally positive outlook, solid commodity prices, prospects of record crops and government incentives are fuelling demand for equipment finance loans in the agriculture sector.
Indeed, the total value of these loans to NAB small business customers has surged 341 per cent over the past two years, as Australian farmers invested in critical agricultural equipment.
NAB’s data shows that equipment finance for agricultural businesses generally, taking in enterprises of all sizes, has increased 33 per cent from 30 September 2019 to 30 September 2021.
NAB executive regional and agribusiness, Julie Rynski, says this growth reflects good seasonal conditions creating good economic conditions across Australia and the continued uptake of government incentives such as the instant asset write-off scheme.
Equipment finance lending for sheds has jumped 80 per cent while lending for grain silos has increased 65 per cent over the last two years, she says.
NAB expects these trends to continue as farmer confidence remains high.
“The Australian Bureau of Agricultural and Resource Economics and Sciences is forecasting that Australian winter crop production will reach a new national record of 58.4 million tonnes, even with flooding causing some losses and downgrades across several production regions,” says Rynski.
“The area planted to summer crops in 2021/22 is forecast to increase by 36 per cent to reach 1.4 million hectares.”