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Impressive Farm Cash Flow Points to the Worry of Input Costs

Impressive Farm Cash Flow Points to the Worry of Input Costs


Impressive Farm Cash Flow Points to the Worry of Input Costs

Article by: Hari Yellina

Farmers are banking unusually large sums in the aftermath of a record national grain harvest, and experts predict that 2022 will be another bountiful year for commodities prices and agricultural sector confidence. According to agribusiness lenders, the mood and cash returns in the agricultural and livestock industries are continuing close, if not beyond, historic highs. Despite concerns about rising fuel, chemical, and fertiliser prices, as well as freight network bottlenecks, primary producers continue to invest aggressively, anticipating a third year of high commodity prices and generally favourable seasonal conditions. According to Rabobank’s latest quarterly sentiment monitor, just over half of Australian farmers expect last year’s very favourable business circumstances to continue.

Another 31% believe things will be even better in 2022. National Australia Bank, Australia’s largest agribusiness lender, has reported the highest level of grain customer business cash inflows in Victoria, NSW, South Australia, and Western Australia since it began gathering its monthly Economics Data Insights in 2015. Meanwhile, because the strong demand for red meat, healthy pasture conditions, post-drought herd rebuilding and business cash profits from beef cattle clients were high in all states, it kept the Eastern Young Cattle Indicator around record levels above 1100 cents a kilogramme. Farmers on both sides of the Tasman are noticeably downbeat as local and global economic pressures bite. They are, in actuality, completely dissatisfied.

New Zealand not too Happy

According to the NZ Federated Farmers’ latest six-month survey, soaring farm input prices, labour shortages and expenses, as well as New Zealand government rules on emissions, water, and compliance costs, have lowered kiwi farm confidence to its lowest position in 13 years. Despite the fact that meat and dairy returns are now increasing, nearly two-thirds of producers (64%) expect the overall economy will suffer this year. Farm investment attitude in New Zealand was also dropping, although Rabobank said that 40% of Australian farmers wanted to boost their business investment in 2022. Farm infrastructure came out on top in Rabo’s study of roughly 1000 producers, followed by new machinery and equipment and a growing commitment to new technology. Farmers in Western Australia were the most eager to purchase additional land. Julie Rynski, NAB’s agriculture and regional executive, said grain growers in WA were benefiting from the state’s record 23.1 million tonne winter crop.