On the same day as the Reserve Bank delivered the bad news of another rate rise, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) delivered more positive news for the agriculture and aquaculture sector. News which may provide reasons for operators to consider investing in new equipment with cost-effective machinery finance.
It may sound incongruous to suggest asset investments with finance in the same conversation as interest rate increases. But as Dr Jared Greenville, Executive Director of ABARES noted, investments in productivity is seen as one of the reasons for the good results in the agricultural sector.
In addition, despite the RBA rate rises, cheaper interest rate asset finance can be achievable. Jade Equipment Finance assists agriculture and aquaculture operators with cost-effective machinery finance for asset investments to achieve greater productivity.
The ABARES is the science and economics research division of the Department of Agriculture, Fisheries and Forestry. The Bureau’s latest snapshot shows the agriculture industry continuing to grow strongly. The projection is for broadacre farm income to decrease in 2022/23 but it remains well above the average over 10 years. Production in the aquaculture and fisheries sector is forecast to increase 8% in 2022/23.
To assist operators plan asset investments in machinery, we provide a summary of the latest ABARES reports and information on securing cost-effective machinery finance.
Agriculture Sector Snapshot
The ABARES released the latest agricultural sector snapshot on March 7. The headline ‘strength behind the numbers’ provides positive indications for the industry. The snapshot shows the sector is performing strongly and growing in the key areas of incomes, risk management and exports.
Record levels of export values and industry production have been forecast for 2022/23. Cash incomes for dairy and broadacre farm remain significantly above the historic benchmarks.
Dr Greenville said that the statistics tell only a part of the story. Investments in productivity, past reforms, and the changes to what is produced and exported contributed to achieving the good results. According to Dr Greenville, these are the factors that have the industry in a strong position for taking advantage of the favourable climate and high prices for commodities.
The ABARES anticipates operators facing challenges in adapting to the negative impacts on profits from changing climate despite the beneficial effects of the recent climatic conditions. Sustainability is noted as increasing in importance as an attribute for both investors and for consumers. Being included in the criteria for investments and in trade policy in many countries.
Dr Greenville said that the Australian agricultural sector is already very sustainable on many of the criteria in comparison to other global competitors. But this advantage needs to be maintained. A return to normal patterns of rainfall are expected following the recent years of high levels.
The rebuilding of herds, strong moisture levels in the soil and full water storage will provide a safeguard, despite conditions deteriorating. Dr Greenville said this buffer will give the sector a further year in the high country.
For more information, you can visit the website of the ABARES to access valuable insights and research reports..
Easing Farm Incomes
In another report, the ABARES projects a 7% decrease in broadacre farm cash incomes this financial year but remaining 46% over the average for 10 years. Peter Gooday, ABARES Head of Farm Production, said the decrease was expected in all states with the exception of WA and SA.
The recent ABARES report on aquaculture forecasts a promising 8% rise in the gross production value for fisheries and aquaculture in this fiscal year, largely driven by the aquaculture sector.
Dr Greenville highlights that the growth forecast for aquaculture stands at an impressive 11% increase in production value. This growth is primarily driven by the elevated values of tuna, abalone, and salmonids. The production across both aquaculture and fisheries is projected to remain stable in 2023/24. However, the real total value is predicted to decrease by 0.7% by 2027/28. Despite this, exports in 2023/24 are expected to experience a 7% increase.
Given this context, the present time might be opportune for operators to invest in new machinery to spur further productivity improvements. The Reserve Bank of Australia has indicated the likelihood of more rate increases in the future. Additionally, the appealing tax benefits of temporary full expensing are due to end on 30 June.
Sourcing Cost-effective Machinery Finance
We support operators in sourcing more cost-effective interest rates across our extensive portfolio of farm and agricultural loans. Operators can choose the finance product that best aligns with their business setup. Our consultants then take up the task of sourcing and negotiating the most affordable and suitable solution.
Our finance products range includes Leasing, Commercial Hire Purchase, Chattel Mortgage, and Rent to Own. Chattel Mortgage is often considered the most suitable for temporary full expensing. Engage in a no-obligation discussion with one of our consultants to explore how we might assist in further enhancing the productivity and profitability of your operation with low-interest rate asset finance.
Contact Jade Equipment Finance on 1300 000 003 for cost-effective machinery finance.
DISCLAIMER: IF MISINTERPRETATIONS, MISREPRESENTATION OR ERRORS EXIST IN THIS ARTICLE, NO LIABILITY IS ACCEPTED. THE INFORMATION IS PROVIDED ONLY FOR GENERAL PURPOSES AND NOT IN ANY MANNER INTENDED AS THE ONLY SOURCE FOR MAKING FINANCIAL DECISIONS. THOSE THAT CONSIDER THEY REQUIRE ADDITIONAL GUIDANCE OR ADVICE SHOULD REFER TO AN INDEPENDENT FINANCIAL ADVISOR.