Two thirds of WA farmers looking to buy new machinery in 2022 as commodity prices soar
Confidence in WA’s agricultural industry has bounced back with rising commodity prices and international market opportunities a silver lining amid skyrocketing input prices.
Optimism in the sector has spurred intentions to invest, according to latest Rabobank Rural Confidence Survey, with WA farmers having the strongest appetite to buy new property in the nation.
It follows two consecutive quarters of declining confidence driven by crippling labour shortages and diesel and fertiliser prices hitting record highs.
Rabobank regional manager for WA Steve Kelly said the state’s “excellent” start to 2022 had influenced farmers’ optimistic outlooks.
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“We have seen all the benefits of reasonable rainfall without the negative effects of frontal winds,” he said.
“This great start to the season has given grain growers the confidence to be able to take advantage of forward selling at historically high prices because the crops are up and away.”
It has sparked an appetite to invest, with 91 per cent planning to increase or maintain current levels of business investment in the next 12 months, up from 88 per cent last quarter.
Of those farmers planning to increase investment, 66 per cent had their eyes on new machinery, while 56 per cent were looking to upgrade infrastructure, including fences, yards, sheds and silos.
Almost half of those looking to increase investment were considering purchasing property to expand their farming operations, with WA’s farmers having the strongest appetite for property purchase in the nation.
Mr Kelly said supply chain issues and a tight property market would provide a challenge for those with investment on the brain.
“WA farmers continue to struggle to source new equipment and machinery as long delays continue to plague global supply chains,” he said.
“And those farmers looking to expand through the purchase of additional farming land face the challenge of a very tight rural property market, with limited supply.
“We are not expecting to see a significant change in Western Australia’s rural property availability until the spring selling season.”
While sentiment has taken a positive turn, the 15 per cent who expected business conditions to deteriorate cited high input prices as their overriding concern.
Mr Kelly said WA’s grains industry — which delivered a record 23Mt crop in 2021-22 — was “most bullish” when it came to income expectations, while mixed beef and sheep operations had the highest overall confidence for the economy.
The survey found 95 per cent of WA beef producers and 73 per cent of sheep producers were expecting agribusiness conditions to improve or remain the same in the next 12 months.
Mr Kelly said the beef market continued to be “super strong” and recent rain through the western Pilbara which delayed the start of mustering were still welcomed.
“Further south, for the pasture-based beef producers, the early rain and warm weather through autumn has set producers up well for the year ahead,” he said.
“For those sheep producers feeding sheep, though, the rising grain prices will be adding costs to their business and those producers will be keeping a close eye on their gross margins.”
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