Plant, machinery costs on rise

The West Australian

Plant and machinery costs are becoming increasingly difficult to contain, according to the AAAC panel which covered the major trends in each of the four WA agricultural regions at last week's conference.

Chaired by Bedbrook Johnston Williams consultant David Williams, who covered the Central region, the panel also consisted of Planfarm's Greg Kirk (covering the Northern region), Icon Agriculture's Mark Allington (Great Southern), and Farmanco's Laurence Carslake (South Coast).

Mr Allington said increasing expenditure was required on plant and machinery and the question was where this would stop as it was adding another level of risk to businesses.

Mr Williams said in his area the low interest rate environment had been assisting some businesses and their viability, which could be a risk going forward if interest rates rose in coming years.

In terms of land sales, Mr Kirk said there was still a lack of interest for a significant amount of land in the north/north-east area.

"However, good-quality cropping land in the medium rainfall zone of the Northern area is finding good demand. Quality land around Eradu, Arrino, West Midlands is selling well at around $2200-$2800/ha," he said.

"We have seen a lot more farmer-to-farmer land sales, which for a while had dropped off significantly. Meanwhile, we have seen less corporate interest during the past 12 months."

Mr Williams said, after a fairly depressed period, interest in the eastern part of the Wheatbelt was increasing, with mainly local farmer-to-farmer sales.

"Demand is still good in central and western parts and a lot of smaller parcels of land under around $2 million have generally been selling well," he said. "Land is tightly held in good rainfall areas. A lot of businesses are certainly looking for opportunities to expand, whether that is through buying and/or leasing."

For Great Southern land, Mr Allington said in the north-east of his region prices ranged from $2000ha, up to $3700 around Kojonup and even higher further south.

"That's for quality but there is not a lot of quality for sale at the moment," he said.

"For larger land holdings I'm not sure where the buyers are going to come from."

On the South Coast, Mr Carslake said land was very tightly held.

"If land is sold, it is probably sold to the neighbour before it comes on the market," he said.

"There is also very little land available for lease and this is also done by word of mouth.

He said, however, many clients were in a position to buy land if it became available.

Mr Kirk and Mr Allington both cited the extra year of high school as being among issues that were having a financial and emotional drain on farming families.

Mr Allington said one of the main issues in his area was lack of stock water, particularly in the northern part of his region. He said farmers were benefiting from the competition provided by Bunge.

Mr Carslake spoke of the impact of fires and winds on the South Coast.

He said there were about 30,000ha of farming land burnt and about 4500 head of livestock lost.

"Probably the uninsurable part of this equation is the amount of head loss on the ground," he said.

"One of my clients was harvesting barley before the wind and fire. It was going for four tonne before and two tonnes after.

"There are anywhere from 200,000 to 500,000 tonnes of grain on the ground. The GIWA estimate (for the region) was three-million tonnes prior to harvest. We were thinking with the way harvest was tracking that it was probably going to be closer to 3.2 million as yields were exceptional.

"This was going to create a problem with the Esperance Port only being able to take 2.6-million tonnes, but sadly this no longer will be an issue."

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