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A ‘bumper’ winter season and good prices have fuelled investments in equipment finance, a major bank has revealed.
The National Australia Bank (NAB) has reported a 59 per cent increase, in its last financial year, for finance for large grain and general haulage trailers, followed by headers, which jumped 18 per cent.
It comes as many farms have seen good growing conditions after a deluge of natural disasters in the years prior, including drought and floods, alongside high commodity prices.
Given the brighter times, agribusinesses have been purchasing new equipment to keep pace with demand and continue to grow.
NAB executive regional and agribusiness, Khan Horne, said the bank’s data showed solid ongoing growth among regional and agribusiness customers.
“Many farmers across the country have had an excellent run of seasons, with some areas in Australia experiencing record-breaking 2022–23 winter crops,” Mr Horne said.
“Bumper crops paired with the federal government’s instant asset write-off scheme have helped fuel investment in vehicles and equipment.”
In particular, regional and agribusiness equipment finance lending lifted 3 per cent in financial year 2022, compared to the previous year, which was 47 per cent up on its pre-pandemic levels.
Mr Hornes said there is also a strong appetite for new and used equipment.
“We expect this to continue at least to June 30 when federal tax incentives are currently scheduled to cease,” Mr Hornes said.
But he added that some asset classes such as cars and tractors were down due to supply chain issues that continued throughout 2022.
Looking across the states, Western Australia saw the biggest increase in equipment financing, increasing 28 per cent in FY22 compared to FY21.
This was underpinned by a run of strong seasons and a 96 per cent increase in spending on agricultural implements.
In NSW, finance for trailers and headers both increased by 24 per cent, while in Queensland, finance for trailers increased 72 per cent and headers, 24 per cent.
In Victoria, finance for headers and trailers both increased 11 per cent.
In the Northern Territory, there was a 302 per cent increase in finance for tractors and 247 per cent increase for headers, though coming off a low base.
Agritech on the rise
As the asset finance sector continues to grow, farmers have also been investing in ways to track their sustainability and productivity.
For example, NAB recently partnered with agritech Geora to allow farmers to support their reporting covenant under NAB’s Agri Green Loan by utilising Geora’s blockchain technology that integrates the company’s existing sustainability providers.
The technology will allow a farming company, such as a cattle producer, to track its sustainability activities by storing information using blockchain to highlight its credentials to customers and in green lending.
In addition, the Commonwealth Bank (CBA) recently announced agribusinesses, such as SA Mushrooms, were heavily investing in agritech to improve process monitoring and drive efficiency on the farm.
[Related: NABs agri customers to track sustainability using blockchain]
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