Younger farm­ers lead on-farm in­vest­ment trend

Australian Farmers & Dealers Journal - - NEWS -

NEW re­search from Com­mon­wealth Bank shows Aus­tralian farm­ers pre­fer a proac­tive ap­proach to farm prof­itabil­ity that in­cludes fo­cus­ing on prod­uct qual­ity over cost man­age­ment and ac­tively ad­just­ing farm man­age­ment strat­egy to meet the needs of the mar­ket. The re­search is part of Comm­Bank's bi-an­nual ‘Agri In­sights' sur­vey, which also shows farm­ers across al­most ev­ery sec­tor are likely to in­crease in­vest­ment in their op­er­a­tions this year. The in­dex now sits at 10.3 points, the high­est re­sult since it was launched a year ago. Farm­ers in the 35 to 44 year age bracket are the most driven to try new in­no­va­tions, with al­most half of that group re­port­ing they are usu­ally among the first in their farm­ing re­gion to try out new ideas. Women are slightly more likely than men to choose more in­no­va­tive prac­tices. The sur­vey re­veals that most farm­ers use a com­bi­na­tion of sales ap­proaches to get the best re­turn for their prod­uct, with a smaller num­ber pre­fer­ring to stay with a tried and true method that has served them well in the past. CBA's ex­ec­u­tive gen­eral man­ager re­gional and agribusi­ness bank­ing, Ge­off Wearne, says the re­sults in­di­cate a good bal­ance be­tween proac­tive man­age­ment and risk mit­i­ga­tion. “In any in­dus­try, you need a mix of early adopters and those who take a more con­ser­va­tive man­age­ment ap­proach,” Mr Wearne said. “In­no­va­tion is es­sen­tial to keep­ing the in­dus­try glob­ally com­pet­i­tive and sus­tain­able, but a mea­sured ap­proach helps man­age risk. What Agri In­sights has re­vealed is a healthy mix of both in Aus­tralian agribusi­ness. “Farm­ers are fo­cused on im­prov­ing pro­duc­tion out­comes, largely through pro­grams of con­tin­ual crop and live­stock im­prove­ment. We're also see­ing a trend to­wards more flex­i­ble prod­uct mar­ket­ing, al­though the de­gree varies by sec­tor.” Ac­cord­ing to the sur­vey, most sec­tors of the in­dus­try will grow pro­duc­tion over the com­ing year. Dairy and prime lamb pro­duc­ers are the most likely to say they will ex­pand op­er­a­tions, and beef in­ten­tions have re­cov­ered strongly, with six per cent of pro­duc­ers say­ing they will ex­pand pro­duc­tion, a 15pc im­prove­ment over this time last year. Cot­ton is the only sec­tor likely to ex­pe­ri­ence re­duced pro­duc­tion, with 10pc of grow­ers say­ing they will de­crease their scale of op­er­a­tion this year. This still rep­re­sents a strong im­prove­ment over the Oc­to­ber 2014 re­sults, when 51pc of grow­ers said they would cut back. “The sound re­sults in the lat­est sur­vey re­flect im­proved sea­sonal con­di­tions, stronger com­mod­ity prices in global mar­kets and a weaker Aus­tralian dol­lar, all of which are driv­ing pos­i­tive agribusi­ness in­ten­tions for the next 12 months,” Mr Wearne said. “Dairy in­ten­tions are buoyed by a steep in­crease in the world dairy price in­dex since the start of the year, cou­pled with a bullish out­look for 2015 thanks to solid de­mand from Asian mar­kets and strong in­vest­ment from China. Like­wise, strong global de­mand is driv­ing live­stock in­ten­tions, with ex­pected tighter supply and higher prices also con­tribut­ing to in­ten­tions around flock and herd re­build­ing.” Key find­ings:

• 69pc per cent of sur­veyed farm­ers say they use a com­bi­na­tion of meth­ods to sell prod­uct to the right mar­ket at the right time, while 31pc sell their produce the same way each year, tak­ing the price on of­fer

• Women are some­what more will­ing to lead the way in try­ing new prod­ucts or ap­proaches (42pc of women ver­sus 38pc of men) and they are also more likely than men to be pre­pared to ad­just their prac­tices in re­sponse to the mar­ket (64pc ver­sus 60pc)

• 69pc say max­imis­ing pro­duc­tion and qual­ity is most im­por­tant to prof­itabil­ity while 31pc say man­ag­ing costs is most im­por­tant

• 20pc of farm­ers are look­ing to in­crease in­vest­ment in farm tech­nol­ogy and in­no­va­tion, 31pc in­tend to in­crease in­vest­ment in fixed in­fras­truc­ture and 16pc in­tend to in­crease in­vest­ment in plant and equip­ment

Agri In­sights sur­veyed 1600 farm­ers about 14 as­pects of farm op­er­a­tion, cov­er­ing phys­i­cal as­pects (in­clud­ing pro­duc­tion scale and land size), fi­nan­cial in­vest­ment in­ten­tions and peo­ple as­pects (re­gard­ing peo­ple work­ing in and for the farm busi­ness). Agri In­sights asks re­spon­dents if they in­tend to in­crease, de­crease or main­tain their level of in­vest­ment across a range of mea­sures in the com­ing 12 months. A ‘net change' mea­sure­ment is used to eval­u­ate the likely over­all im­pact of farm­ers' in­ten­tions.

Com­mon­wealth Bank ex­ec­u­tive man­ager re­gional and agribusi­ness bank­ing, Ge­off Wearne.

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