RISING consumer confidence and good rainfall in the eastern states has boosted optimism among agri-businesses beyond the farm gate.
The June quarter Agribusiness Survey by the National Australia Bank, released today, shows that the indicator for post farm gate business conditions recorded a sharp increase in June to 9 points, compared with zero in the previous three months.“Respondents in the survey cited improved customer confidence and seasonality as key drivers of conditions, as the crop and livestock outlook has been improved by the widespread rainfall across the eastern states,” NAB’s general manager of agri-business, Khan Horne, said.
Employment growth was also up 7 points to 8 in the June quarter.
"These results significantly exceedexpectations of a decline and are in contrast to the June 2009 result when employment conditions were the lowest on record," Mr Horne said.
Export sales by agri-businesses also improved again in the June quarter with improving conditions in Asia and a relatively flat Australian dollar.
“Looking ahead, exporters expect agribusiness export sales to keep improving as they benefit from the pace of economic recovery in Asia, however the strengthening Australian dollar will remain a constraint on growth,” Mr Horne said.
For the next 12 months, survey respondents were more optimistic, with the indicator up 6 points to 23, while 37 per cent of respondents were expecting a moderate-to-strong improvement in conditions.
Forty-two per cent of respondents expected a moderate-to-strong increase in profitability, while 52 per cent were expecting a moderate-to-strong increase in output sales.
Reflecting the increased optimism in the sector, expectations of capital expenditure grew sharply in the quarter, the survey found.
“It appears that agri-businesses are more willing to invest in the current climate than in March, with the improving demand from trading partners and higher prices on offer for some commodities,” Mr Horne said.
Demand still remains a significant restraint on conditions, with 42 per cent of respondents citing customer demand as a key restraint on profitability, as well as concerns about a rising Australian dollar.
