Australia’s agricultural sector is capitalizing on improved seasonal conditions and government incentives, including the Instant Asset Write-off program, to invest in farm equipment, the latest NAB data reveals.
Loans to NAB clients for farm equipment finance increased 132% year-on-year from 2019 to 2020, as agribusiness companies recover from two years of difficult conditions including drought, fires, and related disruptions. COVID-19 and, more recently, flooding.
NAB Regional and Agri-Food Director Julie Rynski said trends in equipment finance were indicative of the strength of lending, resilience and overall confidence in the agricultural sector.
“Loans for tractors increased 146%, while loans for equipment such as sprayers and pickers increased 142%,” Ms. Rynski said.
“Farmers looking to increase their on-farm grain storage have also resulted in a 140% increase in grain elevator loans.
“After a record 2020-21 harvest and with subsoil moisture conditions looking good in much of the southeast and southwest of the country after the summer rains, the numbers reflect our customers’ intentions to capitalize on the turnaround of the seasons conditions. “
Ms Rynski said one of the most important areas of growth has been loans for irrigation plant and equipment, which increased by 217%.
“Investments in irrigation facilities and equipment are occurring across a range of production areas behind the La Niña event, further ensuring the supply of irrigation water,” he said. she declared.
“Farmers are also investing in energy efficiency technologies and practices to generate renewable energy, with loans for on-farm solar energy infrastructure increasing 142 percent.
“We expect investments in this category to continue to grow as our customers continue to focus on sustainable farming practices and also seek to save on energy costs. “
Ms Rynski said as year-end approaches agribusiness is making the most of the federal government’s instant asset write-off program to purchase new machinery and make other investments on the farm. .
“The Instant Asset Write-off program applies to qualifying assets used or installed by the end of June next year, so there is still a good window of opportunity for farmers to capitalize on the program.
“The assets that can be depreciated are the same as those deemed eligible under the existing depreciation rules. “
Ms Rynski said the bank did not expect the current demand for equipment finance loans to ease anytime soon.
“If we continue to have favorable seasonal conditions, we expect this level of investment in farm equipment to continue over the next 15 months.”