Finance for regional businesses investing in trucks and trailers increased by 40 per cent over the past two years according to NAB while light commercial vans increased up 43 per cent.
Equipment finance loans to NAB small business customers have jumped 341 per cent in total value since 2020, as farmers around Australia stocked up on critical agricultural equipment.
The latest data from NAB, who calls itself Australia’s largest agribusiness bank, shows equipment finance for agricultural businesses generally, taking in enterprises of all sizes, has increased 33 per cent from 30 September 2019 to 30 September 2021.
NAB Executive Regional and Agribusiness, Julie Rynski, said the trends in equipment finance reflected good seasonal conditions creating good economic conditions across Australia and the ongoing uptake of government incentives including the instant asset write-off scheme.
“The generally positive outlook of the agriculture sector, buoyed by solid commodity prices and the prospect of record crops, has seen equipment finance lending for sheds increase 80 per cent, while lending for grain silos has increased 65 per cent over the last two years,” said Rynski.
Among the agribusinesses investing in equipment – and seeing an increase in investment across their supply chain – is Jim Riordan, Managing Director of Riordan Grain Services, Victoria.
“In recent years, we have seen a significant increase in on-farm investment by grain growers, especially in large silo and storage complexes,” he said.
“Our business model is about finding the best and most efficient ways for the supply chain to deliver quality grain to their global client base in particular. This year was our 25th year in operation and we loaded our one millionth tonne of export grain to bulk vessels. We have upgraded our transport fleet, prime movers, trailers and invested in our facilities to meet the demand,” said Riordan.
Demand for finance for tractors also continues and is up 69 per cent over the same period and NAB expects these trends will continue as farmer confidence remains high.
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) has forecast Australian winter crop production will reach a new national record of 58.4 million tonnes and that’s after factoring in the likelihood of flooding causing some losses and downgrades across several production regions.
The area planted to summer crops in 2021-22, according to Rynski, is forecast to increase by 36 per cent to reach 1.4 million hectares.
“Farmers are also being incentivised by the instant asset write-off scheme, which was expanded substantially in the 2020-2021 Federal Budget to $150,000, largely as a COVID-19 stimulus measure,” she said.
“In the 2021-2022 Federal Budget, the scheme was extended for one year to 30 June 2023, providing a longer window of opportunity for agribusinesses to make on-farm investments.”
Rynski said equipment finance for regional businesses across Australia had also increased.
“Loans for equipment finance to regional businesses have increased 31 per cent over the last two years,” she said.
“Finance for cars and light commercial vans is up 43 per cent, while finance for trucks and trailers is up 40 per cent,” Rynski confirmed.
Lending for construction equipment such as cranes and earth movers was also up, having increased 39 per cent.
“This is reflective of the ongoing migration of many capital city residents to regional Australia, which is great news for regional communities and their local economies,” said Rynski.
Overall regional net migration grew by a further +14 per cent over the quarter to September 2021, according to data released by the Regional Australia Institute.