Life in lockdown buoys farmers as home cooks embrace their inner ‘MasterChef’: CBA

Cities might be still social distancing to limit the spread of COVID-19, but life on the farm is busier than ever.

The COVID-19 pandemic has increased awareness of the importance of Australian made and grown produce. Picture: Tat Schmaal

Life in lockdown is fuelling a much-needed surge in agribusiness investment, with farmers taking advantage of a spike in demand for fresh produce as people shun restaurants to cook their own meals at home, the nation’s biggest bank says.

Commonwealth Bank says farmer confidence has risen significantly since the outbreak of the COVID-19 pandemic, which came amid drought-breaking rains along Australia’s east coast.

As more Australians cook their own meals, Grant Cairns, CBA’s executive general manager of regional and agribusiness, said demand for fresh produce had soared and combined with favourable weather conditions and record low interest rates had triggered an investment bonanza across farms.

“We are very fortunate that in many parts of the country the drought has eased. It could have very well been a different picture,” Mr Cairns said.

“I travelled to Wagga Wagga and Griffith last week and the contrast of being in Sydney and being out there in terms of people’s optimism and sense of outlook is very different.”

The optimism among farmers comes as NSW premier Gladys Berejiklian warns NSW is at a crossroads, with Sydney at risk of following Melbourne, which has experienced a fresh spike in COVID-19 infections.

But across regional areas, farmers have been working harder than ever. Mr Cairns said CBA loans for agricultural machinery had jumped 27 per cent year-on-year, while the past four months had seen the bank’s strongest volumes of new asset finance in the past two years.

“This signals a strong trajectory into the new financial year where our agribusiness customers appear to be increasingly confident making these capital purchases.”

Mr Cairns said the COVID-19 pandemic had increased awareness of the importance of Australian made and grown produce. He said farmers had been the beneficiaries of a 25 per cent surge in supermarket and grocery spending during May, June and the first week of July.

Cooking at home

“People haven’t been able to eat out like they have been, whether it means people are cooking at home and taking inspiration from MasterChef or whether it’s just the convenience — certainly the supermarkets have seen more demand for takeaway meals. I think a lot of agribusinesses are thinking how do we shift and meet these new customer demands.”

The surge in supermarket and grocery buying helped save a collapse in revenue from one of CBA’s agribusiness customers, Hussey & Co, a Victoria-based business that grows, packages and supplies gourmet baby salad leaf mixes for food service and retail sectors across Australia and internationally.

Hussey’s revenue was split 50:50 between food service and retail, so when the coronavirus hit, its sales dropped by 40 per cent almost immediately.

“Every part of our business is highly measured, so we could watch what was happening and implement changes,” owner Jeremy Haws said.

Mr Haws said one of those changes was reducing the size of its bulk 1.5kg boxes, which normally go to food services business, so it could sell to the consumer market directly via grocers or its own door-to-door delivery services.

“We’ve now recovered 50 per cent of the lost sales,” he said.

Ready for opportunities

“We’re ready now for when the next opportunity comes, and it will, 100 per cent. We’re looking to link with great brands, considering joint ventures and consolidations. It’s important for agribusiness to be in a position to take up opportunities to sustain the global food supply.”

While farmers are more confident, Mr Cairns said many had opted to keep their automatic loan deferrals the bank implemented at the start of the pandemic. On Sunday, CBA chief executive Matt Comyn warned of “difficult decisions” for banks and those on loan repayment pauses in the months ahead.

He said many borrowers would be urged to restart their loan payments, even though an extension was available for those that genuinely required a full 10 months without repayments.

Mr Cairns reiterated that message, saying if you could afford to repay your loan, you should.

“We wanted to support all Australian businesses so we took the decision to automatically defer all Australian businesses with loans of less than $5m. Customers and businesses did have the opportunity to opt out.

“The last stats I saw was 92 per cent had remained opted in, so 8 per cent had opted out. Many of those would have been Australian farmers.

“Every business is looked at on a case-by-case basis but it’s not always in the best interest to defer. If you can repay then you should look to repay.”