Infrastructure boom: Producers investing millions back on farm

New sheds, livestock yardings, fences and silos are being built at a rate of knots across the country, as producers invest heavily on-farm.

A stellar season and strong commodity returns have spawned an on-farm infrastructure boom as farmers spend millions on farm upgrades.

The rush for new sheds, livestock yards, equipment and even animal genetics comes as financial institutions report lending for agricultural businesses at record highs.

And with predictions this week the sector will reach a record-shattering $73 billion production value this year, one industry expert predicts the spending boom will endure for at least another 18 months.

“Lots of people are making these investments … on-farm storage has gone ballistic,” Wimmera farmer and National Farmers’ Federation vice- president David Jochinke said.

“You can’t get a silo now until late June or July next year.

“Machinery is very similar. And also you need the workforce to put things up … even if you had the shed ready to go, or sheep yards to construct, they’re pushing out to about eight months before you can book anyone up, if you’re lucky.”

Commonwealth Bank Australia agriculture general manager Tim Harvey said on-farm investment was at record levels, coming off a strong past few years.

He said investment in headers was up 120 per cent on last financial year, with feeders up 72 per cent, tractors, 41 per cent and sprayers, 21 per cent.

It comes as the nation’s agricultural data agency ABARES yesterday revealed its latest prediction that the value of ag will surge to $73bn this year, up $8bn from previous forecasts, off the back of good seasonal conditions and strong commodity prices.

Mr Harvey said that revised prediction was reflective of the willingness of producers to pump money back on-farm.

“The reason farmers are investing is because of the optimism they see,” Mr Harvey said.

“They can see this happening in real time, the statistics of $73 billion is what the farmers know is happening on the ground.

“You’ve got to invest in your header today for your harvest tomorrow.”

Banquet Angus stud principal Stephen Branson said producers were willing to invest money in both genetics for livestock and infrastructure on-farm, which was reflected in the strength of recent bull sales in eastern Australia.

“The results out of NSW and Queensland are stunning,” Mr Branson said. “Many have made generational improvements to their properties that will not need to be done for another generation. That’s going to make it easier to be able to survive.

“A lot of farmers have bought new machinery, although there’s now not much left to buy. Many have bought a new truck, and that’s about a 15-year investment.”

Mr Jochinke, who farms at Murra Warra north of Horsham, said he had invested heavily in new grain and hay storage, and upgraded sheep yards to be all weather.

National Farmers Federation vice president David Jochinke in front of his new storage shed. Picture: Supplied.

“We were fortunate, it was more luck than management, we saw this was the direction we wanted to go in and we booked early,” Mr Jochinke said.

“There’s been about a 30 per cent rise in silo prices this year, let alone prices for steel going up about 60 per cent.”

Dwain Duxson, founder of Farm Tender, an online marketplace for agricultural machinery and equipment, said since the drought broke in February last year, demand for agricultural machinery, fencing equipment, sheds and livestock yards has gone through the roof.

“It’s just gone nuts,” Mr Duxson said.

“For example, a 36-foot tipper trailer in 2019 might have cost $45,000, and that’s for a used one. That same tipper trailer will sell for $60,000 now,

“Last year, we sold heaps of chaser bins. This year, we could be selling the same amount, but the supply isn’t there. Headers are the hardest thing to sell … last year we sold something like 70 headers, a lot of them were under $100,000. This year we’ve sold a similar amount, but many of them are about $500,000.

“I’ve never seen it better. I’ve been in agriculture all my working life. I’ve never seen it better. Do I think it’s going to bust? I’m reasonably confident we’re going to stay at this level for another 18 months.”

Rabobank southern Victoria manager Deborah Maskell-Davies said the bank’s recent rural confidence survey found a majority of farmers expected the strong seasonal conditions to continue, which would further encourage on-farm investment.

“The continuation of such favourable conditions is really allowing farmers to consolidate

their debt, purchase more land to expand their enterprises, and upgrade equipment and

infrastructure in their businesses,” she said.