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Alongside the drop in crop production, so too has NAB reported less demand for agricultural-related loans.
As reported by the Australian Bureau of Statistics (ABS), 50 million tonnes of winter broadacre crops were sold in 2023–24, 18.6 million tonnes less than 2022–23. These crops had a value of $18.7 billion, $7.7 billion less than the previous year.
This was made up of 28 million tonnes of wheat sold, down 13.2 million tonnes year on year, wheat decreased by $4.7 billion to $8.8 billion, and 29.9 million tonnes of sugar cane sold, 8.4 per cent less than the year prior.
Rob Walter, ABS head of agriculture statistics attributed the drops to drier conditions.
“After having one of the best seasons on record in 2022-23, the drier conditions across large parts of Australia lead to 27 per cent less winter broadacre crop production being sold nationally and generally lower yields. This drop in production sold drove a 29 per cent drop in value to $18.7 billion,” said Walter.
NAB reported a drop in the purchasing of agricultural equipment through the year, coinciding with poorer conditions.
Despite this, NAB’s head of equipment finance sales, Chris Fileman, said loans increased towards the end of 2024.
“Industry Data (AFIA) indicates that less agricultural/mining/earthmoving equipment was purchased in the second half of 2024 than the first. However, at NAB we financed more of these assets in the second half and grew our market share for these asset classes in the back half of 2024,” said Fileman.
“Demand for this type of equipment has always been steady with NAB having an appetite for these asset classes, however it can be cyclical and crop production and weather conditions can play a big part in demand for these assets from year to year. While demand fell in 2024, we expected this to be the case with many farmers taking advantage of the instant asset write-off in 2023 which bought purchases forward.”
The instant asset write-off refers to an initiative from the Australian Taxation Office (ATO), which allows eligible businesses to claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready for use.
This was a big help for the industry, said Fileman. Persistent labour shortages affecting farmers have also made things tough, but the resilient industry pushes on.
Fileman said: “It’s well documented in some regional areas that labour shortages exist. However, farmers and the agri industry have shown that they are one of the most innovative industries, embracing new, automatic technology to create efficiencies to ensure they continue to meet the demand of the market.”
NAB has continued to embrace its agribusiness division with a recent partnership with the Clean Energy Finance Corporation (CEFC), offering 0.5–1.15 per cent interest rate discount on lending for green equipment finance and agribusiness emissions reduction. This is part of a $300 million discount on green loans supported by the CEFC.
“With hundreds of bankers and product specialists based in these areas, we’re committed to expanding our presence and providing ongoing support to our agri sector customers, ensuring they have access to the right products and services at the local level,” said Fileman.
For brokers servicing agribusiness loans, Western Australia is a hotspot, with the ABS recognising the Esperance region as having the largest wheat and canola production in Australia. Over 1 million tonnes of wheat and 464,000 tonnes of canola grew there in 2023–24.
Meanwhile, the Kulin region in Western Australia had the highest total grain production in Australia with over 2.3 million tonnes of barley production, the most in Australia.
