A year of patchy and disappointing seasonal conditions in many parts of Australia is having surprisingly little impact on farmers spending habits, as banks report surging investment in equipment, infrastructure and property.
Farm management deposits and other savings accounts continue to attract funds, too, although dry conditions are set to see more farmers tapping their FMD reserves if good rain does not fall soon.
Westpac has just recorded its biggest quarter for farm sector equipment finance lending since the global financial crisis in 2009.
“Equipment finance activity in the six months to March was up at least 30 per cent on the same period last year,” said agribusiness general manager Steve Hannan.
Grain growing and harvesting machinery was a notable part of that equipment spend, as was improved grain and fodder storage infrastructure on cropping and grazing holdings.
It comes down to a generally good level of confidence across the industry, despite the difficult and varied seasons
Steve Hannan, Westpac
“The trend is fairly much Australia-wide,” Mr Hannan said.
“I think it comes down to a generally good level of confidence across the industry, despite the difficult and varied cropping season in different regions last year and current dry conditions in much of eastern Australia.”
He said farmers were using improved cash flow from meat, wool, and horticulture markets to upgrade gear while they could, bolstering their farms resilience in preparation for potentially tougher times ahead.
Apart from spending on better infrastructure and plant, farmers stashed away a record $6 billion in FMDs at the end of last financial year.
About $5.1b was still in FMDs at the end of March.
Beef and horticulture producers made substantial increases in their savings in 2016-17, with beef-only producers holding about $800m in FMDs last June – up from about 680m a year earlier.
FMDs still growing
National Australia Banks agribusiness general manage, Khan Horne, tipped farm earnings trends were still strong enough to drive FMDs to another end of financial year high this June – probably above $7b.
National Australia Bank's agribusiness general manager, Khan Horne.
“Reserves are being drawn on in some drier areas, particularly Queensland, but nationally theres quite a lot going into savings accounts (not just FMDs), as well as strong spending on new capital initiatives,” he said.
He estimated NAB agribusiness customers currently held a sizeable $12b in various cash reserves.
Mr Horne also noted more farmers opting to make less conventional capital equipment purchases, such as stock yards and solar panels, using asset finance (lease to buy) arrangements over four or five years.
“Equipment finance isnt just about tractors, headers or utes – farmers even opt for multi-item leases which might include a quad bike and yards in one package.”
Westpacs Mr Hannan said despite generally poor cropping and declining grazing conditions since January, there had been sufficient resilience to drive surprisingly robust grain sector capital investment strategies and even underpin considerable dry sowing activity in parts of eastern Australia.
“We know farmers overall are fairly resilient operators, but as seen in Queensland and parts of NSW in the past few years, the ag industry is getting very good at hanging in there and making the most of things despite continuing weather challenges,” he said.
Weve also seen more farmers increasing repayments on borrowings.
Alexandra Gartmann, Rural Bank
The grain sectors strong spending has slightly surprised Rural Bank managing director, Alexandra Gartmann, but she, too, noted investment confidence was “solid” across the whole farm scene.
Rural Bank managing director, Alexandra Gartmann, talks farm lending trends with Elders' northern zone agri-finance manager, Mark Pain, St George, Queensland.
“Demand for finance in the West Australian grain belt is not as active, but overall its about the same as last year,” she said.
“Weve also seen more farmers increasing repayments on borrowings.”
She felt recent grain sector spending was partly explained by the big 2016-17 season, which prompted investment considerations which may have only come to fruition in the past six months or so.
Low interest rates, dollar
“Interest rates are also very low, which is an incentive producers want to take advantage of while they still can.”
Ms Gartmann said big earnings gains for wool growers in the past two years had prompted them to spend on new gear, sheds and other infrastructure.
Property transaction activity was also strong across all sectors, with more demand than available land for sale.
Also helping farmer confidence is the Australian dollars downward moves in the past month.
“Anywhere in the lower end of the US70 cent range is a good number,” said Mr Hannan.
While the lingering big dry made many in agribusiness uneasy about the sectors ability to properly cash in on bullish food commodity demand, Westpac expected a helpful dip in the Australian exchange rate to as low as US72c by years end.
“Our chief economist, Bill Evans, is talking about a range between US76c and US72c – thats a kind number for exporters like farmers to work with.”
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Australian softball squad leaves for Tokyo Olympics, among first athletes to travel to Japan for Games
The Aussie Spirit, the Australian women’s softball team, will be among the first athletes to arrive in Japan for the Tokyo Olympics after leaving Sydney on Monday.
Australia resists calls for tougher climate targets
Australia’s Prime Minister Scott Morrison has resisted pressure to set more ambitious carbon emission targets while other major nations vowed deeper reductions to tackle climate change.
Addressing a global climate summit, Mr Morrison said Australia was on a path to net zero emissions.
But he stopped short of setting a timeline, saying the country would get there “as soon as possible”.
It came as the US, Canada and Japan set new commitments for steeper cuts.
US President Joe Biden, who chaired the virtual summit, pledged to cut carbon emissions by 50-52% below 2005 levels by the year 2030. This new target essentially doubles the previous US promise.
By contrast, Australia will stick with its existing pledge of cutting carbon emissions by 26%-28% below 2005 levels, by 2030. That’s in line with the Paris climate agreement, though Mr Morrison said Australia was on a pathway to net zero emissions.
“Our goal is to get there as soon as we possibly can, through technology that enables and transforms our industries, not taxes that eliminate them and the jobs and livelihoods they support and create,” he told the summit.
“Future generations… will thank us not for what we have promised, but what we deliver.”
Australia is one of the world’s biggest carbon emitters on a per capita basis. Mr Morrison, who has faced sustained criticism over climate policy, said action to reduce greenhouse gas emissions would focus on technology.
The prime minister said Australia is deploying renewable energy 10 times faster than the global average per person, and has the highest uptake of rooftop solar panels in the world.
Mr Morrison added Australia would invest $20bn ($15.4bn; 11.1bn) “to achieve ambitious goals that will bring the cost of clean hydrogen, green steel, energy storage and carbon capture to commercial parity”.
“You can always be sure that the commitments Australia makes to reduce greenhouse gas emissions are bankable.”
Australia has seen growing international pressure to step up its efforts to cut emissions and tackle global warming. The country has warmed on average by 1.4 degrees C since national records began in 1910, according to its science and weather agencies. That’s led to an increase in the number of extreme heat events, as well as increased fire danger days.
Ahead of the summit, President Biden’s team urged countries that have been slow to embrace action on climate change to raise their ambition. While many nations heeded the call, big emitters China and India also made no new commitments.
“Scientists tell us that this is the decisive decade – this is the decade we must make decisions that will avoid the worst consequences of the climate crisis,” President Biden said at the summit’s opening address.
Referring to America’s new carbon-cutting pledge, President Biden added: “The signs are unmistakable, the science is undeniable, and the cost of inaction keeps mounting.”
Read from source: https://www.bbc.com/news/world-australia-56854558
Sydney seaplane crash: Exhaust fumes affected pilot, report confirms
The pilot of a seaplane that crashed into an Australian river, killing all on board, had been left confused and disorientated by leaking exhaust fumes, investigators have confirmed.
The Canadian pilot and five members of a British family died in the crash north of Sydney in December 2017.
All were found to have higher than normal levels of carbon monoxide in their blood, a final report has found.
It recommended the mandatory fitting of gas detectors in all such planes.
British businessman Richard Cousins, 58, died alongside his 48-year-old fiancée, magazine editor Emma Bowden, her 11-year-old daughter Heather and his sons, Edward, 23, and William, 25, and pilot Gareth Morgan, 44. Mr Cousins was the chief executive of catering giant Compass.
The family had been on a sightseeing flight in the de Havilland DHC-2 Beaver plane when it nose-dived into the Hawkesbury River at Jerusalem Bay, about 50km (30 miles) from the city centre.
The final report by the Australian Transport Safety Bureau (ATSB) confirmed the findings of an interim report published in 2020.
It said pre-existing cracks in the exhaust collector ring were believed to have released exhaust gas into the engine bay. Holes left by missing bolts in a firewall then allowed the fumes to enter the cabin.
“As a result, the pilot would have almost certainly experienced effects such as confusion, visual disturbance and disorientation,” the report said.
“Consequently, it was likely that this significantly degraded the pilot’s ability to safely operate the aircraft.”
The ATSB recommended the Civil Aviation Safety Authority consider mandating the fitting of carbon monoxide detectors in piston-engine aircraft that carry passengers.
It previously issued safety advisory notices to owners and operators of such aircraft that they install detectors “with an active warning” to pilots”. Operators and maintainers of planes were also advised to carry out detailed inspections of exhaust systems and firewalls.
Read from source: https://www.bbc.com/news/world-australia-55862128
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