Post‐farm gate business conditions surged

• Post‐farm gate agribusiness conditions lifted considerably in the December quarter to be moderately positive after three consecutive quarters of decline.
• Customer demand, availability of suitable labour and government policy and regulation to act as constraints.
• Medium‐term expectations improved, translating into more bullish capital expenditure plans.

Business conditions improved notably

After three consecutive quarters of recording negative results, the post‐farm gate agribusiness conditions index has finally “crossed the line” into positive territory. This suggests that, on balance, more survey respondents reported good conditions than poor. Driving the result were increases across the three key components that make up the index: employment, trading and profitability, with the sharpest turnaround in employment conditions.

The overall improvement in conditions is consistent with improved confidence in agribusiness markets on the heels of the continuing rally in global equity markets and more positive news from some of Australia’s major trading partners (the US and China in particular). Export volumes have risen solidly in some markets such as lamb and beef as dry conditions have forced herd reductions, and this is likely to have helped meat processors.

Despite the improvement in conditions, agribusiness confidence remains deep in negative territory following a minor improvement of 3 points to ‐13, possibly reflecting weak expectations about orders, high and rising crop prices and adverse sentiment in poultry and sheep meat.

For further analysis download the full report.

• Quarterly Agribusiness Survey – December 2012 (PDF 543 KB)