October 25, 2013
Quarterly Agribusiness Survey – September 2013
Post‐farmgate agribusiness conditions maintained its momentum in the September quarter to remain in positive territory, with the profitability index recording its first positive reading in three years.
Post‐farmgate business conditions positive still
- Post‐farmgate agribusiness conditions maintained its momentum in the September quarter to remain in positive territory, with the profitability index recording its first positive reading in three years.
- The lack of demand has become a greater constraint to businesses’ output in the September quarter relative to the June quarter.
- Post‐farmgate agribusinesses expectations for business conditions for the next 12 months improved in the quarter, to be the highest in nearly two years.
Business conditions stayed resilient on favourable interest and exchange rates
Post‐farmgate business conditions maintained its positive momentum into the September quarter after a turnaround in the June quarter Aiding conditions in the quarter were a number of favourable economic and agricultural developments, such as an interest rate cut by the Reserve Bank of Australia (RBA) to 2.50% and the sustained improvements in weather conditions supporting a robust outlook for dairy and crop production, plus continued low input costs in the forms of low saleyard prices for livestock and constrained wage growth. As such, more survey respondents reported good conditions than poor in the quarter. Contributing to the positive reading of the business conditions index has been an increase in profitability component, which turned positive for the first time in three years.
Protein exports continued to grow at robust pace in the quarter, with beef exports continuing to chart new territory and reach another monthly record in July after May. In contrast to the continued downward trend in total business conditions into negative territory, post‐farmgate business conditions have shown a gentle upward trajectory despite high seasonal volatility. This suggests that post‐farmgate businesses might be insulated from some of the factors affecting businesses in general. Post‐farmgate agribusiness confidence has improved markedly over the quarter but is still mildly negative overall, possibly reflecting the still‐weak sales margins as costs rose in the quarter.
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