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.

For further analysis download the full report.

• Quarterly Agribusiness Survey – September 2013 (PDF 622 KB)