National Australia Bank (NAB), Media Release, 1 June 2023
Businesses in regional and rural Australia have prospered in the past year and are well placed to consolidate their gains in the year ahead, NAB’s second annual Horizons Report shows.
NAB Executive for Regional and Agribusiness, Khan Horne, said the report reflects a recovery from a bust-boom cycle of drought years followed by the Covid-19 pandemic.
“While nobody can deny the cost-of-living pressures across all parts of Australia, we are seeing a new baseline set for sustainable and resilient growth in regional Australia,” Mr Horne said.
“Our customer insights show strong business sentiment in rural and regional locations, reflecting optimism for the future and confidence to tackle emerging challenges.
“The call of the country has cemented itself in Australia, with internal migration from capital cities to the regions continuing at 30% above pre-pandemic rates.
“This has come with massive growth in demand for infrastructure and is reflected in an uptick in demand for credit and corresponding investment into infrastructure projects. The Community Services and Property Services segments have seen a 24.8% and 10.2% increase in credit demand respectively.”
The NAB Regional and Agribusiness Horizons Report shows in 2022:
- Demand for credit was up 6.7%. Australian regional businesses are focused on long-term growth and short-term opportunities and are investing at a higher rate than the rest of the economy.
- Commodity prices may have come off their superheated tops, but a good season in 2022 and another projected for 2023 saw agricultural lending up 14.6% for the 12 months from March 2022 to March 2023, compared to 10.7% for all businesses.
- Demand for equipment finance was up 47% on pre-pandemic levels, reflecting strong customer appetite for new and used equipment.
- Deposit volumes for regional businesses grew by 3% and agricultural deposit volumes grew by 8.1% – Farm Management Deposits (FMDs) were up 35%.
- Farmland values are set to stabilise in the year ahead after sustained historic levels of growth. Transactions in the $15 million to $25 million range are likely to be most common, with large-scale family owner-operators again the most active buyers.
The same research also shows labour shortages are still top of mind for regional and agribusiness customers.
“Our bankers report that availability of labour is the top concern for regional employers, with wage costs not far behind. Despite the growth in regional populations, the skilled and unskilled farm labour markets remain tight,” Mr Horne said.
NAB’s Regional and Agribusiness Horizons Report released on 1 June 2023 provides a detailed exploration of business conditions in regional and rural Australia and what’s driving them.