NAB has a produced a comprehensive insight into the current state of play for Australia’s agriculture sector in its fourth annual Horizons Report released today.

The annual report brings together the latest data from NAB’s national network of specialist agri bankers and economists, along with surveys of farmers, manufacturers, logistics and shipping businesses, wholesalers and retailers, accountants and health professionals.

Rising beef, lamb and dairy prices have helped to drive NAB’s Rural Commodities Index 6.1pc higher in Aussie dollar terms in the 12 months to March 2025.

The report also notes that Australia is starting to see downward pressure on interest rates. The cash rate peaked at 4.35pc in November 2023, and NAB forecasts additional cash rate cuts to land at 3.1pc by the end of 2025.

On the currency outlook, NAB’s FX forecasts see scope for a multi-year bear market for the USD. “Because of this USD weakness we see a good chance that the AUD/USD will hit 0.70 by year end and move higher into 2026.

On the ground in Australia conditions vary from regions that have had great seasonal results, including particularly notable wheat yields, while others are managing severe drought conditions.

“Our bankers are hearing cash flow challenges are a concern for one in two of their regional and agribusiness customers,” the report states.

The price of new vehicles has also added to the cost squeeze, with new and used vehicles now 50pc above 2020 levels.

The past year has seen strong growth in Food and Beverage Manufacturing, which investment in the sector increasing by 11.9pc in the past 12 months. The report attributed this growth the maturation of regional businesses. “Already a world-leading ‘brand’ in the agricultural sector, it’s a natural development for regional businesses to tap into that demand for Australian food by doing more processing and manufacturing close to the source, capturing more of the final value.”

Property prices have also continued to rise, with regional valuation growth (5.6pc) outpacing city valuation growth (2.6pc) in the year to April 2025. Regional valuations reached a median of $673,373 as at end of April 2025, now 58.7pc higher than pre COVID prices.

There has also been a surge in deposits over the previous 12 months, with growth of 8.2pc in 2024.

ABARES is predicting a $91 billion turnover for 2025/26, including a $40 billion contribution from the livestock sector. If achieved it would be the third highest ever agricultural sector turnover for a single financial year.

Average broadacre cash income is projected to hit $213,000 in 2025/26, up from $124,000 in 2024/25.

While the farm sector has generally benefitted from higher prices over the past year, it has also faced higher costs for key inputs.

In particular fertiliser prices have moved higher since mid-2024, up around 19 percent year-on-year in March 2025. As most fertiliser is imported, the weaker Aussie dollar over this period has increased the cost pressure.

In contrast feed grain prices were a little lower in March 2025 than a year ago, down around 1.3pc. However, prices have been trending higher since October 2024.

The broader global outlook suggests a significant slowing in global growth in 2025 and 2026. What this means for Australia’s agriculture sector is still not clear – slow global growth could negatively impact demand, particularly for higher quality products, large trade barriers imposed by the United States and China on each other could present opportunities for Australian exporters.

The research shows that living costs t0pped the list of current key issues affecting the lives of regional Australians, followed by healthcare, housing availability and affordability, the stability and strength of the economic and taxes and other Government fees and charges.

With the agriculture sector continuing to grow and on track to become $100 billion industry by 2030, there is a continuing drive towards consolidation, according to the Report.

Large producers are getting larger but there’s a new generation on the way; expect to see a new crop of operators and businesses turning up in the near future, and a significant volume of wealth transfers, the report states.

Property

NAB Head of Valuations, Mark Browning, said in conjunction with a dollar conducive to foreign investment, expect to see a continuation of 2024’s trend of foreign corporates and institutional investors active in the agricultural property market.

“Investors from the United States made up the lion’s share of buyers in 2024, which saw more than 265,000 hectares change hands for a collective price tag of more than $1.2 billion,” Mr Browning said.

Some differentiation emerged over the year, with WA remaining affordable relative to the eastern states, despite a big uplift.

Queensland also had a good run, while some regions in the southeast of the country saw marginal declines.

In 2025, NAB expects strong activity and valuations in the $25m+ and $50m+ segments, given the continuing appeal of agricultural property to foreign investors and high net worth buyers, who may be less impacted by cost of capital factors or who may benefit from the exchange rate.

 Equipment finance

NAB’s regional and agribusiness customers showed continued appetite for investing in equipment, according to the Report.

By equipment type, mining, earthmoving and construction equipment was in hot demand, with 14.9% growth in values moved.

Cars and light commercial vehicles recorded a 12.7% increase.

Demand for agricultural equipment fell by 14.5% but NAB continues to see strength in the sector.

A greater variety of equipment is hitting the market, particularly now that production and logistics challenges are finally being worked through. The range of headers in Australia, for example, is more diverse than in much of Europe.

NAB is seeing an increase in demand for light aircraft. Although primarily seen as assets for aviation businesses, NAB recognises that light aircraft are simply tools of the trade for many regional and agricultural businesses.

NAB Executive for Regional and Agribusiness Khan Horne said strong market activity is expected in 2025, but the record-breaking run will likely end.

“Election years typically result in customers pausing purchases, however, NAB expects there will be a continued appetite for investment,” Mr Horne said.

“The end of the $150,000 Instant Asset Write-Off scheme took some heat out of the market, although surprisingly less than expected.”

Vehicle durability is evolving faster than purchasing habits. While it used to be common practice to turn over a light truck fleet every four years, it may now be possible to run them for seven or longer

When the New Vehicle Efficiency Standard comes into play in July, the range of vehicles available in Australia may begin to change. Manufacturers will be required to offset high-emission vehicle sales, including utes, with more emissions-friendly vehicles.

Over years, this may have some bearing on manufacturers’ decisions over which equipment to market in Australia.

Mr Horne said tariffs are a key concern of NAB customers when considering their purchases of vehicles and equipment. These tariffs will have a small but noticeable impact on prices and availability for buyers this year.

“For those looking to finance green equipment or vehicles, now is a good opportunity, with new technology on offer every month. As market and regulatory demand for action on sustainability ramps up, NAB is supporting customers’ sustainability strategies, backed by our partnership with the Clean Energy Finance Corporation (CEFC) offering interest rate discounts on loans for eligible green equipment and vehicles,” Mr Horne said.

 Source: NAB