Regional Australians are generally happier, more confident in business and depositing more money in their bank accounts than the national average, says research by National Australia Bank.
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A landmark report into how regional and rural communities sit after two years of coronavirus pandemic, plus extraordinary population growth and business activity, has highlighted some distinctive high notes, as well as changes and challenges ahead.
NAB's inaugural Regional and Agribusiness Horizons report identified historic levels of deposit growth and borrowing activity for investment.
Agribusinesses banked 20.6 per cent more in NAB's transactional accounts in the year to March than a year earlier, while other regional businesses lifted their deposits by 15.2 per cent.
While business deposits generally grew Australia-wide in that period, national average growth at 14.5 per cent, was slower than the bush, despite farm management deposits flattening.
NAB also reported regional and agribusiness lending grew almost 15 per cent nationally in the year to March 2022 as new and existing businesses invested to support population growth and surging trading conditions.
Loans for services to agriculture grew almost 19 per cent.
Electricity and gas sector borrowings helped Queensland lead NAB's regional and agribusiness loan rush, with 18 per cent growth in 2021, followed by Victoria (14.6 per cent), South Australia (14.4 per cent), NSW 14.3 per cent) Western Australia (12.2 per cent) and Tasmania (6.6 per cent).
In the equipment finance market, the big business lender now has 32 per cent more funds on loan than before the pandemic two years ago.
Regional businesses represented 45 per cent of the bank's equipment finance market, despite being home to only 29 per cent of the nation's total business segment.
Although supply chain bottlenecks limited the availability of agricultural gear, loans for farm equipment still managed to stay in line with the overall regional equipment finance trend, growing 31 per cent.
We anticipate at least another year of heightened activity before the instant asset tax write-off ends
- Julie Rynski, National Australia B
Tractor and harvester sales were particularly notable in the past year, with the farm machinery industry reporting tractor volumes up 25 per cent on 2020 figures to 18,000 units and harvester sales topping 1000 for 2021 - the highest in a decade.
NAB's loans for truck, trailer and bus purchases grew 18 per cent and by 24 per cent for earthmoving and construction gear.
"We anticipate at least another year of heightened activity before the instant asset tax write-off ends in 2023," said NAB regional and agribusiness executive, Julie Rynski.
She said the research showed regional Australians had more confidence to invest in their businesses, were less stressed about job security, and felt they enjoyed a better sense of wellbeing in general than their metropolitan cousins.
"That's feeding through to business confidence," she said.
"Almost 30 per cent of Australia's business population is in regional Australia, yet the NAB data shows 39 per cent of business lending growth came from regional businesses in 2021."
Agriculture was evolving fast on the back of booming commodity markets, strong harvests and favourable investment incentives such as the instant asset tax write-off.
"Activity is elevated in every direction," Ms Rynski said.
"NAB is experiencing record levels of demand for credit, simultaneous to surging growth in deposits, and is witnessing both new and growing agribusinesses investing in land, equipment and livestock."
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The boom in migration of city dwellers to the bush was also driving the way many businesses were looking to the future.
The bank's research indicated, while current migration patterns were likely to be slower this year, they would not reverse.
Critical time
"It's a critical time for the regions to assess the growth they've experienced and set themselves up to take advantage of the next horizon," she said.
"Industries such as health, professional services, personal services, wholesaling, manufacturing and tourism are all experiencing periods of evolution in regional Australia."
The landscape for these sectors was almost unrecognisable from two or three years ago, and in another two or three years would have transitioned again.
The sudden upswing in population, had, however, taken many by surprise, and regions were experiencing growing pains.
"Infrastructure and services are lagging in some regions," she said.
"We're seeing this in our data and hearing it in our conversations with customers all around the country.
In the farm sector, the cost of inputs, including fuel and fertiliser, and the ability to mitigate or pass through these costs were crucial business issues for the year ahead.
Interest rate impact?
The bank was also monitoring the impact of rising interest rates and global inflation on input costs.
"There are concerns over global conflict and volatility, as well as the impact of changing weather patterns and the market and consumer demands for action on climate change," Ms Rynski said.
"However, for businesses that are positioned to embrace the challenge, there are significant growth opportunities."
Rapidly emerging technology and practices were bringing precision to carbon markets, with carbon methods for soil testing a particular focus.
"Well-planned and well-executed carbon projects are proving able to bring co-benefits, in particular increased productivity, along with bringing producers closer to consumers' expectations.
"NAB is supporting customers to explore and understand this developing space."
Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
