The agribusiness sector has experienced a boost in economic performance, reporting a substantial improvement in the December 2008 quarter following two quarters of negative economic performance.
The results, reported in a Westpac/Charles Sturt University quarterly survey of the sector, showed increased levels of business performance and confidence. The report also calculates the economic performance index (EPI), which measures the average of results for business performance, employment and investment (capital expenditure) indicators. According to the study, the EPI rose to 0.03 from -0.02 in September 2008.
The report attributed the strong improvement in the agribusiness index mainly to “a return to positive business performance and increasing capital expenditure during the quarter”.
The report said agribusiness reported positive business performance, with Western Australia performing the strongest and only South Australia reporting negative performance.
“Nationally, seasonal issues followed by climatic conditions had the most significant impact on positive business performance,” the report said.
Business confidence also showed marginal improvement in the last quarter of 2008 due primarily to “increased producer confidence”.
“Agribusiness in Australia is showing remarkable resilience in the face of the global uncertainty and economic gloom,” said Westpac’s chief executive, agribusiness, Graham Jennings, in a media release.
Jennings also noted the rise in capital expenditure by agribusinesses, “reflecting Australian agribusinesses’ confidence in the future”.
Employment results in the sector also showed marginal improvement last quarter, with Western Australia and Victoria demonstrating the strongest growth in employment. Other states reported employment cuts.
Despite the boost, agribusinesses overall experienced “less than satisfactory profit levels”.
“Five of the six states reported less than satisfactory profitability, with New South Wales and South Australia reporting the worst levels of profitability,” the report stated. “In contrast, Western Australia reported satisfactory profitability during the quarter.”
The outlook for the March 2009 quarter is for the EPI to remain positive for at least four states.
“The resilience is evident looking forward to the March quarter, where agribusinesses are equally positive in their outlook,” said Jennings.
The report noted that 67 per cent of agribusinesses were confident about their performance over the coming 12 months.
The Agribusiness Index report is based on a nationwide survey of 1,200 businesses in the agribusiness sector.
