The Coronavirus pandemic has arrived in Australia at a time when farmer sentiment was on the rise, following some widespread rainfalls and a touch of green appearing across parts of the country.
The agribusiness sector is not however immune from the impact of Coronavirus. The limited access to foreign workers will be heavily felt during picking season as will the ripple effect of the cancellation of shows and other events across rural and regional centres.
The Government’s economic response to Coronavirus contained no measures specific to the agribusiness sector, though the farming sector will benefit along with the rest of the business community from the:
- cash flow boost to employers
- apprenticeship and trainee subsidy
- accelerated tax deduction for depreciating asset purchases
- credit access measures
Governments around the world have shown their commitment to the health and safety of the general population at a great economic cost. Food security is likely to have a similar place in Government priorities, meaning there is some optimism on the long-term outlook for Australian agriculture demand.
Cash flow injection and automation stimulus
This then brings us to some key observations of how we see the stimulus packages playing out in the agribusiness sector.
- Suppliers to the agribusiness sector and those farmers that have struggled with the cash drain of many years in drought will be willing recipients of the temporary cash boost over the coming two financial quarters.
- The increased thresholds for accelerated tax deductions will finally look appealing to farmers, as historically the cost of farming machinery has far exceeded the instant-asset write off thresholds.
Staff shortages are continuing to advance the case for automation in the agribusiness sector and the tax incentives now on offer, along with some higher farmer sentiment, may lead many farms to consider whether now is the time to invest further into automation. That would be welcome news to many suppliers to the agribusiness sector.
For more information
If you require further information regarding the implications on the agribusiness sector, please contact your local RSM office today.
To find out more about the current COVID-19 situation, please visit our coronavirus advisory centre.