Australia’s Agricultural Landscape: Insights from NAB’s 2024 Horizons Report

The National Australia Bank (NAB) has released its fourth annual Horizons Report, offering a comprehensive overview of the current state of Australia’s agricultural sector.

This report consolidates findings from NAB’s network of agri bankers and economists, along with insights gathered from farmers, manufacturers, wholesalers, and other stakeholders.

Market Movements and Economic Forecasts

Thanks to increasing prices for beef, lamb, and dairy, NAB’s Rural Commodities Index has risen by 6.1% in Aussie dollar terms over the past 12 months, ending March 2025 on a positive note.

Moreover, the report highlights potential downward pressure on interest rates, forecasting a decline in the cash rate from its peak of 4.35% in November 2023 to an anticipated 3.1% by the end of 2025.

On the foreign exchange front, NAB indicates that a prolonged downturn for the USD could lead to an AUD/USD rate of 0.70 by year-end, with potential further appreciation into 2026.

Regional Challenges and Opportunities

Across Australia, agricultural conditions vary, with some regions experiencing excellent wheat yields while others suffer from severe drought. The report identifies cash flow challenges as a significant concern for half of regional agribusiness customers.

The rising cost of vehicles, both new and used, poses additional challenges, with prices now 50% higher than in 2020.

Investment in Food and Beverage Manufacturing has surged by 11.9%, reflecting the maturation of regional businesses engaging more in local processing and manufacturing to tap into domestic demand.

Property prices in regional areas continue to appreciate, outpacing city valuations. As of April 2025, regional property values have increased by 5.6%, reaching a median of $673,373, representing a 58.7% increase since before COVID-19.

Future Expectations

ABARES projects a turnover of $91 billion for 2025/26, with $40 billion attributed to the livestock sector, making it the third highest turnover ever recorded in Australia’s agricultural history.

While some sectors have benefitted from improved prices, rising costs of key inputs—especially fertilizers—pose challenges. Fertilizer prices rose approximately 19% year-on-year by March 2025 due to the weakened Australian dollar.

In contrast, feed grain prices saw a slight decline compared to last year, although they have been on an upward trend since October 2024.

Globally, the forecast suggests a slowdown in growth for 2025 and 2026, creating uncertainty for Australian agricultural exports, particularly amid trade tensions between the U.S. and China.

Living costs have been highlighted as a leading concern for regional Australians, closely followed by healthcare and housing issues, with many also worried about the evolving economic landscape and government charges.

As the agricultural sector aims to reach a $100 billion valuation by 2030, continued consolidation is expected, along with new operational entrants and significant wealth transfers.

Property Market Insights

NAB’s Head of Valuations, Mark Browning, emphasized the growing appeal of agricultural property, particularly to foreign investors. In 2024, U.S. investors accounted for a large portion of property sales, with significant transactions recorded.

While WA remains relatively affordable compared to eastern states, regions in Queensland showed promising activity, and southeast areas experienced minor downturns.

Equipment Financing Trends

Reflecting a strong interest in equipment investment, NAB’s report notes a 14.9% growth in mining and construction equipment valuations, while agricultural equipment demand has dropped by 14.5%.

There is also a notable increase in demand for light aircraft, shifting their perception from niche aviation assets to essential tools for many agribusinesses.

Looking ahead, NAB expects active market conditions in 2025, particularly in higher value property segments, despite potential disruptions from election-year purchasing pauses.

The introduction of new vehicle efficiency standards in July may also lead to shifts in available vehicle options in Australia.

As regulators push for sustainability, NAB’s partnership with the Clean Energy Finance Corporation (CEFC) aims to support the financing of green equipment, providing interest rate discounts for eligible purchases.

Source: NAB