With clients spanning from Goondiwindi, QLD, through to Adelaide, SA, we’re seeing consistent themes emerge across the agribusiness sector. While there is plenty of noise around fuel prices, fertiliser and interest rates, the primary driver of decision-making on the farm right now is seasonal conditions.
Dry conditions continue across northern and southern NSW, which is influencing key operational decisions, particularly for livestock producers. We’re seeing breeders being sold down and stocking rates reduced heading into winter. While parts of southern NSW received some late summer/ early autumn rainfall, conditions have since tightened again.
In contrast, parts of Victoria and South Australia are seeing improved conditions, which is supporting a more stable outlook in those regions. As always, seasonality remains the single biggest influence on confidence and decision-making across the sector.
Are people still borrowing?
The short answer is yes; however, behaviour is becoming more considered.
We are still seeing farm transactions being executed in certain regions, but alongside this, there has been a noticeable increase in clients looking to review their existing debt structures. In a more dynamic lending environment, ensuring finance is structured correctly has become just as important as accessing new debt.
At the larger end of the market, some clients are taking a more proactive approach. We’re seeing increased demand for pre-approvals ahead of potential acquisitions in late 2026 and into 2027. These clients recognise both the opportunity in the market and the time required to arrange and structure larger, more complex debt facilities.
Are our clients fixing or hedging their interest rates?
With the cost to fix rates currently sitting at a premium (generally 0.75%–1.25% above variable), many clients are choosing to remain on variable rates.
While there is some concern around short-term rate movements, there is also a view that a slower economic environment may see rates ease over the longer term. When combined with the flexibility that variable structures provide, this is influencing the decisions we’re seeing.
That said, there is no one-size-fits-all approach. Clients with higher leverage are more likely to hedge a portion of their exposure to manage risk, particularly where cash flow certainty is critical.
Are the banks being more cautious?
We are starting to see a shift in lender behaviour, with some banks taking a more conservative approach to new lending.
This is typical in periods of economic uncertainty. Small policy adjustments, whether in servicing, security, or structure, can have a meaningful impact on borrowing capacity and deal execution. These changes are subtle but important, and they reinforce the value of being well-prepared when approaching the market.
Historically, agriculture has performed strongly through downturns, particularly during periods such as the GFC and COVID. However, that doesn’t remove the need for well-structured, professionally presented finance in the current environment.
Are we still seeing off-farm investment?
Yes, although activity has levelled out.
We are still seeing enquiries from clients looking to invest in off-farm assets, particularly commercial property. However, higher input costs and increased interest rates are impacting the investment equation.
As a result, many clients are prioritising capital allocation back into their core operations, ensuring their existing business is well-positioned before pursuing external investments.
Top Three Succession Tips
- Start early. Even simple guardrails can create clarity and direction.
- Ensure all key stakeholders are aligned from the outset.
- Don’t give up if progress is slow; these conversations take time.
Other interesting trends
- We’ve seen a noticeable increase in purchases of secondhand equipment, driven by the rising cost of new machinery. Many clients are choosing to redirect capital into existing operations rather than upgrading equipment.
- Investment in on-farm infrastructure, particularly within livestock operations, remains strong, as producers focus on efficiency and long-term productivity.
To navigate this environment, having clarity around your financial position and a plan for the next 12–24 months is critical. Whether it’s reviewing your current lending structure, planning for working capital, or preparing for future opportunities, taking a proactive approach will place your business in a stronger position. At SproutAg, we’re continuing to work closely with clients to ensure they are well-structured, well-informed, and ready to act when the right opportunities arise.
