“Grower confidence regarding production costs other than labour increased by 34 per cent on the previous quarter, indicating that growers are more optimistic about investing in their business, perhaps by purchasing machinery, materials and tools,” said AUSVEG CEO, Richard Mulcahy. “It is likely that this quarter’s increase in grower confidence regarding production inputs has occurred as a result of the 2015 Federal Budget, handed down in May, which outlined a number of initiatives that are favorable for members of the vegetable industry.”

“AUSVEG has previously stated that the Budget would inject confidence in the vegetable industry, especially for a number of smaller farms struggling with high production costs. These results suggest confidence levels have increased, which is a good sign for the industry.”

The Federal Budget allowed for tax deductions on water and fencing for all primary producers, as well as deductions on other asset expenditure for farms with an annual turnover of less than $2 million.

In addition to a favourable response to the Budget, sentiment towards low interest rates contributed to grower confidence more than other indicators such as exchange rates.

“These Budget initiatives should hopefully drive investment for the vegetable industry, which has been lagging for several years. They should also assist growers with cash flow, due to low interest rates making it cheaper to borrow money and invest in their operations,” Mulcahy said. “However, respondents were least confident with labour costs, which continue to affect growers in the vegetable industry.”

AUSVEG said that the information from the quarterly survey is used to track and communicate grower sentiment in relation to economic indicators over time, with respondents located all over Australia and varying in farm size.