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It has been a volatile year for grain farmers here in the Esperance region, and I think many growers will be looking forward to the end of harvest and hopefully some downtime over Christmas.
El Nino brought with it drier conditions this year, with reduced soil moisture and crop yields leading to reduced crop production volumes from the record highs of the 2022 harvest.
This year, the global economic slowdown became more pronounced due to high inflation, rising interest rates, and the global impacts of the Russia-Ukraine war, Europe’s energy crisis and China’s difficult economic recovery following COVID-19. On home soil, high input costs continued in 2023, and unseasonal weather brought with it a mediocre harvest for most.
In 2024 we’re expecting the trend of elevated farm input costs to continue. Multiple factors are driving the increase in production costs, namely: interest rates, the value of the $AUD, high energy prices and volatile global oil markets.
Although some project a recovery in demand and application rates of fertiliser next year, ultimately it comes down to growers procuring and securing fertiliser in the coming months. Overall, the profit margins for growers continue to remain tight in 2024, and labour costs are set to remain high.
Export markets will continue to be volatile, as a result of the Russia-Ukraine war however, the improvement of trade relations with China provides Australia with a unique opportunity due to our close proximity as we move into the new year.
There is certainly a lot of uncertainty out there for farming families, as concerns about farm profitability overshadow the day-to-day running of the farm. Moving into 2024, never before have I felt so strongly about the importance of working with your close-knit team of professionals to ensure the business is sustainable and profitable.
Here are my recommendations for 2024:
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The last three years have been extremely volatile and challenging for farmers, traders, and food processors. Successive waves of drought, disease, and war pushed agricultural commodity prices to record levels and left even the most experienced buyers in uncharted territory.
In the last few years, economic shocks, Covid-19, the Russia-Ukraine war, and other factors caused fertiliser prices to hit historic highs. This triggered farmers to change farm practices, with many trimming fertiliser application rates.
The Government has reinvigorated the 120% skills training and technology costs deduction for small and medium business.
An election ago, the 2022-23 Budget proposed a 120% tax deduction for expenditure by small and medium businesses on technology, or skills and training for their staff. This proposal has now been adopted by the current Government and details released in recent exposure draft by Treasury.
From 1 July 2022, the standard Superannuation Guarantee (SG) rate increased from 10% up to 10.5%. It’s part of the government’s commitment to increase the SG by half a percent each year until 2025, when the SG rate will reach 12%.
The Australian Federal Budget 2022 was delivered on 29 March 2022 by the Federal Treasurer Josh Frydenberg.
See our breakdown of the tax measures impacting small business in Australia.
Smith Shearer, in collaboration with Kitto and Kitto Lawyers, will be hosting the ECCI Business After Hours on 12 August 2021
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