Farmers have seen an improvement in their financial wellbeing since the onset of COVID-19, according to new research from ANZ. The ANZ Roy Morgan Financial Wellbeing Indicator revealed that between March and August 2020, the financial wellbeing of farmers and farm managers increased by 4.3%, moving from a score of 60.2 to 62.8 out of 100. This contrasts with the national average, which saw a decline of 6.4%, dropping from 60.7 to 56.8.
The report highlighted that regional Australians experienced a smaller decline in their ability to meet financial commitments, with only a 0.7% decrease compared to an 8.6% drop for those living in capital cities.
Michael Whitehead, ANZ’s Head of Agri Insights, noted several reasons for the positive trend among farmers that are not directly related to COVID-19. "Now that the drought has broken, farmers are not only enjoying more reliable crops, they have more grass for cattle and sheep, which means feed costs are also way down," he said.
Whitehead added that high prices for agricultural commodities were driven by increased demand during COVID-19 and strong export demand: “At the same time, prices for a number of agri commodities are at record highs, driven by an increase in demand for cattle, sheep and dairy which can be partially attributed to panic buying during COVID-19."
Further insights from the ANZ Roy Morgan Financial Indicator show significant changes over five months leading up to August 2020:
- The percentage of farmers describing themselves as "Struggling" fell by more than seven points (from 12.8% to 5%), while those who felt they were "Doing OK" rose by twelve points (from 46.6% to 58.7%).
- Farmers increased their savings buffer from holding income equivalent to 8.2 months' worth in savings up to 9.3 months.
- More than six percentage points rise was observed among farmers who reduced spending (from 64.4% to 70.7%).
Farmers also showed more conservative attitudes towards money management; those preferring safe investments rose ten points (up from 71.9% to 81.6%), while those wanting comprehensive insurance coverage increased from 64.4% to 77.1%.
The ANZ Roy Morgan Financial Wellbeing Indicator is derived from the Roy Morgan Single Source survey involving around fifty thousand Australians annually assessing various factors contributing towards financial wellbeing.