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Speaking to Broker Daily, National Australia Bank’s (NAB) executive for commercial broker and equipment finance sales, Chris Thomas, and executive for regional and agri, Khan Horne, said businesses were continuing to invest and execute their strategies, but working capital support had become increasingly important as they navigate fluctuating input costs and changing operating conditions.
While a range of environmental, global, and economic pressures have threatened the industry, the pair said the mood among NAB’s 25,000-strong agri and rural customer base remained broadly upbeat, with businesses continuing to look for opportunities to grow and innovate.
Indeed, the gross value of Australian agricultural production has grown by 45 per cent, from $69 billion in 2004 to $100 billion in 2024–25.
NAB’s lending to agriculture, forestry, and fishing has outpaced total business lending, growing by 65 per cent between May 2021 and May 2026, compared with 57 per cent over the same period.
The tyranny of distance
While regional Australia can get lumped together as a single entity, Horne said the scale of rural economies meant they could not be treated as a single market, with conditions varying significantly between locations, industries, and agricultural sectors.
“I talk about the tyranny of distance,” he said.
“We’ve got 120 locations in Australia. Atherton in the far north of Queensland doesn’t react as Armadale. You’ve got to be careful drawing trends because it’s such a big country.”
This year, however, a selection of factors have hit regional businesses more broadly, such as the war in the Middle East placing upward pressure on fuel and fertiliser costs, as well as three successive rate hikes from the Reserve Bank of Australia in 2026.
“Regional economies are resilient and they are diverse, but they’re not immune from geopolitical pressures,” Horne said.
“If you burn diesel, it’s been a pretty interesting six months. The first thing most regional and agri-businesses do in the morning is burn diesel. Then interest rates are turning higher than a lot of younger business people have seen in a while.
“I talk about the cost of running a business. Energy, inputs, everything is in flux.”
In addition, environmental pressures are hitting rural areas disproportionately and in a way that could expose the limits of traditional lending approaches.
Despite this pressure, NAB’s own data, alongside that of other banks, shows that agri lending, as well as broader business lending, remains on a trajectory of growth.
Thomas said the resilience of regional and agricultural businesses meant the challenges facing them were not necessarily translating into a retreat from investment or borrowing.
“Regional businesses are still executing on their strategies, they’re still pushing forward, and they’re borrowing where they need to,” he said.
“The one piece that would probably be more prominent today is probably working capital support. Just as these fluctuations in input costs continue, they’re looking to just get additional support at times with just being able to cope with the cash flow impacts of that.
“It’s certainly not undermining profitability because they’re also having very strong and robust conversations with their suppliers and their customers and are working through it.”
Agri investment changes gear
Technology is also changing where agricultural businesses are directing their investment, with larger, more automated and more efficient equipment increasingly becoming part of the lending mix.
Horne said the investment shift was not limited to emerging technologies such as AI and robotics, but also extended to larger machinery to improve productivity and address labour constraints.
“The sprayer is getting bigger. The tractors have got more horsepower, but the smarts, so it might not be just AI and robotics, it’s just bigger, more efficient gear,” Horne said.
Green equipment is also emerging as a more significant part of the finance mix, with Horne pointing to the range of machinery now being financed through NAB’s green offering.
“The amount of battery operated forklifts, for example, but all of a sudden you look at the leasing numbers, you go, wow. You’d expect it to be all cars, all trucks, a few buses, but you see scissors and you see crazy stuff,” Horne said.
Horne added that technology was not just enabling greater efficiency or capacity, but was changing what businesses could produce and the markets they could serve.
“Trends have emerged because of the changes in the socioeconomics of Australia. You have new markets, you have new products and you have people attracted to the industry because they want to work in a factory or a farm that is clean and safe,” Horne said.
Brokers need to get closer to the business
Both Horne and Thomas said that the changes in credit demand, combined with the broader pressures facing regional businesses, meant that brokers could fill a crucial role, provided they were sufficiently integrated within the local economies.
“We see the broker channel as a partnership, and we see the very best brokers are expert at partnership,” Thomas said.
“It means being able to walk the farm with the owners and the broker and talk about what the owner’s plans are to try and really get deep understanding of the business, what the challenges are, what the opportunities are, full transparency, walking shoulder-to-shoulder, banker, broker, working in service of the customer.”
Thomas said this was particularly important as businesses became more sophisticated and looked to invest in areas such as technology and new equipment.
“We’re not afraid of customers’ aspirations to invest in new equipment and invest in technology and take their businesses to different places, but it’s incumbent upon us as it is a great broker to really analyse and understand what all of that means,” Thomas said.
[Related: Regional sectors hit hardest by fuel shock, NAB CEO warns]
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