Home > Drought drags down Australian ag sector confidence, but farm viability remains strong

Drought drags down Australian ag sector confidence, but farm viability remains strong

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The severe drought across eastern Australia is heavily impacting sentiment in the nation’s ag sector, with the latest Rabobank Rural Confidence Survey finding the lowest farmer confidence levels recorded since the depths of the millennium drought in 2006.

With dry conditions preventing many farmers from capitalising on what remain high prices for most commodities, the overall Australian rural confidence index dropped significantly in the latest quarter, with more than half of those surveyed having a pessimistic view on the 12 months ahead.

However, the current challenges with drought were shown to have done little to dent the resilience of Australian farm businesses, with farmers reporting relatively strong business viability and at levels higher than throughout much of the past decade.

Completed last month, the latest Rural Confidence Survey found 56 per cent of the nation’s farmers now expect conditions in the agricultural economy to deteriorate in the coming 12 months, significantly up from 35 per cent with that expectation in the June quarter.

Those expecting an improvement in conditions declined to 13 per cent (from 18 per cent previously), while 25 per cent expect similar conditions to last year (down from 41 per cent).

Rabobank Australia CEO Peter Knoblanche said farmers across the country were demonstrating exceptional resilience and adaptability to manage their businesses through worsening drought conditions – particularly in Queensland and northern New South Wales which had been plagued by drought for several years.

“Parts of central and western Queensland have been in drought for seven years, with only sporadic short-term relief, while the whole of New South Wales is drought-declared and its reach is spreading into South Australia and Victoria,” he said.

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