Home > Australian farmer confidence mixed as season dictates sentiment

Australian farmer confidence mixed as season dictates sentiment

Supplier News
article image Peter Knoblanche

The latest Rabobank Rural Confidence Survey reveals Australian farmer confidence has eased for the second consecutive quarter on the back of mixed seasonal conditions.

Record farmgate prices for Victorian dairy farmers combined with a bumper crop in the major grain-growing states of Western Australia and South Australia as well as an above-average harvest in Victoria and parts of southern New South Wales have all contributed to a positive sentiment. 

However, farmers in Queensland and northern New South Wales continued to tackle prolonged drought conditions with cattle producers have a particularly tough time. 

Net overall rural confidence eased to near neutral levels this quarter with close to one third of farmers (29 per cent) reporting optimism about the state of the rural economy and close to one third reporting pessimism (27 per cent). 

According to Rabobank group executive for Country Banking Australia Peter Knoblanche, rural confidence continued to be largely dictated by seasonal conditions as in the previous quarter, with the dry having intensified across large parts of Queensland and northern New South Wales in the early part of the year. 

In contrast, timely rains saw Western Australia and South Australia harvest one of their best crops on record, while strong domestic demand and a weaker Australian dollar underpinned robust grain prices. 

The impact of seasonal conditions on farmer sentiment was more pronounced this quarter with 64 per cent of those expecting conditions to worsen citing the season as cause of their pessimism (up from 40 per cent with that concern previously). Concerns were also expressed about input costs (29 per cent) and commodity price outlook (25 per cent). 

Farmers confident about the year ahead noted seasonal conditions (43 per cent) and commodity prices (34 per cent) as the primary reasons for their optimism – mainly driven by dairy and grain producers. 

While their outlook for the overall rural economy had eased, Australian farmers were generally more bullish about the expectations of their own farm businesses. More than one-third (34 per cent) still held positive views on the performance of their business over the next 12 months, while 18 per cent expected a deterioration in business performance (up from 14 per cent previously).

Farmers reported robust income expectations with 73 per cent of farmers expecting the same or better incomes compared to last year. On the back of record dairy prices recently, dairy farmers held the strongest income outlook with 70 per cent anticipating their incomes to be higher than in 2013. 

States

The survey saw mixed results across the states this quarter with some improvement in net sentiment recorded among farmers in South Australia and New South Wales compared to the previous quarter. 

Confidence in South Australia was underpinned by strong sentiment among grain growers, who recorded a record harvest as well as sheep producers, who reported improved market dynamics. 

NSW farmer confidence meanwhile is mixed on the back of recent rains alleviating the dry conditions across much of southern and central NSW. 

For the sixth consecutive survey, farmers in Victoria remained the most optimistic in the country with a net confidence level of 20 per cent (down from 22 per cent in the previous quarter). 

Confidence eased among farmers in Western Australia and Tasmania with both states coming off previous highs. 

Queensland reported the weakest overall rural sentiment with the state’s prolonged drought weighing heavily on many of the state’s farmers. 

Sectors 

Confidence among the nation’s dairy farmers remained higher than those in other sectors with 54 per cent expecting conditions to improve in 2014 on the back of stronger prices. Confidence also picked up in the grains industry with many of the nation’s farmers harvesting an above-average crop. 

Sheep producers retained a fairly stable outlook on the year ahead with graziers relying on autumn rains to hold on to stock over winter. Little upside was seen from the nation’s beef farmers with oversupply and drought forcing the hand of many farmers. 

Confidence eased this quarter among Queensland sugar producers as price worries weighed on sentiment.

Questioning respondents for the first time on human resources, the survey found 56 per cent of Australian farmers reported it difficult or very difficult to attract and retain farm employees. Cane farmers reported the most challenges with farm labour with 71 per cent finding it difficult or very difficult to retain and attract farm employees, while cotton farmers (13 per cent) had the least problems in this regard.

Mr Knoblanche noted availability of farm labour and farm succession were among the issues being canvassed in the Federal Government’s White Paper on Agricultural Competitiveness.

A comprehensive monitor of the outlook and sentiment in Australian rural industries, the Rabobank Rural Confidence Survey, conducted by an independent research organisation questions an average of 1000 primary producers across a wide range of commodities and geographical areas throughout Australia on a quarterly basis.

Newsletter sign-up

The latest products and news delivered to your inbox