Home > External factors cause Australian rural confidence to fall despite an overall good produce season.

External factors cause Australian rural confidence to fall despite an overall good produce season.

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Rabobank has released the results of its latest quarterly Rural Confidence Survey.  The Survey, conducted since 2000, is carried out by an independent research organisation who interview, on average, 1200 farmers across the country.  This quarter’s survey results show, that despite an average to good season for produce, rural confidence in future growth is falling.  This fall in confidence is mainly attributable to outside influences including global market volatility and public policy. 

Despite high commodity prices, the high Australian dollar and 49% of Australian producers reporting higher gross farm income when compared to the same time the previous year, only 18 % of farmers, down from 42%, expected the agricultural economy to improve over the next 12 months.  Dairy farmers are the most confident, with 39% expecting conditions to improve, but even this is down from last year.  

The key factors influencing this fall in rural confidence, as found in the Rural Confidence Survey, are:

  • the impact of coal seam gas exploration and mining on agriculture;
  • concerns about the impact of the proposed carbon tax;
  • implications of the proposed suspension of live cattle exports to Indonesia; and
  • worries about the turmoil of the global market due to recession and natural disaster. 

52% of farmers surveyed viewed coal seam gas exploration as a threat to agriculture.  This figure rose to 62% in NSW and 71% in Queensland, where exploration and mining is already occurring.  Only 7% of farmers surveyed saw any future opportunity to agriculture from coal seam gas exploration. 

Cattle farmers reported the least confidence that business performance would improve over the next 12 months.  This lack of confidence is attributable to two key factors.  Australia’s key Global market for beef is Japan, where the market is still subdued after the earthquake earlier in the year.  This market concern is compounded by fears of further recession in US and Indonesia 

In addition to fears about the global markets is concern about the proposed policy to suspend live trade cattle export to Indonesia.  Northern farmers will be directly affected by the suspension of the export of their cattle and this could have a knock on affect for the rest of Australia’s cattle farmers and beef producers, as Northern cattle floods the Australian market.

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