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New Rabobank survey reveals optimism among nation’s farmers

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The latest quarterly Rabobank Rural Confidence Survey reveals that Australia’s farmers are taking a much more optimistic view of the year ahead, with the lower dollar and good winter rainfall across the southern states boosting sentiment. 

A comprehensive monitor of outlook and sentiment in Australian rural industries, the survey by agribusiness banking specialist Rabobank questions an average of 1000 primary producers across a wide range of commodities and geographical areas throughout Australia on a quarterly basis. 

The survey recorded a significant turnaround in rural sentiment, after the previous five consecutive quarters had seen net confidence wedged firmly in negative territory. Three-quarters of the nation’s farmers now expect the agricultural economy to improve or remain stable over the next 12 months. 

The latest survey found 36 per cent of farmers expected conditions to improve (up from just 15 per cent), while 38 per cent had a stable outlook on the year ahead. Those with a negative view of the coming year fell to 21 per cent – down from 46 per cent previously.

Rabobank group executive for Country Banking Australia, Peter Knoblanche said rural confidence had bounced back from the bottom of its cycle, driven particularly by a strong lift in cotton and dairy sector sentiment – although all farm sectors were now more positive about their prospects than three months previously. 

The optimism is also attributed to the impact of good timely rainfall in the southern states, along with the easing of the Australian dollar. However, seasonal conditions were still very challenging in parts of the country, including western and northern Queensland and parts of the north-eastern and far-eastern wheat belt in WA. 

While the survey had been completed just prior to the election campaign, Mr Knoblanche said the certainty provided by Saturday’s election result would likely also add to farmers’ confidence levels in the weeks ahead. 

Farm business performance, income and investment intentions 

In line with higher overall confidence levels, Australian farmers were increasingly confident about the outlook for their own businesses performance – with this net confidence indicator lifting from -13 per cent last survey to 20 per cent. The proportion expecting improved performance in their own farm enterprise increased to 36 per cent (up from 19 per cent previously) while a similar proportion (43 per cent) continued to expect stable conditions. The proportion expecting their business performance to deteriorate fell to 16 per cent, from 32 per cent last quarter. 

This was reflected in farmers’ income expectations, with 32 per cent, mostly cotton and dairy producers expecting their income to increase over the coming 12 months. Those expecting a similar income to last year stood at 42 per cent, while the number expecting their income to decline fell to 23 per cent. 

States 

A strong lift in sentiment was recorded across the states, with confidence returning into positive territory in all except WA, where the indicator climbed to just below neutral levels. 

Confidence amongst farmers in the west is quite mixed, with about 10 to 15 per cent of the state’s key grain crop missing out on the critical rains in mid-July and August. While the state’s wheat crop is still pegged above seven million tonnes, it really hangs on rainfall over the next six weeks, Mr Knoblanche said. 

Crops are progressing well in South Australia, Victoria and southern New South Wales, aided by good winter rainfall and mild conditions, while sheep, beef and dairy farmers are entering a good spring after a relatively tough winter. Improved sentiment in the dairy sector was largely behind the pick-up in confidence in Tasmania. Farmer sentiment improved in Queensland, but was disparate across commodities and geographical regions. 

Sectors 

Cotton and dairy farmers were the most bullish about their prospects for the next 12 months; however all surveyed commodity groups posted an increase in confidence. 

Prospects are good for cotton growers, with the lift in the international cotton price aided by the drop in the dollar. Good water availability in key irrigation water storages has also shored up production prospects for the coming season. 

A good spring is expected across most of the key dairy-producing regions, providing some relief to feed prices. From a pricing perspective, strong global pricing has translated into higher opening milk prices with prices at least 20 per cent up on last year. 

Confidence in the beef and sheep industries has also picked up, notwithstanding the difficult conditions for beef producers in Queensland. 

Though grain grower sentiment had picked up, it remained near neutral levels reflecting a ‘cautious optimism’ prevailing in the sector. While the lower currency had been welcomed by grain growers, their confidence had been mainly dictated by rainfall in the key growing period, during which the survey had been conducted.

Confidence amongst sugarcane growers lagged behind those of other commodities, posting a lift but remaining in negative territory. In terms of production, growers welcomed optimal crushing conditions, which have seen very minimal disruptions to harvest. 

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