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Pressure on farming returns affects Australian farmer confidence

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Pressure on farming returns, resulting from a combination of lower commodity prices and a prolonged high Australian dollar and rising input costs, has seen a further decline in Australian farmer confidence, according to the latest quarterly Rabobank Rural Confidence Survey.

The latest survey also suggests that more primary producers expect conditions will continue to worsen rather than improve, with the number believing that conditions will improve falling to 12%. The Rabobank Rural Confidence Survey is a comprehensive report of the opinion and attitude in Australian rural industries that questions around twelve hundred farmers across a wide range of commodities throughout Australia every quarter.

Peter Knoblanche, Rabobank general manager in Rural Australia explained that many Australian farmers were feeling the pressure from continuing weakening in prices for key commodities was negatively impacting farmer confidence.

Farmers are experiencing a situation where production and yield are largely favourable however primary producers are not receiving the profit margins that they were a year ago. 

The survey results showed, of those expecting the agricultural economy to improve over the next 12 months, 39 per cent cited seasonal conditions as a driving factor.

The Rabobank survey also reviewed respondents’ opinions surrounding farm business performance, income and investment intentions depending on the state and the sector.

The Rabobank survey found that the greatest percentage of farmers expected the performance of their business to remain the same, while a similar percentage expected to see performance in their own farm business to improve as those who believed it would worsen.

Producer’ investment intentions remained constant throughout the survey, with 90% intended to maintain or increase the level of investment in their business in the next 12 months. 

The survey found farmer confidence decreased in all states except Queensland this quarter, making the state’s farmers the most confident in the nation, although sentiment remained at relatively low levels.

Confidence remains subdued across the key commodity sectors, as producers cite their concerns around softening commodity prices and pressures from the prolonged high Australian dollar. Sugar, cotton and beef producers reported an improvement in sentiment, albeit confidence remained in negative territory, while dairy, sheep and grain producers were the least optimistic across the nation.

For the full Rabobank Rural Confidence Survey please visit thewebsite.

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