Home > Pressures on farm returns worry nation’s farmers: New Rabobank survey

Pressures on farm returns worry nation’s farmers: New Rabobank survey

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The latest quarterly Rabobank Rural Confidence Survey reveals a slide in Australian rural confidence as farm returns are squeezed by a continuing high Australian dollar and elevated production costs. The hot, dry summer experienced across much of the country has also dampened sentiment.

A comprehensive monitor of outlook and sentiment in Australian rural industries, the Rabobank Rural Confidence Survey questions 4500 primary producers per year across a wide range of commodities and geographical areas throughout Australia on a quarterly basis.

Completed last month, the new survey has the net confidence indicator wedged in negative territory over the past 12 months, with more farmers expecting conditions to worsen than to improve.

According to the Rabobank Rural Confidence Survey, 37% of the nation’s farmers were expecting the agricultural economy to worsen over the coming 12 months (up slightly from 35% in the previous survey). Just 15% were optimistic about the year ahead (down slightly from 16% previously), while 48% expect similar conditions to last year.

Rabobank group executive for Country Banking Australia, Peter Knoblanche said the latest survey results reflected the impact of a combination of market pressures, with the dollar remaining at elevated levels and the cost of farm inputs also comparatively high relative to commodity prices.

According to Mr Knoblanche, seasonal conditions were also a factor with many farmers having just come out of the warmest summer on record with not a lot of rain to report, and looking at what is in store for the coming 12 months.

Mr Knoblanche also notes that the dollar has a huge bearing on returns, given that 90% of Australian agricultural commodities are destined for the world export market. Though a strong dollar is expected to translate into lower prices for imports such as fuel and fertiliser, these still remain at elevated levels.

All states reported negative sentiment, but confidence dropped markedly in Tasmania and Queensland. Expectations were also pared back in South Australia and Victoria, while farmers in New South Wales and Western Australia took a slightly more positive view on the coming year, albeit remaining subdued.

Sector-wise, dairy and sheep producers across the nation were the most positive about their prospects, although their confidence remained slightly negative, while cotton and sugar growers were the most pessimistic. The wait for rain in the critical planting period weighed on grain grower sentiment, while beef producers saw limited upside in their market prospects.

Highlights of the Rabobank Rural Confidence Survey:

  • 31% of farmers were increasingly worried about the impact of the high dollar on their bottom line, up from 21%
  • 20% reported concerns around seasonal conditions, up slightly from 18%
  • 23% of farmers expect an improvement in their farm business performance in the next 12 months, while 25% expect performance to worsen and 52% expect no change
  • 48% expect their income in the next 12 months to remain similar to last year, while 31% anticipate a decline and 21% expect improvement
  • 88% expect to increase or maintain their level of investment in their farm business over the next 12 months, up from 85% in the previous quarter
The detailed Rabobank Rural Confidence Survey report can be accessed online on the Rabobank website.

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