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Rabobank Rural Confidence Survey reveals mixed outlook among Australia’s farmers

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The latest Rural Confidence Survey report by leading agribusiness banking specialist Rabobank reveals a mixed outlook among Australian farmers.

While Australian farmer confidence has staged a slight recovery, there is marked disparity between key commodity groups with grain producers the most positive in the nation while dairy farmers are downbeat.

The latest quarterly Rabobank Rural Confidence Survey found an overall lift in sentiment, with 19% of primary producers expecting the agricultural economy to improve over the next 12 months, compared to 12% in the previous quarter.

However, a greater number of respondents at 31% expect conditions to worsen rather than improve while 47% expect conditions to remain stable.

The Rabobank Rural Confidence Survey is a comprehensive monitor of outlook and sentiment in Australian rural industries, covering approximately 1200 farmers across a wide range of commodities and geographical areas throughout Australia on a quarterly basis.

Rabobank group executive for Country Banking Australia, Peter Knoblanche explains that farmers are focused on commodity price returns with seasonal conditions favourable across much of the country. Since the season is supportive of production and yields, farmers are looking at prices and how this will affect their margins.

Highlights of the Rabobank Rural Confidence Survey:

  • 27% cite input costs as a concern
  • 15% expressed concern about the newly-introduced carbon tax as it increases input costs
  • 71% saw increase in farm input prices while 23% observed no change and 5% a decline
  • 51% attributed the strong sentiment in the grains industry to rising commodity prices
  • 27% expected the agricultural outlook to improve due to seasonal conditions
  • 28% expect improved business performance over the next 12 months with 49% expecting stable performance and 21% expecting farm business performance to worsen
  • 26% expected high farm income generation, 25% anticipated a decline and 48% expected no change from last year
  • 89% intended to increase or maintain the level of investment in their farm business over the next 12 months
 
Rabobank Rural Confidence Survey - States

Though the majority of states reported an improvement in sentiment, more farmers expected conditions to worsen than improve. Farmers in Tasmania report a further slide in confidence, while sentiment in New South Wales remains the same as last quarter.

Farmers in South Australia are the most confident in the nation with grain producers anticipating good yields in a year of strong prices. The impact of rallying grain prices also lifted confidence in the key wheat-growing state of Western Australia.

Overall farmer confidence levels in Victoria lifted this quarter, underpinned by grain growers in the Wimmera/Mallee region, while dairy farmer confidence was down with some farmers in the Gippsland region dealing with flood damage to their infrastructure and pastures.

Confidence in New South Wales and Queensland remained similar to last quarter and tracked around the national average, underpinned by seasonal conditions but driven by the price outlook for respective commodities and cost pressures.

Rabobank Rural Confidence Survey - Sectors

Confidence lifted significantly in the grains industry with farmers the most positive in the country. Confidence also lifted in sugar and cotton, but remained neutral to slightly negative.

Dairy farmers were the most pessimistic with confidence falling further, while those in the sheep and beef industries reported similar sentiment to last quarter.

According to Mr Knoblanche, heightened concerns about the state of the US corn crop due to drought as well as crop developments in the Black Sea region have raised fears around global exportable grain supplies. Prices have rallied on the back of this dynamic, with further upside if the situation deteriorates further.

Sugar and cotton producers have been affected by recent rains, delaying the sugar crush and causing some cotton discolouration, while prices have also retracted from their highs.

Sentiment among graziers remained well down on last year, but this was a reflection on the retraction in lamb and wool prices from historical highs.

Confidence across the beef industry has also remained subdued on the back of flat prices, but good seasonal conditions will allow producers to make timely decisions around when to market their stock.

Sentiment in the dairy sector deteriorated further, with two-thirds expecting conditions to worsen over the next 12 months. Seasonal conditions however bode well for milk production, with pastures emerging well and water storages at or near capacity.

The complete Rabobank Rural Confidence Survey report is available on the Rabobank website.

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