Home > Rabobank survey indicates Australian farmer confidence has hit three-year high

Rabobank survey indicates Australian farmer confidence has hit three-year high

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The latest Rabobank Rural Confidence Survey indicates a strong boost to Australian farmer confidence to levels last seen three years ago. Good autumn rains across much of the nation’s key cropping regions and southern grazing areas account for the upswing, as does the outlook for commodity markets.

A comprehensive monitor of the outlook and sentiment in Australian rural industries, the Rabobank Rural Confidence Survey questions an average of 1000 primary producers across a wide range of commodities and geographical areas throughout Australia every quarter.

Overall, 40 per cent of farmers expect conditions in the agricultural economy to improve (up from 29 per cent in the previous survey) while 44 per cent expect similar conditions to last year. Those expecting conditions to worsen nearly halved to 15 per cent this quarter, down from 27 per cent.

Longer-term confidence in the agricultural sector is also sound, with farmers revealing their plans for succession. Close to two-thirds of farmers are actively looking to incorporate the next generation into their business either through transfer of asset or shared ownership.

Conducted last month, the survey reported a strong lift in overall confidence levels led by the improved outlook for beef and sheep as well as grains. Dairy farmers remained the most upbeat about their prospects for the coming year.

Rabobank group executive for Country Banking Australia Peter Knoblanche observes that the strong rally in farmer confidence was not surprising given the good autumn rains that had boosted production prospects across Western Australia, South Australia, Victoria, and into central and southern New South Wales.

He explained the rains couldn’t have come at a better time, with much of the winter crop planted on an excellent sub-soil moisture profile. Graziers in many parts of Australia also have had more reason to smile, with the markets responding in March and April to the improved climatic conditions.

However, Mr Knoblanche said parts of the country were still badly affected by lack of rain. While much-needed rains were recorded in central Queensland and parts of the south, almost three-quarters of that state remains drought-declared and there has been little relief in the north-west and western areas of NSW.

The Rabobank survey showed seasonal conditions were the most dominant driver of sentiment this quarter, with 60 per cent of the farmers expecting conditions to improve citing the season as reason for their optimism (up from 43 per cent previously). The outlook for overseas markets and commodity prices was also front-of-mind for many, nominated by 47 per cent and 43 per cent of respondents respectively.

With 61 per cent of respondents looking to involve the next generation into their business either through transfer of the farm to family or shared ownership, Mr Knoblanche believes it reflects what they are seeing on the ground as their team of succession planning specialists proactively work with farmers to help facilitate the younger generation into the business.

States

Sentiment lifted across all states, with confidence rallying to three-year highs in Victoria, NSW, South Australia and Queensland. Confidence also lifted in New South Wales, with timely rains turning around the season in the central and southern part of the state. In the major grain-growing states of South Australia and Western Australia, good autumn rains drove the lift in confidence. Sentiment was weakest in Queensland, although it did lift to its highest level since mid-2011 on the back of ‘handy rains’ over parts of the state and some positive signals in the beef industry.

Sectors

After reporting negative sentiment in the previous quarter, confidence picked up markedly amongst beef and sheep graziers, while grain growers were also more positive about their prospects.

Mr Knoblanche said the flush of feed in southern Australia and improved conditions in parts of Queensland had seen farmers increasingly hold on to stock. With an improvement in confidence and increased re-stocker demand, there was a strong lift in beef prices, with the Eastern Young Cattle Indicator at a 12 to 18-month high in late April.

Dynamics had also improved for sheep producers, with lamb prices close to 200 cents above where they were this time last year.

Confidence lifted amongst the nation’s grain producers, albeit by a smaller margin than their grazing counterparts, with good planting conditions boding well for the establishment of this season’s crop. However, the outcome would remain reliant on follow-up rains and there was some trepidation about a developing El Nino for east coast growers.

Dairy farmers remained the most optimistic of all the sectors; while confidence moderated slightly among dairy producers, a total of 47 per cent expected the next 12 months to be better than the last.

In contrast, confidence remained subdued among cotton and sugar producers. Low irrigation storage levels raise concerns about production prospects for next year in cotton, while confidence in the sugar industry is hampered by ongoing concerns around yellow-canopy syndrome, as well as input costs.

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