Home > Australian farmers optimistic as rural confidence lifts to its highest in four years

Australian farmers optimistic as rural confidence lifts to its highest in four years

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There is optimism in the air among Australian farmers with rural confidence lifting to its highest level in four years, says the Rabobank Rural Confidence Survey.

According to the latest quarterly survey of farmer sentiment, factors such as elevated commodity prices, summer rainfall and the drop in the Australian dollar have all contributed to this optimism. Representing a comprehensive monitor of outlook and sentiment in Australian rural industries, the Rabobank Rural Confidence Survey covers, on average, 1000 primary producers across a wide range of commodities and geographical areas throughout Australia on a quarterly basis.

The survey found farmer confidence at its highest level since March 2011 at a positive net reading of 32 per cent, up from a negative position of minus six per cent in the previous survey, released in December 2014.

However, while good summer rains had turned around conditions for many farmers in the eastern states, a number of regions continue to have dry seasons, according to Rabobank group executive for Country Banking Australia, Peter Knoblanche.

Confidence was up in all states and across all commodity sectors, with the exception of sugar, which has been impacted by a surplus of global supply. Sectors driving this upswing in sentiment include livestock graziers, with beef markets recovering and prices reaching record levels early this year, while sheep prices remained strong.

This quarter, nearly half of the country’s farmers (45 per cent) surveyed expected conditions to improve over the coming 12 months, up from a quarter that held that view in the previous survey. Those expecting stable conditions stood at 40 per cent, while just 13 per cent expect conditions to deteriorate (down from 31 per cent).

Farmers expecting conditions to improve over the coming 12 months had cited commodity prices (63 per cent) and the season (50 per cent) as the biggest drivers of confidence.

Farmers were also generally more optimistic about the outlook for their own farm business performance with 43 per cent expecting an improved performance in 2015 and 46 per cent expecting performance to remain the same as last year. Only nine per cent expected a deteriorated performance this year. This flowed through into income projections, with 86 per cent of farmers expecting higher or at least similar incomes to last year. Beef, sheep and grain growers were the most positive about their expected cash flow.

Reflecting the positive outlook for farm incomes, investment intentions also picked up across all states of Australia. Overall, 29 per cent were looking to increase their level of investment while 62 per cent were intending to maintain it at the same level.

Rural confidence in various states rose strongly, with sentiment in Tasmania hitting its highest level since the survey began 14 years ago, and confidence in New South Wales at a seven-year high. Confidence in New South Wales and Queensland was driven by a good start to the season and the subsequent lift in beef and sheep prices.

Livestock producers were also more upbeat in Victoria, while dairy farmers expected this year to be similar to the last. Harvest had come in better than expected for South Australia, causing South Australian grain grower confidence to recover from negative levels last quarter. Growers in Western Australia bagged the fourth biggest winter crop on record, and are hopeful of another good season based on rains in the coming weeks.

Beef producers were particularly upbeat this quarter, while confidence also rebounded strongly in the sheep industry.

Sentiment also improved among cotton growers; however, low water storage in many key growing areas will impact national production in 2014/15.

Confidence in the dairy industry lifted from subdued levels to a neutral reading with farmers expecting a similar year to the last. 

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