Business

Dry Conditions Dent National Farmer Confidence

Australian farmer confidence has dipped with more of the country’s farmers reporting a pessimistic view on the future agricultural economy.

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Image: Gemma Stiles

Australian farmer confidence has dipped into overall negative territory with more of the country’s farmers reporting a pessimistic view on the future agricultural economy than those with an optimistic outlook, the latest quarterly Rabobank Rural Confidence survey has found.

Significant falls in confidence among farmers in Victoria and South Australia, due to below-average rainfall in recent months, contributed most to reduced national rural confidence.

Western Australian farmers continued to lead the country as the most optimistic, while South Australian producers reported the lowest confidence levels.

Falling commodity prices at the time of the survey, particularly for dairy and grains, were other key drivers behind lower sentiment.  Beef producers on the other hand reported stronger confidence levels, largely driven by robust prices and positive news in overseas markets.

The focus on food and agriculture at the G20/F20 and positive reports about the Free Trade Agreement (FTA) with China, were welcome news for the bulk of the industry.

The survey – completed approximately a month ago – reported 31 per cent of the nation’s farmers expected conditions in the agricultural economy to deteriorate in the coming 12 months (up from 24 per cent with that view in the previous quarter). A quarter (25 per cent) expected conditions to improve (down from 30 per cent), while  42 per cent expected similar conditions to last year (compared to 45 per cent in the previous survey).

Rabobank group executive for Country Banking Australia Peter Knoblanche said the results showed the sustained period of dry weather was now a major concern for many of the country’s farmers.

“Dry weather has been a major concern for many farmers in northern New South Wales and Queensland for a number of quarters, and these recent results indicate that similar concerns are now setting in for western Victoria and across much of South Australia,” he said

While climatic conditions were the main factor impacting confidence, the results indicated easing commodity prices at the time of the survey, particularly for grains and dairy, were another key reason for a negative outlook.

In line with declining confidence in the outlook for the agricultural economy, Australian farmers reported reduced expectations about the performance of their own farm enterprises.

This quarter, 31 per cent of the nation’s farmers expected their own farm business performance to improve, while 25 per cent expected performance to worsen.

A quarter of farmers (25 per cent) expected higher gross incomes in the coming 12 months while 30 per cent expected gross farm income to decrease. Income projections were highest among beef producers and canegrowers.

Despite the declining confidence, investment intentions remained stable, with 24 per cent of Australian farmers surveyed expecting to increase investment in their business over the coming year (compared to 25 per cent last quarter) and 61 per cent intending to maintain investment (from 60 per cent).

While rural confidence eased overall, farmers in Tasmania and Queensland reported some improvement in overall rural sentiment coming off a low base last quarter and their counterparts in New South Wales maintained stable levels of optimism.

Although rural sentiment eased in Western Australia, that state’s farmers remained firmly optimistic, with 83 per cent expecting better (35 per cent) or stable (48 per cent) conditions in the year ahead.

Sentiment dipped significantly in Victoria and South Australia after a number of stronger quarters for both these states.

Farmers in northern New South Wales and central west Queensland also continued to struggle with dry conditions.

Sentiment softened across most sectors, although beef producers confidence improved.

In a new question added to this survey, over one-third (36 per cent) of the nation’s farmers reported using a smartphone or tablet to access the internet in the operation of their business.  While half (56 per cent) said they did not.  The remainder did not record a result.

Farmers in South Australia (48 per cent) and Western Australia (49 per cent) reported the highest usage of this technology.

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