- Another big production year is underpinning continued strong confidence within Australia’s farm sector
- 90% of Australian farmers are expecting excellent business conditions to continue or even improve over coming year
- Farmers are taking the opportunity to improve their assets and upgrade their operational infrastructure
With all the talk of property booms, and economic rebounds, and sustained lower interest rates, the prospect of a big farm production year is also on the cards.
According to Rabobank’s latest quarterly survey, almost 90% of Australian farmers are expecting “generally excellent” business conditions to continue, or even improve over the year ahead.
Rabobank Australia CEO Peter Knoblanche said the latest survey results were a reflection of just how positive the current operating environment was for Australian agriculture, with an “ideal combination of positive seasonal, financial and commodity market factors”.
“There is certainly a view out there among many farmers that business conditions right now are excellent. Many would say it’s as good as it gets, and they can’t see how it could get any better,” he said.
“Strong prices for grain and terrific growing conditions in most regions have driven another near-record winter crop planting program across the country, with early estimates for a second-straight year of bumper tonnages of wheat, barley and canola when harvested at the end of the year.
“Meanwhile commodity prices in the beef and lamb sectors are also supporting producer confidence, with low supply and high demand for protein pushing prices to levels not seen before. And dairy confidence is also strong on the back of favourable milk price contracts and improved water allocations.”
As if to underline the fact, the latest Rural Confidence Survey’s Farm Viability Index – measuring farmers’ assessments of their own business viability – has continued to edge higher in the latest quarter to sit at a new record 20-year high.
Completed last month, the latest survey found 35% of farmers nationally were expecting conditions in the agricultural economy to improve over the year ahead.
While this was down marginally on the 39% March quarter result, Mr Knoblanche said this was “likely a reflection of the view among some that business conditions in agriculture are about as good as they get”.
A further 54% of respondents were expecting the current positive conditions to continue for the coming 12 months, while just eight per cent expected a deterioration.
Mr Knoblanche said that while the current mouse plague was causing anxiety for farmers in affected areas, primarily in central-western and northern New South Wales, it had not registered as a major concern in the survey, cited by five per cent of those expecting conditions to worsen as the reason for their pessimism.
Long term prosperity
Mr Knoblanche said 2021 was shaping up to be an instrumental year in the long-term prosperity of the Australian farming sector.
“For most farmers, we are seeing a second year of very good seasonal conditions, high to very high commodity prices, low interest rates and favourable infrastructure investment incentives from government.
“The benefit of another year like this for Australian farming shouldn’t be under-estimated. This will allow many farmers to really consolidate their position after years of drought – to further reinvest in their businesses to make them more efficient and resilient, and to expand and grow their businesses for the future.
“This is a sector which has made an excellent recovery after the drought and is helping power the nation through the challenges of the COVID-19 pandemic.
“Many of our country towns are booming, there is tremendous regional growth and employment and the strength and stability in the agricultural sector is playing a significant part in that.”
Mr Knoblanche said even in those areas where seasonal conditions had not been optimal heading into winter, such as the cropping regions of South Australia and north-west Victoria, there was still a high level of confidence that the current positive business conditions would continue, and gross income projections for farm businesses were very good.
Confidence was found to be strongest in Tasmania and New South Wales, where 45% and 44% of farmers respectively were tipping conditions to improve.
In NSW, a large boost to water allocations and the prospect of another big grain production year was sustaining high levels of farmer confidence, despite some concerns around the mouse plague.
Mr Knoblanche said with a great production year behind them, and another one on the horizon, many Australian farmers were making longer-term investment plans and putting money back into their own enterprises through equipment and infrastructure upgrades as well as property expansion.
Farmers are taking the opportunity to improve their assets and upgrade their operational infrastructure while the seasons, commodity prices and interest rates were all working in their favour.
While there was intense interest and competition for agricultural land, those farmers who weren’t in a position to buy more land were investing on-farm to make the property they own “work harder for them”.
The next survey results are scheduled for release in September 2021.