- While confidence improved, it remains in negative territory
- WA has -44% confidence, the third lowest confidence level since 2004
- 63% of SA farmers want to continue with their current level of investment
Confidence among farmers has remained subdued with the latest quarterly Rabobank Rural Confidence Survey finding farming confidence, nationally, sits at -22%; while in negative territory, it does represent a three percentage point rise from the last survey of -25%.
Minor improvements were also recorded across other responses. While around one in two farmers expected no change to Australian agricultural economy performance over the next 12 months, 13% are now anticipating improvements, up from 11%; fewer are expecting conditions to worsen, 35%, down from 36%.
Concerns around commodity prices are also reducing falling, now 56%, compared to 68% last quarter., and concerns around rising input costs is down to 29% from 35%.
One area of concern that saw numbers rise was government intervention/policies; the number of farmers citing this as a reason for apprehension lifted eight percentage points to 18%.
“While nationally confidence increased marginally, it’s riding on the back of a much larger surge of positivity in Queensland, where confidence lifted from -30% to -13%,” said Rabobank group executive for Country Banking Australia, Marcel van Doremaele.
“We can’t credit this just to winning the State of Origin opener – seasonal conditions and commodity prices are the real drivers of the optimistic outlook in Queensland. These factors also improved confidence in Victoria, although not as notably as in the Sunshine State.”
The remainder of the country recorded mixed results. Notably, Tasmanian and Western Australian farmer confidence has dropped off significantly, Queensland farmers are showing an increase in confidence and confidence in both NSW and South Australia has stabilised.
Certain commodities have helped to improve or maintain confidence levels, such as beef, up to -21% from -29%, dairy, up to -15% from -22%, and cotton, up to -20% from -59%. Sugar also improved from -28% to a positive 22%, marking the only sector to enter into the black.
Nevertheless, the current lack of confidence has resulted in Australian farmers, on the whole, turning away from property investment, with only 17% of Australian farmers contemplating purchasing property, down from the previous quarter’s 34%.
Western Australian farmers lacking confidence on a grand scale
The plummeting confidence levels follow a record-breaking winter grain crop earlier this year. The latest figures show Western Australian farmers have the third lowest confidence level since 2004, as their confidence current sits at negative 44%, a 21% drop since last quarter.
Farmers are concerned with falling commodity prices, unfavourable weather conditions for the start of seeding and overall market uncertainty, particularly in the live export market.
“Commodity prices remain a cause for concern for nearly half of WA grain growers. Post-harvest, we saw a number of break-even budgets as farmers came to terms with softer commodity prices and ongoing high input costs including interest rates.”
Steve Kelly, Rabobank regional manager for WA
This lack of confidence is reflected in the survey responses, with only 7% of WA farmers believing the agricultural economic condition will improve in the upcoming 12 months.
Over two in five (46%) of WA farmers are concerned about falling commodity prices, 43% are concerned with government policies and inventions and 33% are concerned by rising input costs.
Only 17%, down from 29%, of WA farmers are currently wanting to increase investments, with the reduced intentions to invest in on-farm infrastructure potentially curtailed by supply challenges.
Appetite for investing in farmland, however, remains strong; intentions for expansion are similar to the previous quarter, but the cost of borrowing is now front of mind.
“While there is continued strong prices for land offered, it’s not surprising to see interest rates now a higher consideration for purchasers.”
Steve Kelly, Rabobank regional manager for WA
Queensland farmer’s confidence on the mend
Farmers in Queensland have reported a rise in confidence, although still in negative territory. The June quarter has seen figures increase from last quarter’s -30% to the current -13%.
This increased confidence follows reduced numbers of farmers expecting declining economic conditions, now 27%, down from last quarter’s 40%; 15% believe business conditions will improve, while 57% believe the condition will remain the same.
The current seasonal conditions and commodity prices have also played a role in overall confidence.
Cotton growers, in particular, have shifted to a majority believing that the agricultural economic condition will stay the same or improve. This is a massive improvement considering the previous survey found that 87% of cotton producers in Queensland believed the then agricultural economic condition would worsen over the coming 12 months.
Growth in the Sugar sector has been strong enough to see investors start to entertain the idea of investing.
“The survey indicates that this lift in confidence within the sugar sector is generating a lift in investment intentions – particularly around property purchases.
“In recent years there has been limited demand for sugar cane farms – however, we are seeing early signals this may be changing as the sector has a return to strong economic conditions.”
Brad James, Rabobank regional manager for Southern Queensland
Confidence however has waned a little with beef farmers, as the reduction in cattle prices has left many beef farmers concerned. Nevertheless, 56% of surveyed Queensland beef producers believe business conditions will remain the same.
South Australian farmer confidence is relatively unchanged
Despite the current agricultural conditions, changing commodity prices, and seasonal conditions, farmers in South Australia have reported no real change in overall confidence; SA is still sitting at a fairly steady -15% confidence.
“Although confidence is still in negative territory, the settling of sentiment across SA reflects how our farming community has built resilience into their businesses, to weather economic and seasonal challenges.”
Roger Matthews, Rabobank regional manager for South Australia
Nevertheless, South Australia still recorded some changes to confidence levels in certain areas.
SA farmers who believed the economic condition would improve fell from 15% to 11%. However, those who are expecting a worsening economic condition fell from 31% to 26%.
In terms of future investment, 63% of SA farmers are looking to continue with their current level of investment, while 27% of SA farmers expect to increase their investment.
Out of that 27%, 67% of SA farmers are looking to invest in infrastructure, such as fencing and yards and 53% are looking at investing in machinery.
