- National farm viability index hits a new 20-year high
- Australian farm confidence remains at historically-high levels
- Headwinds include COVID-19, China trade tensions and workforce shortages
The latest quarterly Rabobank Rural Confidence Survey reveals ongoing optimism among Australian farmers who have not only rebounded from significant drought conditions a year ago, but also stared down immense uncertainty and, in some sectors, market volatility as a result of the COVID-19 pandemic.
Trade tensions with China and a looming skills shortage are the main headwinds the farmers are confronting, in what is otherwise a positive outlook.
Farm viability has hit a 20-year high, and farm confidence remains at historically high levels, according to the latest survey findings.
Australian farmers are forecasting another productive and profitable year ahead, thanks to “perfect” summer conditions in much of the nation’s east and exceptionally strong commodity prices.
They are also revising their income expectations for 2021 upwards, which in turn is driving a major investment injection into farm business productivity over the year ahead.
Rabobank Agricultural Sentiment Index (%)
The survey, completed last month, found:
- 39% of farmers expect conditions in the agricultural economy to improve in the coming year (from 43% in the previous quarter);
- 51% expect them to remain stable;
- Only 7% had a pessimistic outlook on the year ahead (down from 8% last quarter);
- 68% farmers cited rising commodity prices as the main reason for confidence;
- 62% expected seasonal conditions to be better this year;
Those with the most worry were in Western Australia or Queensland, where dry conditions have persisted.
“The recovery from drought and the return to production over the past 12 months has been extraordinary, despite the uncertainties around COVID-19.”
“Australian grain growers delivered a record wheat harvest and near-record total winter grain harvest last season and there are promising early signs as farmers start making plans to plant this year’s crop.
Peter Knoblanche, CEO of Rabobank Australia
“Livestock prices are breaking all sorts of records because the demand for sheep and cattle is so strong and there just aren’t the numbers to meet that demand. That is proving a challenge to those farmers trying to rebuild herd and flock numbers after the drought but providing good returns for farmers who held onto stock through the dry years.
“This year it seems all the fundamentals are lining up. We’ve had near-perfect seasonal conditions over summer for much of the country and commodity prices are very solid. Combined with low interest rates and a number of government incentives, farmers are generally speaking in a good place right now.”
Even in the drier areas of WA and Queensland, overall positive sentiment is starting to breakthrough.
Along with trade tensions with China, workforce shortages are starting to appear in the wool and horticulture sectors.
Sentiment is most positive in NSW, where 92% of farmers either expect business conditions to improve or remain the same.
Grain growers were also positive, with another solid year of grain production likely, as were cotton, livestock and sheep producers.
Rabobank Rural Confidence Survey questions an average of 1000 primary producers across a wide range of commodities and geographical areas throughout Australia on a quarterly basis. The survey has been conducted by an independent research organisation interviewing farmers throughout the country each quarter since 2000. The next results are scheduled for release in June.