Rural confidence softens as farmers report mixed outlook on year ahead

Sentiment in Australia’s agricultural sector has softened over the winter months, as the nation’s farmers contend with higher input costs and mixed seasonal conditions, the latest Rabobank Rural Confidence Survey has found.

The survey, released in late August, found net farm sector confidence has eased to a neutral reading of zero (down from five per cent in the previous survey).

This means the same number of farmers (29 per cent) now expect conditions in the agricultural economy to improve over the next 12 months as those who anticipate conditions to weaken.

Farmers reported feeling most positive about seasonal conditions and commodity prices, although producers in Victoria and South Australia in particular remained concerned about weather.

High input costs, as well as concerns about government policies and intervention, were the main causes for pessimism.

A total of 39 per cent of farmers expect conditions will stay the same in the year ahead.

Rabobank group executive for Country Banking Australia Marcel van Doremaele said although overall rural confidence has softened over the winter months, it was encouraging to see that a large proportion of farmers still expect conditions to remain stable or improve over the next 12 months.

“This highlights the resilience of Australian farm businesses – they are navigating rising input costs and ongoing seasonal variability, but are capitalising on the positive drivers of solid commodity prices, primarily in livestock sectors, and favourable seasonal conditions in key regions,” he said.

Production costs were top of mind for Australian farmers this survey – which was completed last month* – with the rising price of inputs, including fertiliser and feed, emerging as the leading cause for pessimism (for 41 per cent of farmers, up from 25 per cent last survey).

Input costs were the main reason for concern in Tasmania, Queensland and NSW, however seasonal factors outstripped costs in Victoria and South Australia, and WA farmers were most worried about government intervention and policies.

“Global demand drivers are pushing urea prices skyward, so we expect to see this volatility play out as Australian growers update their farm input budgets over the coming months,” Mr van Doremaele said.

“The high prices for feed over the past 12 months will also be felt for a considerable time by many producers in southern areas, especially those who are still relying on purchased hay and grain to maintain stock until their pasture gets back on track after prolonged – and in many areas, ongoing – dry conditions.”