Farming confidence across the country had fallen this year even before the Iranian war pushed fuel prices up, a new national survey reveals.
The quarterly survey by global agribusiness banker Rabobank found farming confidence was down 9% (down by 3% on a previous survey).
Mounting fertiliser and fuel costs, and a challenging summer, had lowered hopes; the bank says the impact of the war was not covered in the survey.
Rabobank group executive for country banking Australia, Marcel van Doremaele says given the war, worries over cost and supply would now be much greater as farmers move into their winter cropping program.
“We’ve seen fuel and fertiliser markets and freight rates react to the Middle East conflict due to the impact on prices and threat to supply. This flows directly into farm budgets, adding to inflationary pressures,” he says.
“Disruptions in global fertiliser markets (particularly for nitrogen-based products) and higher shipping costs for imports, combined with domestic fuel price volatility, are tightening margins at a time when many producers are already managing significant and sustained cost inflation.”
He says higher and unpredictable fertiliser and fuel prices are adding more cost worries for cropping and livestock producers as they plan for the year ahead.
Some farmers will likely change their practices and crops.
“Some farmers are rethinking the application of nitrogen in particular as a result of high prices and some crop farmers are adjusting their cropping programs,” he said.
“For graziers, increased fuel prices add to costs, particularly for transport.”
Van Doremaele says the Middle East war is testing the farming sector.
“As we have seen before over the years, farmers have navigated geopolitical shocks and challenges such as droughts and floods, followed by adjustment periods,” he says.
“These current challenges present themselves as a new test of the resiliency and adaptability of the country’s farmers and graziers.”
PRE-WAR FARMING SURVEY FINDINGS
- 50% of farmers nationally expected conditions to remain stable over the next 12 months.
- An extra 16% of farmers were preparing for conditions to fall (28%).
- 8% more farmers were less optimistic about the year ahead (now at 19%).
- A dry summer, floods and bushfires were weighing down on farmers.
- Commodity (specially livestock) prices remain strong.
Mr van Doremaele said commodity prices are providing hope for the farming sector with some cattle prices still historically high due driven by strong global demand while lamb/mutton and wool prices “holding steady”.
“Although we’ve seen global wheat prices across major future markets firm up in the past month, there is expectation of volatility, caused by seasonal factors as well as from the Middle East conflict.”
“There has also been a bounce in dairy commodity values but all eyes are on the Middle East as the region became an increasingly important market for milk powders in recent years.”
STATE OF THE STATES
Farmers’ optimism had fallen in all state except South Australia while Tasmanian farmers remain the most optimistic.
In NSW, recent rain across central, southern and far west regions, was expected to have boosted farming spirits.
Last summer rain is expected to help Victoria continue their recovery from bushfires but “it will take some time to recover,” van Doremaele said.
In Queensland, there was a 10% fall in sentiment due to unpredictable weather, government policy concerns and ongoing cost pressures but hopes for a good season remain strong.
In South Australia, farming confidence grew slightly based on better‑than‑expected harvest and strong livestock markets.
In Western Australia, rural confidence fell 11% as farmers balanced a record harvest against high costs, policy worries and global price volatility.
Click here read about the latest trends in farm debt
ABOUT THE SURVEY
- The Rabobank Rural Confidence Survey questions an average of 700 primary producers across a wide range of commodities and geographical areas on a quarterly basis.
- The survey has run since 2000 by an independent research organisation.
- The next results are due in June.
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