Farming confidence is starting to rebound amid greater optimism about prices and better-than-expected seasonal conditions.
The mood swing was caught in the latest quarterly rural confidence survey of 700 farmers and growers by global agribusiness Rabobank.
The survey reveals that national farming confidence is still negative (-19%) but nowhere near last quarter’s -48% (a 20-year record) sparked by overseas wars.
It says while 12% of surveyed farmers believe conditions will improve in the next 12 months (up 2 % on last quarter), those expecting conditions to worsen fell from 58% to 32% while 52% of respondents expect business conditions to stay unchanged.
Rabobank group executive for Country Banking Australia, Marcel van Doremaele says the optimism stems from better seasonal conditions and relief over supply costs and availability.
“Although input costs continue to be the dominant factor weighing on confidence this quarter, and cost pressures remain elevated, farming businesses have experienced the initial price shocks,” he says.
“Despite ongoing tensions in the Strait of Hormuz and Black Sea, sentiment has been steadied by recovery of key supply chains and stronger commodity signals.
“Domestic urea supply is now sitting in a more comfortable position, reducing the risk of fertiliser shortages and easing concerns around local supply constraints heading into the end of the season,” he says.
FARMING MOOD LESS NEGATIVE
Despite forecasts of a strong El Nino, van Doremaele says their survey shows concerns have fallen; about 25% farmers were worried about conditions compared to about 33% last quarter.
“Seasonal conditions have improved through August compared to July, with rainfall supporting winter crops and pastures across parts of southern and eastern Australia,” van Doremaele says.
“This helped stabilise production outlook.”
But, he adds, there is cause to be cautious about Spring.
“The Bureau of Meteorology’s Spring forecast points to below-average rainfall and above-average temperatures across key southern agricultural regions, meaning growers may be relying heavily on stored soil moisture.
“Northern NSW and Queensland remain more vulnerable with depleted soil moisture and a subdued rainfall outlook presenting ongoing downside risks.”
Van Doremaele says more farmers are concerned about government intervention and policies (at 38% (from 23% previously) as they assess the impact of tax, superannuation and working visa changes.
FEELING BETTER ABOUT SPENDING
Farmers are reporting a greater appetite to invest in their farms in the next 12 months; 28% plan to increase their spending (up from 21% last quarter) while only 12% expect to reduce investment (down from 19%).
“There is renewed vigour from Australian farmers to develop their farms with 63% earmarking investment for capital expenditure such as yards, silos and fences (up from 56% last quarter),” van Doremaele says.
The Rabobank survey has been conducted since 2001 by an independent research organisation. The next results are due out in December.
