Rural confidence slowly recovering but remains low

Rabobank ’s latest Rural Confidence Survey has revealed that the confidence of Australia’s farmers remains subdued as a result of ongoing dry conditions , although recent rainfall offers hope for the year ahead.

Rabobank’s Rural Confidence Survey questions an average of 1,000 producers across a variety of commodities and geographical areas throughout Australia on a quarterly basis.

The survey’s results for the June quarter show that there has been a slight increase in overall rural confidence, though sentiment still remains low due to concerns about drought conditions.

A very dry autumn has created challenges for many key agricultural regions, hindering crop planting and placing pressure on livestock producers. Farmers are currently waiting for the seasonal break to replenish severely depleted soil moisture levels and water catchments.

This is especially pronounced in Western Australia, which has experienced its driest five months on record to May and is the only state in the survey which did not report improved sentiment.

“This will have been weighing heavily on farmers as the winter cropping season began and as livestock producers moved into winter with poor pasture growth and low dam levels,” says Rabobank Australia CEO Peter Knoblanche.

The grain sector has also posted a small decline in confidence due to continuing drought conditions.

“In the grains sector, sentiment all hangs on the state of the season and where growers were unable to fulfil planting intentions, this would be at the forefront of their mind with the price outlook a secondary consideration,” says Mr Knoblanche.

However, late widespread rainfall across Western Australia and some parts of South Australia and the eastern states has offered hope to many producers.

“The late arrival of widespread rains over recent days could be game changing for agriculture in the state,” says Mr Knoblanche. “In particular, they’ve brought a desperately-needed late break for most cropping regions – particularly the western half of the wheatbelt – and will also have eased the pressure on graziers with regards to water.”

The survey also notes that improvements in commodity prices for sheep and dairy have helped underpin confidence in the agricultural sector.

71 per cent of sheep graziers expect conditions in the agricultural economy to improve or remain similar to last year.

“For graziers, confidence is largely being held up by the market, with prices for lamb at record levels for this time of year, and this is alongside the continued strength in mutton and wool markets,” says Mr Knoblanche.

Furthermore, despite facing numerous challenges in recent years , the dairy sector has seen the biggest lift in confidence, indicating early signs of improvement in dairy farmer sentiment.

“Processors have come into the market with strong milk prices for the 2019/20 season and while this has started to drive that lift in farmer sentiment, it has been somewhat muted by the elevated input cost environment for feed and water,” says Mr Knoblanche.

The next Rural Confidence Survey is scheduled for release in September 2019.