Good winter rainfall across much of the country hasn’t been enough to prevent a slide in Australian rural confidence, due to concerns over COVID-19, overseas trade and markets and commodity prices.
The latest Rabobank Rural Confidence Survey results reveal the nation’s farmer confidence has continued a downward trend, after beginning the year at close to a record five-year high.
All states, except Queensland and Tasmania, recorded some decline in sentiment, with the impacts of COVID-19 on agricultural markets increasingly weighing on the sector.
But the continued turnaround in seasonal conditions in many regions and the prospect of a bumper winter grain harvest are helping stabilise confidence levels.
The latest survey, completed last month, found 24 per cent of farmers surveyed nationally expect conditions in the agricultural economy to improve over the coming year, compared with 33 per cent with that outlook in the previous quarter. The number of farmers, however, with a pessimistic outlook on the year ahead stood at 27 per cent (from 23 per cent last quarter). A total of 44 per cent expect business conditions to remain relatively unchanged.
Beef, grain, cotton and dairy farmers are the most optimistic about the year ahead, but not all for the same reasons.
While price uncertainty is concerning grain and cotton farmers, the return to more normal production levels following drought and good harvest forecasts is supporting confidence in those sectors.
Strong commodity prices for beef and farmgate milk prices for dairy – and forecasts of a really positive spring season are bolstering sentiment.
Farm sentiment has, however, deteriorated further among sheep producers, nearly all due to market uncertainty.
Overall, farmers with a pessimistic outlook on the coming 12 months cited falling commodity prices, concern about overseas trade and markets and COVID-19 as the three main reasons for their negative view.
Rain has helped
Rabobank Australia CEO Peter Knoblanche says continued good rain throughout the winter months has been a boon for long-awaited good winter crops, particularly on the east coast, and the prospect of a big harvest right across the nation will inject some much needed cashflow back into farming businesses and regional communities after successive years of drought.
“Farmers are still keeping an optimistic outlook because in many of those areas which had been so severely drought affected, this is the harvest, and this is the big spring, they’ve been waiting for,” he says.
“For many farmers, this spring will be the season that allows them to consolidate their business position and start to ‘catch up’ after years of drought. The crops are looking good and livestock numbers are rebuilding. So that is all positive news for farmers on the home front.
“But concerns about the impact of COVID on trade, on consumer sentiment and what that means for markets is definitely worrying many.
“Wool and sheep producers, cotton and grape growers, and those industries like beef and grain which have been caught up in recent trade disputes with China, are concerned about market instability and what it could mean for their own incomes over the coming year. While in some sectors (wool, grain and horticulture) producers are also feeling the strain of border closures limiting access to seasonal labour.”
Farm confidence was shown to have declined in all states, except Queensland and Tasmania which went against the national trend.
While sentiment was back on the previous quarter; New South Wales still recorded the highest rural confidence levels in the nation, with sentiment continuing to trend at its highest level since the 2016/2017 season. This was despite growing concerns about commodity pricing and market instability.
Cropping prospects in particular have boosted optimism in the state, Knoblanche says, spurred on by regular and well-timed rain which saw the largest planting of winter crop hectares in four years and are supportive of excellent yield potential.
“New South Wales beef producers also expressed a very positive sentiment, driven by record prices and continuing demand. But the impact of COVID-19 on agricultural trade and markets is concerning a growing number of the state’s farmers.”
The mounting impact of the coronavirus pandemic on Australian farmer sentiment was evident over the past three surveys – nominated as factor of concern by six per cent of those expecting the agricultural economy to worsen in quarter one, by 26 per cent in quarter two and 37 per cent this survey.