Farmer sentiment remains high: Rabobank

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Farmer sentiment remains at near-record highs, spurred on by good rainfall and strong commodity prices, according to Rabobank’s quarterly Rural Confidence Survey.

Despite the wider economic uncertainty caused by COVID-19, the survey has revealed more than 90 per cent of farmers expect the current positive conditions to either continue or improve over the next year.

The overall sentiment is the equal third-highest ever in the survey’s history, which includes more than 80 quarters of data since its introduction in 2000.

A big improvement during the last quarter was that 43 per cent of farmers surveyed anticipate the agricultural economy to improve during the next year, which is up from 35 per cent in the previous survey.

Commodity prices and ideal seasonal conditions were the two main reasons cited by farmers for their optimism while Rabobank Australia CEO Peter Knoblanche adds low interest rates and a lower Australian dollar as further reasons for the strong performance continuing.

"While there are some challenges for the farm sector due to shipping delays and labour shortages, the Australian farm sector has largely been sheltered from the broader impacts of COVID-19 restrictions and is a shining star in the Australian economy right now," he says.

"Above-average rainfall in the late half of winter across many agricultural regions has set up the sector for another big spring, with prospects of a second year of high-yielding crops and excellent conditions for livestock.

"Optimism is also being underpinned right now by the fact that the main factors driving commodity pricing higher are forecast to hold until at least the end of the year."

Grain producers were among the most optimistic in Australia about the next year, Rabobank's quarterly survey found

While all states had positive sentiment in the survey, including those whose state capitals have experienced COVID-19 lockdowns, Western Australia led the way for optimism while the most positive sectors nationally were grain and cotton producers.

Another key indicator of confidence was in planned farm investment.

Rabobank’s survey found 37 per cent of Australian farmers intend to increase their business investment during the next year, with a further 56 per cent maintaining current levels, which equals 93 per cent overall.

More than half the farmers surveyed (51 per cent) expect their income to increase during the next year and a further 37 per cent expect it to remain stable.

With such positivity around the sector, Knoblanche believes this will set Australian agriculture up for the long term.

"The success we are seeing right now in agriculture is very important for the whole Australian economy as it grapples with the COVID-19 pandemic," he says.

"Agriculture is sustaining employment and economic activity in regional areas which is essential at all times, but particularly during the pandemic.

"This is a really formative period for family-farming enterprises, because consecutive years of good returns encourage young family members to return to the land, and it enables good succession planning to take place, which is often not possible during drought years."

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