Reasons for optimism remain, Rabobank finds

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Rising input costs and Ukraine war fallout have impacted Australian farmer confidence, but recent high returns have left the industry in a strong position, according to Rabobank

The agribank has released the second of its quarterly Rural Confidence Surveys for 2022, which revealed some concerns about external factors, but also optimism about high agricultural commodity prices and the prospect of another bumper grains harvest.

The majority of farmers surveyed expect business conditions to remain stable over the next year, with 53 per cent of farmers answering in that way.

Of the remainder, almost twice as many expect an improvement as anticipate a decline (28 per cent compared to 16 per cent).

The sectors with the most positive outlooks are cotton, grain and dairy, Rabobank says, due to high prices and excellent seasonal conditions.

The grains sector is among the most optimistic in Australia, according to Rabobank's survey

Recent strong conditions have led to more farmers investing in machinery and technology for the future, and Rabobank Australia CEO Peter Knoblanche says this will help to offset challenges due to increasing costs.

"The benefits of those investments are certainly helping farmers create some efficiencies, but the cost pressure is not easing and producers definitely need those higher commodity prices in order to meet rising input costs," he says.

The war between Russia and Ukraine is also impacting confidence, with 50 per cent of Australian farmers believing it will have a negative impact on farm businesses, although 25 per cent are expecting it to impact Australian farms positively.

Rising fuel, freight and fertiliser prices were cited as the main causes for concern, while those with an optimistic outlook highlighted high commodity prices and impacts on supply and demand.

The grains sector was most optimistic, Rabobank says.

"[The war] is undoubtedly exacerbating many of the cost and supply issues which were already in play last year," Knoblanche says.

"But for some sectors, especially grains, we are seeing the conflict impact global supply and push prices higher, and also deliver higher local prices with strong demand for Australian grain as the world turns to our producers to help meet critical food needs."

Rabobank’s survey also measured the confidence of each Australian state.

It found farmers in New South Wales remain the most confident in Australia, while Western Australia had the biggest jump in optimism during this quarter.

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