Aussie farmers have begun the year with confidence on the back of better-than-expected summer conditions and positive signs from key commodity markets
Rabobank’s latest quarterly Rural Confidence Survey has found national farmer confidence has returned to ‘positive’ territory for the first time since June 2022.
Net national rural confidence rose significantly from a reading of -41 per cent in the last quarter of 2023 to 15 per cent in the first quarter of 2024.
Rabobank country banking Australia group executive Marcel van Doremaele says one of the key reasons Australian farmers have moved confidently into 2024 was due to better-than-expected seasonal conditions through summer.
“This, along with expectation of positive farm margins for the year ahead – has driven the most significant turnaround in confidence we’ve seen in several years,” he says.
Van Doremaele says the last two years have seen farmers hold pessimistic views on the future due to falls in the red meat market, higher interest rates and rising input costs.
Returning to a more positive outlook, the survey found that nearly a third of farmers across the nation (31 per cent) expect the agricultural economy will improve over the next 12 months – more than double the last survey (14 per cent).
There was also a significant drop in the number who anticipate conditions will worsen, down to 16 per cent from 55 per cent at the end of 2023.
The latest quarterly survey found summer rainfall topped up sub-soil moisture in many cropping zones, delivering a boost to the feed base across grazing regions.
Because of this, farmers who believe the agricultural economy will worsen were less concerned about drought – nominated by just eight per cent this survey, which was down from 45 per cent in the last quarter of 2023.
Rising commodity prices topped the list of reasons Australian farmers gave for their positive outlook (nominated by 58 per cent of those expecting the agricultural economy to improve).
Commodities
There has been a drop in those concerned about falling commodity prices. This is now a factor for 45 per cent of farmers who expect the agricultural economy
to worsen over the next 12 months, after spiking at 64 per cent in the previous survey.
“Although agricultural commodity prices remain well below the highs we saw in 2022, the outlook is more positive for this year,” van Doremaele says.
“In particular, beef and sheep prices are set to be above the lows we saw last year, and that has driven up the confidence of red meat producers.”
Net confidence of beef producers jumped from -40 per cent at the end of 2023 to 29 per cent now, while net confidence in the sheep sector bounced back from -45 per cent to 27 per cent.
The negative outlook continued to prevail among grain growers due to falling commodity prices and rising input costs, although confidence did increase this quarter from -38 per cent to -15 per cent.
“Although grain producers are likely to remain under pressure as a result of plentiful global and local supply, there’s a silver lining as farm input prices for fertilisers and plant protection products are forecast to be below last season,” van Doremaele says.
“This, combined with useful rainfall in many grain-growing regions, sets growers up to more optimistically plan, compared to the same period last season – for the upcoming planting period for winter crops such as wheat, barley and canola.”
Dairy farmers’ confidence increased as they look ahead to the new season milk price, with their net confidence level lifting from net -42 per cent to -7 per cent.
With an increase in confidence for the year ahead, Rabobank says farmers intend to make more investments.
Investment and income
Rabobank’s latest Rural Confidence Survey found 21 per cent of farmers are looking to increase investment in their business in 2024 (up from 15 per cent in the previous quarter) and only 12 per cent intend to decrease investment (down from 29 per cent).
“Farmers took a very conservative approach to spending last year, mindful of reduced incomes and the uncertain summer forecast, but they now have more confidence to boost their budgets following improved seasonal and economic outlooks which underpin positive farm margins in key agricultural sectors this year,” van Doremaele says.
Of those planning to increase their investments, 61 per cent plan to invest in on-farm infrastructure, which is a 9 per cent increase on the last quarter.
Around a third of those farmers (34 per cent) are looking to increase their livestock investment, up from 20 per cent.
“Farmers have emerged from a period of eroded confidence and reduced income, so it’s encouraging to see a lift in positivity about what the year ahead will bring,” van Doremaele says.