Mixed bag in farmer confidence

Survey results of farmer confidence from an agribusiness banker have revealed heightened concerns about the economy and falling commodity prices as a result of COVID-19.

The latest Rabobank Rural Confidence Survey has shown that despite a strong start to the year, the number of Victorian farmers expecting business conditions to worsen has almost doubled.

But it is graingrowers who have bucked the trend, however, with seasonal conditions in cropping regions instead helping bolster business confidence for the year ahead.

While COVID-19 has created significant short-term uncertainty, longterm confidence in the sector remains strong, with the survey revealing investment intentions high among the state’s farmers.

Results show a sharp retreat in farmer confidence from the highs of the March quarter.

The percentage of farmers expecting business conditions to improve in the coming 12 months has dropped to 26 percent compared with 41 percent at the start of this year. A total of 29 percent now reported a negative outlook on the year ahead.

Taken at the height of coronavirus restrictions, the survey found 56 percent of Victorian farmers reported COVID-19 or related government restrictions having a negative impact on their business.

Among graingrowers, this number increased to 66 percent, while 60 percent of beef and 57 percent of sheep respondents also reported negative fall-out from the pandemic.

The range of impacts included supplies being harder or slower to obtain or more expensive, not being able to go to sales, markets and auctions, and the impact on wool prices.

Rabobank southern Victoria regional manager Hamish Mcalpin said farmer confidence had fallen due mainly to concerns about commodity prices and uncertainty about markets from COVID-19.

He said the mood among Victorian farmers was still generally upbeat, particularly because drought-affected areas had good autumn rain and a positive winter cropping program.

“Farmers in the northwest are happy with the improved season and generally there is a lot of optimism about good seasonal conditions continuing,” he said.

“The negative sentiment really only comes from farmers’ uncertainty about the markets.”

The latest survey results reveal overall Victorian rural confidence was primarily dragged down by a decline in sentiment in sheep and dairy sectors.

In the state’s sheep sector, confidence fell sharply, with 48 percent of the state’s sheep graziers expecting conditions to worsen over the next 12 months, compared with 20 percent holding the same view in the March quarterly survey.

Grain boost

A major turnaround in seasonal conditions, particularly in the Mallee and state’s northwest, has sustained graingrower confidence for the year ahead, with 39 percent expecting conditions to improve this year.

The survey found overall confidence had declined in all surveyed regions in the state, with the southwest of Victoria reporting a particularly large drop-off in confidence.

“After a run of really bad seasons, conditions have really turned around for farmers in the state’s north and northwest regions,” Mr Mcalpin said.

“There is a good feeling about the year ahead and farmers are well positioned to hopefully enjoy a year of good production above-average rain.

“For the southwest the erosion in confidence would have a lot to do with the downturn in the wool market, which has been significant in recent months.”

The survey found farm viability was strong, with 96 percent of Victorian farmers reporting viability despite a significant downward revision in expectations for farm incomes.

Income sentiment has improved for graingrowers, with 28 percent now expecting a higher gross-farm income this year – up from 19 percent.

Sheep and dairy farmers have both wound back their income expectations.

The quarterly survey questions an average of 1000 primary producers across a wide range of commodities and geographical areas throughout Australia. supported by