Farmer confidence rebounds

The latest quarterly Rabobank Rural Confidence Survey, released earlier in March, found Australian farmer confidence has returned to “positive territory” for the first time since June 2022, with more farmers now optimistic than pessimistic about the year ahead.

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.

Nearly a third of farmers across the nation (31 per cent) expect the agricultural economy to improve over the next 12 months – more than double 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.

Farmer confidence lifted across the country, although Tasmania and Western Australia were the only two states where confidence remained at net negative levels, despite seeing sentiment rally considerably since the end of 2023.

For those expecting a better year ahead, rising commodity prices topped the list of reasons for their positive outlook (58 per cent), while good seasonal conditions trail just behind at 40 per cent.

Rabobank group executive for Country Banking Australia, Marcel van Doremaele, said one of the key reasons Australian farmers have moved confidently into 2024 was 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 said.

Van Doremaele said the surge in farmer confidence followed two years where rural sentiment had “languished in negative territory”, corresponding to falls in the red meat markets, higher interest rates and rising input costs.

Sentiment had then stagnated at low levels in late 2023, as farmers faced uncertainty about how the declared return to El Niño conditions would play out.

“Summer certainly presented some weather challenges, with four cyclones making landfall in the 2023/24 wet season, major storm damage and extreme heat and bushfires,” he said.

“However, most farmers emerged relatively unscathed from what they anticipated to be pretty dire conditions through summer as significant rainfall was received across many farming regions.

“This buoyed the optimism of those fortunate to receive the rain, but there are still regions where farmers remain concerned about dry conditions. The dry summer has taken its toll in Tasmania and WA in particular, where confidence levels are lagging the rest of the nation.”

Van Doremaele said it was pleasing to see areas of WA had received significant falls of rain in late February which will set up the state’s grain growers as they head into the sowing window for winter crops.

The latest survey, completed last month, found with summer rainfall topping up sub-soil moisture in many of the nation’s cropping zones and delivering a boost to the feed base across grazing regions, drought had fallen away as a concern for farmers who believe the agricultural economy will worsen – nominated by just eight per cent this survey, down from 45 per cent in the last quarter of 2023.

There was also a drop in those concerned about falling commodity prices. This was 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 said.

“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.

“The market is starting to re-set following the high volumes of livestock which hit the market last year and which, paired with the dry outlook, had depressed prices. We’ve already seen price gains this year for beef and sheep off the back of strong rainfall and re-stocker demand returning.”

More farmers reported being concerned about rising input costs this survey (cited by 37 per cent of those with a negative outlook on the year ahead, up from 28 per cent in the previous quarter), while overseas markets/economies were also an increasing worry (18 per cent, up from nine per cent).

However, concerns about the impact of rising interest rates eased slightly and worries about the Australian dollar remained at low levels.

With the bounce back in confidence, more farmers are looking to invest in the year ahead, the survey found.

A total of 21 per cent of farmers indicated they are looking to increase investment in their business in the coming year (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 said.

The next results are scheduled for release in June 2024. For more information on the survey and results, visit Rabobank's website.