Optimism high for 2017

Rabobank has released its final Rural Confidence Survey for the year and has found local farmers' confidence to be at historically high levels.

After posting a significant upswing in rural confidence last quarter, the net confidence indicator remain unchanged and at strong levels.

The survey, completed last month, shows a good number of farmers (36 per cent) expecting agricultural economic conditions to improve. About 46 per cent of those surveyed expect the next 12 months to be similar to the last.

Rabobank Country Banking Australia national manager, Todd Charteris says good seasonal conditions across much of the country, coupled with positive market outlooks across most sectors, contributed to the overall optimism.

"Much of the country is experiencing a good season, following the second wettest winter on record, and a wet start to spring," Charteris says.

"That said, the rain has been excessive in northern Tasmania and parts of New South Wales and Victoria, with flooding causing water logging of pastures and crops, which has led to some pretty significant downgrades to crop yields.

"The Western Australian crop has also been hit by mother nature, with the crop now expected to be three million tonnes down on earlier projections due to early spring frosts."

Charteris says grain, sugar and cotton farmers are the biggest winners from the wet season.

He says many grain producers are expecting a sizeable crop harvest, particularly in Victoria and South Australia; while 62 per cent of cotton producers are expecting conditions to improve over the next 12 months.

"The rain has not only spurred a large dryland plant this year, it has also shored up water availability for irrigators, which has facilitated the largest planting in five years – nearly double that of last year," he says.

"The market is also looking favourable, with domestic prices now trading up around $500 a bale (of cotton)."

Graziers were also buoyed by the season and strong market conditions, with 40 per cent of beef and 35 per cent of sheep producers expecting conditions to be better next year.

However, not everyone shares the same optimism, Charteris says, with global grains stock remaining at a surplus.

"While the upside for grain prices is currently limited, thankfully the yields are there for many Australian farmers this year, which will help offset the low prices," he says.

The survey also revealed a large turnaround in confidence among dairy farmers, despite some lingering concern about pricing.

Performance and investment

Of those surveyed, 34 per cent expected an improved financial result next year, while 46 per cent expected incomes to be relatively unchanged.

The high level of confidence among farmers is also reflected in their intention to invest, with 92 per cent looking to increase or maintain their level of farm business investment over the coming year.

About 34 per cent of farmers surveyed were looking to increase their skills and knowledge over the next year, with a good number (57 per cent) looking into garnering more information on emerging technologies on farm.

State-wise

Across the states, much of the upswing in confidence reported in Tasmania, Victoria and South Australia was driven by favourable seasonal conditions.

While there was a slight easing in confidence in New South Wales and Queensland, it remained historically strong, with farmers among the most positive in the nation.

Western Australia was the only state to report a material decline in confidence, with net confidence now in slightly negative territory at a three-year low.

Charteris says the fall in confidence had a lot to do with frost damage to crops, with Western Australia experiencing a series of damaging frosts in early spring.

Conducted on a quarterly basis every year, Rabobank's Rural Confidence Survey questions an average of 1000 primary producers in Australia across a wide range of commodities and geographical areas.

The next survey results are scheduled for release in March 2017.