More than half of Australian farmers expect agricultural economy to worsen

Australian rural confidence has declined in the latest quarter, with increasing concerns about lower commodity prices and the prospect of a return to drought weighing on farmer sentiment. However, Australian farmers are feeling less pressure from interest rates and overseas markets/economies, according to the latest quarterly Rabobank Rural Confidence Survey, released today.

Overall, national rural confidence was found to have dropped to the fourth lowest level in two decades.

More than half of Australian farmers (51 per cent) surveyed expect the agricultural economy to worsen over the next 12 months (up from 35 per cent with that view last quarter).

A total of 10 per cent expect an improvement (back slightly from 13 per cent last survey), while 37 per cent expect the agricultural economy to remain stable in the year ahead.

Among those farmers reporting a negative outlook, there were increasing concerns about lower commodity prices – cited as an issue by 60 per cent, compared with 56 per cent last quarter. Drought was also a growing worry – nominated by 32 per cent with a pessimistic outlook (compared with 20 per cent previously).

Of those producers with an optimistic outlook this survey, expectations of rising commodity prices were a key driver (for 61 per cent). While fewer were expecting good seasonal conditions (19 per cent, compared with 33 per cent in quarter two), more were confident in overseas markets (20 per cent, up from 14 per cent).

Marcel van Doremaele, Rabobank group executive for Country Banking Australia, said farmers with a positive outlook were reflecting the hope that the sector had weathered the worst of price cycles and was now coming out the other side.

“It has certainly been a period of adjustment for our agricultural sector, as we come off historically-high commodity prices, especially for the cattle and lamb sectors,” he said.

“Last quarter we saw stabilisation of confidence in some states, but now it’s fallen consistently across the nation on the back of dry seasonal conditions paired with softer commodity prices.”

Marcel van Doremaele, Rabobank group executive for Country Banking Australia

Van Doremaele said seasonally, farmers had been dealt a mixed hand across the country. “While some winter-rainfall-dominant regions have received beneficial falls to set them up for spring, other areas are grappling with the double-whammy of both a dry start and a dry finish for crops,” he said.

“It’s fair to say the potential of what may happen through the crucial spring period does have many producers on a knife’s edge, especially in regions where winter didn’t deliver rain as hoped.”

A comprehensive monitor of outlook and sentiment in Australian rural industries, the Rabobank Rural Confidence Survey questions an average of 1000 primary producers across a wide range of commodities and geographical areas throughout Australia on a quarterly basis. The next results are scheduled for release in December 2023.

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