Rabobank survey shows drier conditions and economic pressures push farmers confidence down

Fewer farmers expect the agricultural economy to improve in the coming year but the chance of a La Niña event to come provides some hope, the latest Rabobank survey finds.

Australian farmers confidence levels plunged in the last three months, according to a Rabobank survey.

A combination of mixed seasonal conditions and economic pressures has seen the nation’s farm sector confidence take a U-turn in the latest quarter, after a resurgence in optimism at the start of the year.

The June quarter Rabobank Rural Confidence Survey found sentiment among Australian agricultural producers had dipped into negative territory – with fewer farmers expecting a better year ahead than those holding a negative outlook.

Farmer confidence was shown to be down across all states, though remained at comparatively higher levels in NSW and Queensland.
The survey, completed last month, found those Australian farmers expecting the agricultural economy to improve in the coming 12 months had declined to 15 per cent – from 31 per cent with that view in the previous quarter.

This comes after a rebound in farmer confidence in the first quarter of the year, which had been driven by better than expected summer rainfall and promising commodity markets.

The Rabobank survey found farmers in the west and south of the country – particularly Western Australia, Tasmania and South Australia – had struggled through a very dry autumn, although rainfall was much more plentiful in Queensland and many parts of NSW.

Meanwhile, the impact of economic pressures on farm business bottom lines was also found to be an increasing concern, with worries cited about softer commodity prices in some sectors and inflationary pressures being felt in the form of high input costs.

The June quarter Rabobank Rural Confidence Survey found sentiment among Australian agricultural producers had dipped into negative territory – with fewer farmers expecting a better year ahead than those holding a negative outlook.

The survey found 36 per cent of respondents were now expecting conditions to worsen – up from 16 per cent. A total of 46 per cent though had a stable outlook on the year ahead, anticipating the agricultural economy to remain the same.

In contrast, the recently released Australian Bureau of Agricultural and Resource Economics and Sciences’ has forecast an overall improvement in the agriculture sector following drier conditions in 2023-24. ABARES said it expected gross values in the sector rise by 2 per cent from $87.6bn in 2023-24 to $89.5bn in the 2025 financial year, despite a 4 per cent fall in the value of agriculture, fisheries and forestry exports in the same period.

Rabobank group executive for Country Banking Australia Marcel van Doremaele said the survey results reflected the “patchy” seasonal conditions that had been seen across different parts of Australia during autumn.

He said pleasingly many of the drier parts of the country had since received late rainfall events in recent weeks, which would be offering many farmers a reprieve, though some areas still remained in need of rain, particularly in parts of Victoria.

“And although confidence has come down from the high levels we saw at the beginning of the year, overall conditions in the agricultural sector are still good,” van Doremaele said.

“There has been rainfall in many agricultural regions, setting up the planting conditions for the winter cropping season, while the potential of a La Niña developing in the second half of the year is holding additional promise.

“And commodity prices – while down from the very high levels seen a couple of years ago – are overall reasonable.”

A canola crop near Geelong in Victoria.

Drought/dry weather conditions was nominated as the biggest concern by farmers this survey (cited by 37 per cent), followed by rising input costs (35 per cent) and falling commodity prices (32 per cent).

Farmers were also mindful of the impact of government intervention and policies and overseas markets/economies – rated as a cause for concern by 24 per cent and 21 per cent, respectively.

“Although the formal announcement of when live export of sheep will cease hadn’t been made during the survey period, the issue has been weighing heavily on the minds of sheep producers, especially in WA where alternative markets are limited,” Mr van Doremaele said.

There was, though, still significant cause for optimism identified among farmers in the latest survey, with 37 per cent expecting a good season ahead and 28 per cent anticipating rising commodity prices.

All commodity sectors surveyed reported lower confidence levels, with the exception of cotton.

“Despite a mixed start to the grain season across the country, Australia’s crop planting is estimated to be up more than three per cent compared with 2023,” Mr van Doremaele said.

“After the tough start in WA, SA and western Victoria, farmers are looking to a mid-to-late season boost following better rainfall due to a potential La Niña.”