Farmers riding a wave of confidence into 2022: Rabobank survey

Australia’s farmers are riding a wave of confidence fuelled by high commodity prices, low interest rates and good seasonal conditions.

In the Rabobank survey, 84 per cent of Australian farmers surveyed forecast the agricultural economy would continue to perform at, or exceed, its currently excellent levels in the year ahead. Picture: Zoe Phillips

Australia’s farmers, who are expected this financial year to generate a record $78bn in farmgate output, are riding a wave of confidence fuelled by high commodity prices, low interest rates and good seasonal conditions that are expected to continue in 2022.

Rabobank said in a new report that farmers had finished the year with a positive outlook, though impacts of rain-affected harvests were still to be felt, and strong signals of long-term optimism across all sectors.

The Q4 Rabobank Rural Confidence Survey has shown Australian farm sector confidence held strong over the latest quarter, albeit easing from the near-record levels reported last survey.

The impact of recent excessive rainfall and flooding in southern Queensland and northern and central NSW grain-growing regions – which has devastated many crops on the point of harvest – has yet to be taken into account though, coming mainly after the survey was in the field. This is expected to significantly alter income projections in the grain sector that had been high.

The Rabobank survey reported that growers in impacted regions have been counting the cost of significant downgrades or complete ruination of what was shaping up as one of the biggest winter harvest years on record.

However, production losses have not been as significant in the livestock sector, which continued to enjoy sustained high commodity prices and favourable grazing conditions, while many summer croppers and cotton producers look set to capitalise on surety of water supplies and full soil moisture profiles.

The Rabobank survey, completed last month, also showed while overall national farmer confidence had softened on last quarter, it remained at strong levels, with 84 per cent of Australian farmers surveyed forecasting the agricultural economy would continue to perform at, or exceed, its currently excellent levels in the year ahead.

Rabobank Australia chief executive Peter Knoblanche said strong demand for Australian commodities, good seasons and favourable business settings were supporting solid, long-term confidence, although he added this would likely be diminished among grain growers and other flood-affected producers heading into the end of the year.

“Overall, there is significant long-term positivity in Australia’s farm sector – we see it in the high levels of farm viability reported, in farmers’ strong investment plans, and in the optimism about the year ahead,” Mr Knoblanche said.

“But while above-average rainfall has been a blessing in some sectors, it has caused significant heartbreak in others. The full extent of the damage to this year’s east coast winter grain harvest, in particular, is still being assessed, and it’s unclear yet just how much grain has been downgraded to feed quality, and how much will be a write-off.

“This is particularly heartbreaking for grain growers as they were very optimistic about this year’s crop – it had enormous potential in both yield and value.”

Rabobank found 35 per cent of farmers surveyed were expecting conditions in the agricultural economy to improve over the year ahead, easing from 43 per cent with that view in the September quarter. A further 49 per cent said they were expecting farm business conditions to remain stable over the coming 12 months, while 13 per cent expected conditions to worsen – an increase on the 4 per cent of farmers with that view last quarter.

In terms of investment outlook and expectations, the survey found close to 40 per cent of farmers surveyed expected to increase investment in their farm business next year. For those intending to increase spending, 71 per cent was earmarked for on-farm infrastructure and 53 per cent for new plant and machinery.