Inflation hits farmer confidence

Victorian farmers are feeling the effect of rising interest rates and inflation, with confidence in the sector plunging.

Rising interest rates, on-farm labour shortages and falling commodity prices have taken the shine off of farming in Victoria, with farmers feeling the ongoing effect of input price pressures.

And as the rising cost of living continues to squeeze Australians, the outlook for the farm sector for the remainder of the year appears cloudy, according to Rabobank’s latest rural confidence survey.

Victorian farmer optimism has plunged with just 9 per cent of those surveyed last quarter expecting business conditions to improve in 2023, compared to 12 per cent surveyed the quarter prior.

Almost 70 per cent of respondents attributed their lack of confidence in the sector to softening commodity prices, up from the 17 per cent who listed it as a factor in the previous quarter.

Rabobank regional manager for Southern Victoria and Tasmania Deborah Maskell-Davies said most agricultural commodity prices had either softened, or were forecast to this year, with prices returning to “normal” after a boom.

“However, although cattle prices have backed off a significant peak, the milk price remains strong, and the quality of broadacre crops was better than many anticipated,” Ms Maskell-Davies said.

The Eastern Young Cattle Indicator fell below 700c/kg last week: the first time since 2020, and is 428c/kg below where it was the same time last year, in a reflection of a flow-on from a national herd rebuild.

The High Country Weaner sales this year saw a dip in prices. Picture: Zoe Phillips

There were 39 per cent who anticipated conditions to worsen (from 38 per cent), while more than 50 per cent expected the situation and conditions to remain stable, according to the report.

It comes as new research shows more primary producers are feeling unsupported by the government in an increasingly unstable economy.

The latest AgriWebb State of the Farmer report showed 43 per cent of producers felt very unsupported or somewhat unsupported by the government, compared to only 13 per cent at the same time last year.

Top concerns for producers this year included rising input costs and rising interest rates, contributing to low sentiment for government.