Rabobank rural confidence survey: Rising input costs knocking farmers

A rural confidence survey has found the war in Ukraine and exacerbating fuel and fertiliser prices are knocking farmer confidence. Full report here.

The prospects of a third bumper harvest and high prices as a result of the war in Ukraine has grain growers the most optimistic in the rural sector. Picture: Zoe Phillips

Farmer confidence in Australia has declined for the third consecutive quarter, largely due to the war in Ukraine exacerbating fuel and fertiliser prices, according to Rabobank.

In its latest quarterly rural confidence survey released today, the bank said farmer sentiment was now at “cautiously optimistic” levels, with more than half expecting current positive conditions in the sector continuing.

But the number expecting an improvement in their businesses had fallen.

The Rabobank rural confidence survey questioned about 1000 farmers across a range of commodities and geographic areas in Australia during May.

This quarter, farmers were specifically asked questions about the war in Ukraine.

Half said the conflict would have a negative effect on farm business, while a quarter expected a positive effect.

Grain growers were among the most optimistic, borne out by the fact 50 per cent of them believe Russia’s attack on Ukraine would have a positive effect on their business, mostly due to rising commodity prices.

But as many as 40 per cent of growers believed the war would negatively effect their businesses through higher costs of fuel and fertiliser and other inputs.

Rabobank Australia chief executive Peter Knoblanche said farmers had been enjoying high commodity prices and mostly excellent seasonal conditions in many parts of the country for more than two years, but many in the sector were now facing considerable margin pressure with input costs rising on all fronts.

Mr Knoblanche said the war in Ukraine was exacerbating cost and supply issues that had plagued the sector since last year.

“But for some sectors, especially grains, we are seeing the conflict impact global supply and push prices higher, and also deliver higher local prices with strong demand for Australian grain as the world turns to our producers to help meet critical food needs,” he said.

“But as the next round of European Union sanctions come into force, there is a lot of caution

among farmers about what this will mean for the longer term, which is flowing through to lower levels of optimism.”

The Rabobank survey showed cotton grower confidence was high.

Dairy farmer confidence was also bullish, with 59 per cent expecting a rise in income.

Sheep and beef producers had their confidence dented by falling commodity prices.