Rabobank survey: More farmers pessimistic about year ahead

For the first time in almost three years more Australian farmers are concerned rather than optimistic about what the next 12 months will bring.

The looming threat of foot and mouth and lumpy skin disease and rising input costs have led one in three Australian farmers to form a negative outlook for the year ahead.

For the first time in almost three years, Rabobank Australia’s rural confidence survey has found that despite the overall health of the farming sector following years of record commodity prices and high rainfall, 36 per cent of farmers surveyed believed conditions were set to worsen over the next 12 months.

The bank’s survey results, released today, found the mounting cost of farm inputs such as fuel, fertiliser, energy and building materials had pushed industry sentiment into negative territory, as more and more farmers expressed their concerns about the year ahead.

Front of mind was the perceived threat of FMD, which is spreading across Indonesia, and concern commodity prices were set to fall.

The survey found 85 per cent of respondents were “extremely concerned” about the threat of FMD and its potential impact on Australian agriculture.

Rabobank Australia chief executive Peter Knoblanche said there were several worrying factors clouding what was previously a positive outlook.

“Long term, I think farmers are still very confident about agriculture. There is good domestic and worldwide demand for our rural commodities, productivity and profitability is high and farmers have done very well rebuilding after the drought and building greater resilience into their businesses,” he said.

“However, margins are starting to come under pressure from the ongoing rise in input costs and farmers are carefully monitoring and managing those costs. And there is definitely some anxiety among livestock producers about the heightened threat of an FMD incursion.”

Many Australian farmers have been investing heavily in their businesses after years of high commodity prices and favourable seasonal conditions.

Not all farmers were downbeat about their business prospects heading into a new calendar year however.

While mixed livestock producers were the most pessimistic, cotton, dairy, sugar and grain producers were upbeat off the back of sustained above-average commodity prices and good seasonal conditions.

In Victoria, two years of strong returns for many of the state’s farmers has led to increased investment, with four in five of those surveyed in the southern state expected to maintain or increase their levels of investment over the year ahead.

But most farmers were apprehensive about rising input costs and their continued ability to wear them.

Sentiment was most positive in the dairy sector, which is experiencing record high milk price contracts.

In NSW, above-average rainfall and FMD concerns have tempered sentiment, with just 13 per cent of farmers expecting conditions to improve.

Rabobank’s quarterly survey monitors confidence in Australian agriculture by asking questions of about 1000 primary producers across commodities and parts of Australia.