Relief from the drought due to good winter rainfall hasn’t been enough to bolster rural confidence as the sector battles COVID-19, A big drop in overseas trade and falling commodity prices.
Having started the year at a five-year high, the latest Rabobank Rural Confidence Survey reveals that farmers’ confidence continues to fall as 2020 progresses.
Every state except Queensland and Tasmania saw a drop in their farmers’ sentiment. The survey reveals that almost a quarter of our farmers – 24 per cent – expect the agricultural economy to improve over the coming year, compared with 33 per cent who voiced that opinion in the last quarter. The percentage of farmers expecting worse conditions grew to 27 from the 23 last time around. And 44 per cent expect conditions in agriculture to remain basically the same.
Beef, grain, cotton and dairy farmers are the most optimistic about the year ahead, but for different same reasons: the breaking of the drought and a forecast bountiful harvest are boosting grain and cotton farmers; and the price of beef and dairy products have risen.
Those farmers who expressed pessimism about the outlook about the year ahead cited falling commodity prices, concern about overseas trade and COVID-19 as the key reasons for forming that negative opinion.
The growing impact of COVID-19 on farmers’ sentiment has been a key feature in the last three quarters, with only six per cent of those expecting the agricultural economy to worsen in quarter one mentioning the pandemic as a reason – that had risen to 26 per cent in quarter two and is 37 per cent this time around.
“Farmers are still keeping an optimistic outlook because in many of those areas which had been so severely drought affected, this is the harvest, and this is the big spring, they’ve been waiting for,” Rabobank Australia CEO, Peter Knoblanche, said.
“For many farmers, this spring will be the season that allows them to consolidate their business position and start to ‘catch up’ after years of drought. The crops are looking good and livestock numbers are rebuilding. So, that is all positive news for farmers on the home front.
“But concerns about the impact of COVID on trade, on consumer sentiment and what that means for markets is definitely worrying many,” Knoblanche added.
“Wool and sheep producers, cotton and grape growers, and those industries like beef and grain which have been caught up in recent trade disputes with China, are concerned about market instability and what it could mean for their own incomes over the coming year. While in some sectors – such as wool, grain and horticulture – producers are also feeling the strain of border closures limiting access to seasonal labour.”
