Australian farmers expect another productive and profitable year, with rural sentiment remaining at historically-high levels thanks to “perfect” summer conditions in the country’s east and exceptionally strong commodity prices.
According to the latest quarterly Rabobank Rural Confidence Survey, while overall net confidence had eased slightly from December’s rating, 39 per cent of farmers still expect conditions in the agricultural economy to improve in the coming year (from 43 per cent in the previous quarter), while 51 per cent expect them to remain stable. Only seven per cent of farmers in the latest survey had a pessimistic outlook on the year ahead (down fractionally from eight per cent last quarter).
Meanwhile, the survey’s farm viability index – measuring farmers’ assessments of their own business viability – continues to climb thanks to the aforementioned positive business conditions in Australian agriculture, with the index now eclipsing the highest level set last quarter to sit at a new record. Overall, it showed prevailing optimism across all agricultural sectors, with sentiment particularly positive among grain and cotton producers.
Rising commodity prices and strong demand were cited by 68 per cent of respondents as the primary drivers of confidence in this quarter’s survey, with 62 per cent citing the continuing run of good seasonal conditions, helped along by consistent summer rain and mild temperatures in many regions. As far as uncertainty caused by COVID-19 is concerned, just 10 per cent of farmers expect a decline in conditions due to the ongoing pandemic.
Rabobank Australia CEO Peter Knoblanche said 2020 had delivered a major turnaround in fortunes for many Australian farmers and the prospect of another good year was underpinning solid, long-term confidence in the sector.
“The recovery from drought and the return to production over the past 12 months has been extraordinary, despite the uncertainties around COVID-19,” Knoblanche said. “Australian grain growers delivered a record wheat harvest and near-record total winter grain harvest last season and there are promising early signs as farmers start making plans to plant this year’s crop.
“Livestock prices are breaking all sorts of records because the demand for sheep and cattle is so strong and there just aren’t the numbers to meet that demand,” Knoblanche added. “That is proving a challenge to those farmers trying to rebuild herd and flock numbers after the drought but providing good returns for farmers who held onto stock through the dry years.”
While Australian agriculture had been spared much of the devastation from COVID-19 felt throughout the global economy, Knoblanche pointed out that workforce constraints, especially in the wool and horticulture sectors, remain a concern for some farmers this year, while market volatility, particularly in export markets dependent on China, was also behind nervousness in some sectors.
Nevertheless, Knoblanche is optimistic of the exciting developments unfolding in the sector, especially the record levels of investment, with farmers capitalising on high returns, excellent seasons and favourable business conditions to build greater productivity and profitability into their enterprises.