Sentiment in the nation’s agricultural sector is at a 15-month low as farmers brace for a hot, dry summer with drought conditions intensifying across large swathes of the country, the latest quarterly Rabobank Rural Confidence Survey has found.
The final survey for 2019 found of the 1000 farmers questioned, 41 per cent expect agricultural economic conditions to worsen in the next 12 months (up from 30 per cent in the September quarter), while 31 per cent expect them to stay the same. Only 17 per cent had a positive outlook on the year ahead, compared with 25 per cent in the previous survey.
The driest spring on record – along with bushfires which heralded an early start to summer – saw the latest survey report the sixth-lowest reading in its 18-year history, with two-in-five farmers expecting conditions in the agricultural economy to deteriorate even further in the coming year.
Rabobank Australia CEO Peter Knoblanche said as the year draws to a close, there had been little respite in the unrelenting dry across much of the eastern seaboard, and dry conditions now extending across the country to the west, and the nation enduring its driest January to November period since 1902. And with little relief foreseen, Knoblanche said the season was understandably on most farmers’ minds as fires, heat and wind foreshadowed “a long summer ahead”.
“The survey, which was completed in November, found drought concerns were particularly heightened in New South Wales, with 99 per cent of farmers who had a negative outlook blaming the season for their pessimism,” he said. “But concerns about weather spread across all states, with drought emerging as the primary reason nationally for farmers expecting economic conditions to worsen in the year ahead.”
The fundamentals of the agri sector, however, remained solid, he said, with strong demand and solid prices for many commodities – such as beef, sheepmeat, wool, dairy, grains and cotton.
Farm business performance and investment
Farmers overall reported an easing in near-term investment intentions this quarter, Knoblanche said, with 19 per cent reporting they would reduce their on-farm investment in the next 12 months (up from 14 per cent last quarter). A total of 17 per cent however, were still intending to increase investment (same reading as last quarter).
Investment intentions varied considerably by region, however – with more farmers in drought-impacted New South Wales and Queensland indicating they would be winding back their investment, while intentions remained comparatively strong in Western and South Australia, Tasmania and Victoria.
In terms of income projections, the nation’s farmers revised down expectations for their gross farm incomes in 2020, compared with 2019, albeit not to the same extent as the drop-off in farmer sentiment.
Across the country, 23 per cent of surveyed farmers are expecting an improvement in gross farm incomes (was 24 per cent), while the percentage expecting a weaker financial result increased slightly to 39 per cent (from 34 per cent). And a total of 34 per cent expect little change in incomes from this year.
A comprehensive monitor of outlook and sentiment in Australian rural industries, the Rabobank Rural Confidence Survey questions an average of 1000 primary producers across a wide range of commodities and geographical areas throughout Australia on a quarterly basis. The survey has been conducted by an independent research organisation interviewing farmers throughout the country each quarter since 2000. The next results are scheduled for release in March 2020.