By Rabobank group executive for country banking Australia, Marcel van Doremaele Coming out of 2024, only Queensland and WA farmers reported improved optimism heading into the end of the year, with sentiment more subdued in other states, the latest Rabobank Rural Confidence Survey reported.
The survey found on a national basis farmers were becoming increasingly cautious about the outlook for the agricultural economy, with nearly half (47 per cent) attributing their concerns to dry seasonal conditions, while rising cost pressures are also a worry.
This follows a dry spring across a number of regions around the country.
However, signs of longer-term optimism in the sector remained strong with farmers reporting robust investment appetite in the year ahead.
The quarter four survey, completed last month, found seasonal challenges – together with rising input costs and the impact of domestic and international policies on markets and trade – had seen the net national rural confidence index ease back to -9 per cent, from -4 per cent in the previous quarter.
The survey found 26 per cent of farmers were expecting conditions in the agricultural economy to decline over the next 12 months (from 27 per cent last quarter), while 18 percent (down from 23 per cent) expected an improvement.
However, more than half (at 52 per cent) expect conditions to remain relatively stable.
Tasmanian farmers reported the largest fall as seasonal challenges had weighed on sentiment. Drought concerns were particularly heightened in South Australia, with 70 per cent of farmers surveyed in the state citing the negative impact of drought.
Despite the overall decline in national rural sentiment, farmers in Queensland and Western Australia bucked the trend, reporting an uptick in confidence.
The factors weighing on sentiment did little to dampen the long-term optimism in the sector nationally, highlighting that close to nine-in-10 farmers (at 86 per cent) are planning to increase or maintain their level of on-farm investment in the year ahead.
Investment intentions remain strong across the country, with three-in-five farmers looking to invest in their on-farm infrastructure and one-in-three focusing on adopting new technologies.
We’re seeing farmers embrace innovation and technology to increase business efficiency – whether it’s improving water use efficiency, gaining market insights into animal production traits and systems, or automating farming practices, it is an exciting time to be in agriculture.
Rabobank attributed the ongoing investment in innovation as key to building resilient farming systems in the face of dry seasonal conditions, with the national wheat crop on track to reach around 30 million tonnes.
Rainfall has been below the five-year median in many areas, particularly in South Australia, but also south-western Western Australia and parts of southern Victoria. Also, frost events have impacted southern grain-growing areas, from South Australia’s Eyre Peninsula to southern NSW.
Thankfully the severity and extent of the frost is not as significant as initially thought, though it has been tough for those impacted, while recent rain has had some impact on grain quality.
While the outlook for commodity markets was mixed, beef producers were the most optimistic about their prospects, as prices remain significantly elevated above last year’s lows. However, rising cost pressures are weighing on margins, with confidence in all commodity sectors (except beef) remaining in negative territory.
“These cost pressures, along with bearish global wheat prices, are suppressing confidence in the grains sector,” he said.
“While in dairy, farmgate milk prices are starting to trend higher with the expectation of a step-up in milk prices in coming months, which should alleviate some margin pressure.
“So, as we head into 2025, farmers will be hoping that the favourable seasonal outlook materialises and that some of the international market pressures ease in this high-cost environment.”
All states, except Western Australia and Queensland, followed the national trend to record a decline in confidence levels.
Tasmanian farmers reported the largest decline in confidence, dropping to a net reading of -14 per cent, from 40 per cent in the September quarter on the back of seasonal concerns.
Farmer sentiment in NSW edged back this quarter to a net confidence reading of -7 per cent, reversing the upward momentum from the previous quarter when it poked its head into positive territory at one per cent.
Dry conditions also weighed on the outlook in Victoria, with confidence remaining wedged in negative territory.
Queensland bucked the national trend to record a slight liftin confidence, driven up by an uptick in grains and cotton, while it remained steady in beef, as the state’s farmers remain hopeful the wet summer will eventuate.
Ongoing drought saw South Australian farmer sentiment fall back, to remain the lowest in the country at a net reading of -32 per cent, citing the drought as the reason for their pessimism.
Western Australian farmers are ending the year with their confidence levels intact, with a better-than-expected harvest seeing net rural confidence creep up slightly to -6 per cent, from -8 per cent previously. The main concern reported by WA producers was government intervention and policies – cited by 48 per cent
