10 June 2003 (1st Quarter 2003)

Results at a Glance:

• Rural confidence has risen further in New South Wales and is higher than most other states.
• Confidence has improved among grain producers and is slightly higher among cotton farmers.
• Investment intentions and incomes expectations have increased.
  

New South Wales farmers have experienced a surprisingly sharp jump in confidence levels, according to the latest Rabobank Rural Confidence Survey.

The survey showed 45 per cent of NSW primary producers expected an improvement in the agricultural economy in the next year, up from 34 per cent with that view in the previous quarter.

Only 15 per cent of the state's farmers expected conditions to worsen over the next 12 months compared to 31 per cent last quarter.

Rabobank state manager NSW Patrick Lally said the marked improvement in NSW confidence levels had been "somewhat surprising". He attributed the surge in optimism to initial rains which had fallen in the state in the early part of the year.

"Widespread rainfall across much of the state in February and March had led to the hope that the worst of the drought was behind us," he said.

"Unfortunately the lack of follow-up rain means that the improvement in confidence may diminish rapidly."

The survey found sentiment was highest among grain farmers in NSW, despite the recent fall in grain prices.

"This was driven by the expectation of an improved season in 2003," Mr Lally said.

"The sowing window for grains remains open for another month or so and farmers are still optimistic of sowing a decent winter crop."

Confidence was lower amongst the state's sheep producers due to the recent volatility in wool prices.

Rural confidence continues to improve in the cotton sector in NSW and is now considerably higher than the levels prevailing in 2002.

"Despite the recent weakness in cotton prices, prices remain considerably higher than last year," he said.

NSW primary producers reported that their farm incomes were generally lower in the first three months of 2003 compared with the same period in 2002.

"Of those surveyed, 63 per cent reported lower farm incomes compared to the previous year due to the severe effects of the drought," Mr Lally said.

However, farmers were increasingly optimistic about their earnings potential, with 43 per cent anticipating their incomes would increase in the next 12 months, compared to 30 per cent with that expectation in the previous quarter. Only 25 per cent anticipated lower incomes compared to 42 per cent last quarter.

Investment intentions among the state's farmers also improved in line with the general rise in sentiment. The survey found 27 per cent expected to increase investment in their farm businesses. This compared with 23 per cent in the previous quarter.

The Rabobank Rural Confidence Survey is a quarterly monitor of outlook and sentiment in Australian rural industries. The only study of its type in Australia, it is conducted by an independent research organisation interviewing a panel of approximately 2100 farmers throughout the country. The next results will be released in September.

Rabobank Australia is a part of the international Rabobank Group, the world's leading specialist in food and agribusiness banking. Rabobank has more than 100 years' experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank has a AAA credit rating and, in recent years, has twice been awarded the title of the world's safest bank by Global Finance magazine. The bank operates in 35 countries, servicing the needs of more than nine million clients worldwide through a network of more than 1900 offices and branches. Rabobank Australia is one of Australia's leading rural lenders and a significant provider of business and corporate banking and financial services to the Australian food and agribusiness sector. The bank has 36 branches through Australia.

Contact

For further information about the Rural Confidence Survey, please contact Denise Shaw, Public Relations Manager (Tel: +61 2 8233 8744) or email on sydney.confidence.survey@rabobank.com.