10 June 2003

Results at a Glance:

 

• Rural confidence has improved slightly across Australia.
• Farm incomes continue to be adversely affected by the drought.
• Farmers are more confident about income expectations over the next 12 months.
• The rising Australian dollar has negatively influenced sentiment with falls in the prices of most agricultural commodities.
• Investment intentions have also improved.
• The stable interest rate environment continues to positively influence sentiment.
  

The prospect of an improved 2003 season is positively influencing sentiment among Australia's farmers, with rural confidence continuing to climb gradually in the first quarter of the year, according to the latest Rabobank Rural Confidence Survey.

 

The survey found approximately 42 per cent of the country's primary producers expected the agricultural economy to improve over the next 12 months.

 

In the previous survey, 40 per cent of respondents had indicated they expected the agricultural economy to improve.

 

Rabobank general manager rural Australia Neil Dobbin said the increase in rural confidence was relatively small, but significant.

 

"While this is only a slight improvement in outlook to the previous survey, it does show a continuing trend of increasing optimism among our farmers," he said.

 

Mr Dobbin said that, in addition to optimism about this year's season, farmers may also have been positively influenced by improvements in the international environment.

 

"The stable interest rate environment is also likely to be influencing their confidence levels, while on the negative side, concerns about the rising Australian dollar and its impact on commodity prices are obviously keeping this optimism somewhat in check," he said.

 

The survey showed a surprisingly sharp jump in confidence in New South Wales, where 45 per cent of those surveyed expected the agricultural economy to improve, compared to 34 per cent last survey.

 

"This result took us a back a little," Mr Dobbin said, "considering a significant area of New South Wales is still in the grip of the drought."

 

Mr Dobbin said the widespread rainfall in the state in February and March had resulted in a surge in confidence.

 

"Unfortunately, the lack of follow-up rains in the state means that upsurge in confidence may diminish rapidly," he said.

 

South Australian farmers were the most optimistic of all states surveyed (46 per cent expecting conditions to improve), while Tasmanian primary producers registered the lowest levels of optimism (only 34 per cent expecting an improvement in the economy).

 

Of the different commodity sectors, cotton growers were most confident, while sentiment also improved among grain producers.

 

"The high level of optimism among cotton growers (57 per cent) undoubtedly stemmed from higher cotton prices, although water storage levels remain extremely low," Mr Dobbin said. "And, despite the falls in wheat prices, sentiment improved among grain producers on the back of expectations of a better season this year."

 

Farm incomes continue to be adversely affected by the drought, with 58 per cent of farmers reporting lower farm incomes in the first three months of 2003 compared with the corresponding period last year.

 

Incomes were lower across all sectors, with dairy producers significantly affected by lower milk prices and an increase in input costs.

 

Respondents were, however, generally confident about their income levels over the next 12 months, with 46 per cent expecting higher incomes and only 22 per cent lower incomes.

 

Mr Dobbin said grain and cotton producers were most confident about income levels.

"Sheep farmers conveyed concern about incomes due to the uncertain outlook for wool prices. Cane growers are also concerned about income prospects due to recent international price falls," he said.

 

Of those farmers surveyed, 30 per cent expected to increase investment in their farm businesses, up from 28 per cent in the previous survey. A further 54 per cent expected their investment levels to remain static.

 

The survey found farmers were generally not concerned about the direction of interest rates with 64 per cent of respondents believing rates would stay the same or fall over the next 12 months.

 

 

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.