29 March 2004
Results at a Glance:
Confidence has declined further in Western Australia and is now at its lowest level in 18 months, according to the latest quarterly Rabobank Rural Confidence Survey.
The survey shows only 16 per cent of WA's primary producers expect the agricultural economy to improve in the next 12 months, down from 24 per cent in the last quarter.
Thirty-two per cent of farmers expect economic conditions to worsen during the year, up slightly from 30 per cent last quarter.
Crawford Taylor, Rabobank state manager for Western Australia says the fall in confidence comes after record grain production in 2003.
"The forecasted lower grain prices for this year, combined with the prospect of not repeating last year's record crop production means farmers are more circumspect this year," says Mr Taylor.
Last year's record crop production led to 64 per cent of respondents reporting higher gross farm incomes for that year. Only 17 per cent reported lower farm incomes.
"While you would normally expect farmers to be confident after such a season, the strength of the Australian dollar and its effect on commodity prices have negatively impacted on sentiment," he says.
Significantly, only 7 per cent of respondents were concerned about the possible impact of drought in the next 12 months, suggesting price issues are more "top-of-mind" for WA's primary producers than seasonal conditions.
Of the farmers expecting agricultural economic conditions to worsen in the next 12 months, 76 per cent say the rising Australian dollar is a major concern, compared with 56 per cent last quarter.
WA farmers' income expectations have been battered by the stronger Australian dollar.
Of those surveyed, 25 per cent expect higher gross farm incomes this year, down from 52 per cent in the previous quarter.
However, investment intentions are relatively stable despite the fall in rural confidence, with 29 per cent expecting to increase investment in their farm businesses in the next 12 months, marginally down from last quarter at 37 per cent. The number of respondents who expect to reduce investment in their business is unchanged at 10 per cent.
Farmers in Western Australia are more pessimistic about the benefits for Australian agriculture of the Free Trade Agreement with the United States. Overall, 24 per cent of respondents say the FTA will have a positive effect on the agriculture sector, compared with the national average of 34 per cent.
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 2000 farmers throughout the country. The next results will be released in June 2004.
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 41 branches throughout 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.