31 May 2004 - 2nd Quarter 2004
Results at a Glance:
- Confidence is stable in rural Queensland but remains relatively weak
- Rural confidence is higher in Queensland than all other states
- Investment intentions and income expectations declined slightly
- Sentiment is stronger among cotton and grain producers
- Confidence has improved in the sugar industry but remains weak
Rural confidence is stable among Queensland primary producers but still remains relatively low, according to the latest quarterly Rabobank Rural Confidence Survey.
However, with falls in rural confidence Australia-wide, sentiment is highest in the Sunshine State.
The survey shows 18 per cent of Queensland's primary producers expect the agricultural economy to improve in the next 12 months, down from 29 per cent last quarter.
However, only 25 per cent expect conditions to deteriorate, compared to 34 per cent last quarter.
"While it is pleasing to see stability in the survey, sentiment continues to remain weak," says Ian MacGibbon, Rabobank state manager for Queensland.
"The dry conditions have been an issue for most Queensland farmers," he says.
"However, recent rainfall across the state is a promising sign for primary producers, who had been expecting adverse seasonal conditions to continue for the rest of the year."
"The weakening Australian dollar in the past few weeks may improve the outlook for Queensland farmers but it will need to correlate with increased commodity prices, if we are to see any improvement in rural sentiment."
Of farmers who expect the agricultural economy to get worse in the next 12 months, 42 per cent say lower commodity prices are a major concern, with 34 per cent concerned about the strength of the Australian dollar. Seasonal conditions are more top-of-mind this quarter, with 21 per cent of respondents saying dry conditions are having a negative impact on the sector's economy, compared with just 2 per cent last quarter.
Confidence is higher among cotton producers this quarter, with an increase in water storage levels improving prospects for plantings planned later this year. Sentiment has also improved among the state's sugar farmers on the back of higher international sugar prices and the federal government's funding package for the sector.
However, despite the improvement in rural confidence among sugar farmers in Queensland, sentiment still remains weaker than all other sectors in the state.
The survey showed sentiment was also relatively weak among beef producers with dry conditions leading to increased turn-off rates and lower prices over recent months.
Farm investment intentions declined slightly, with 21 per cent intending to invest more in their business during the year, compared to 30 per cent last quarter. Of those farmers intending to invest in their business in the next 12 months, farm machinery purchases are the most popular option at 20 per cent, with livestock and land buying also important options at 13 and 12 per cent respectively.
Income expectations also declined with 30 per cent of Queensland farmers expecting higher gross farm incomes in the next 12 months, down from 38 per cent last 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 2000 farmers throughout the country. The next results will be released in August 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 43 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.