30 May 2005

Results at a Glance:

• Rural confidence in Western Australia has improved, but remains weak.
• Investment intentions and income expectations have improved slightly.
• Sentiment is weak among all farm types.

Rural Confidence in Western Australia has improved slightly, but remains at low levels, according to the latest quarterly Rabobank Rural Confidence Survey.

Overall, 10 per cent of WA farmers expect the agricultural economy to improve in the next 12 months, up from seven per cent in the previous quarter. And fewer expect conditions to worsen over the next 12 months - 47 per cent compared with 58 per cent last quarter.

However, Rabobank state manager for Western Australia, Crawford Taylor said rural confidence should have continued to improve over the last few weeks with the excellent opening rains experienced around most of the agricultural area.

"With rain in most areas it is a great opportunity for farmers to complete their seeding programs," Mr Taylor said.

"And pasture establishment has been excellent which will give livestock producers extra flexibility."

While the opening rains have undoubtedly improved sentiment, there remain a number of concerns. The falls in wool prices and weakness in wheat and canola futures continue to affect the outlook. And farmers continue to be affected by higher input prices, particularly fuel. Over the next 12 months, 85 per cent of producers expect input prices to continue to rise.

Of the farmers expecting agricultural economic conditions to worsen in the next 12 months, 61 per cent said falling commodity prices were a major concern compared with 69 per cent last quarter. Rising input costs are also a major concern cited by 46 per cent of respondents and up from 33 per cent last quarter. Significantly, seasonal conditions were only mentioned by four per cent of respondents compared to eight per cent last quarter.

Consistent with the improvement in headline confidence, income expectations have also improved. Over the next 12 months, 29 per cent expect higher incomes up from 26 per cent last quarter and fewer farmers are expecting lower farm incomes - 35 per cent compared with 42 per cent last quarter.

Investment intentions have also improved with 24 per cent intending to increase investment in their farm business over the next 12 months, up from 19 per cent the previous quarter. And only 15 per cent expect lower investment in their business over the next 12 months compared to 23 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 more than 2000 farmers throughout the country. The next results will be released in August 2005.

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 is ranked one 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 46 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.