5 September 2005

Results at a Glance:

• Rural confidence in Western Australia has improved, but remains weak.
• Investment intentions and income expectations have also improved.
• Sentiment is stronger among grain producers, but remains weak among sheep producers.

Rural confidence improved significantly in Western Australia, but remains in negative territory, according to the latest quarterly Rabobank Rural Confidence Survey.

Overall, 15 per cent of WA farmers expect the agricultural economy to improve in the next 12 months, up from 10 per cent in the previous quarter. Significantly, far fewer expect conditions to worsen over the next 12 months - 27 per cent compared with 47 per cent last quarter.

Rabobank state manager WA, Crawford Taylor said the improvement in confidence since the last survey period had resulted from the excellent opening rains experienced around most of the agricultural area.

"However, the very dry period experienced around much of the state in July has put a lid on the improvement in confidence," Mr Taylor said.

"There are also a number of other factors negatively impacting on sentiment including lower grain and wool prices and higher fuel and fertiliser costs."

Of the farmers expecting the agricultural economy to worsen in the next 12 months, 65 per cent said falling commodity prices were a major concern compared with 61 per cent last quarter. Rising input costs continue to be a key concern cited by 52 per cent of respondents and up from 46 per cent last quarter. Significantly, seasonal conditions were only mentioned by three per cent of respondents, compared to four per cent last quarter.

While confidence has improved among all farm types, grain producers are feeling more optimistic than other types. Wool producers are feeling the least confident at the moment with concerns over the direction of wool prices, together with the mixed seasonal conditions affecting sentiment.

Encouragingly, investment intentions continue to improve with 27 per cent intending to increase investment in their farm business over the next 12 months, up from 24 per cent the previous quarter. And only 12 per cent expect lower investment in their business over the next 12 months compared to 15 per cent last quarter.

Consistent with the improvement in headline confidence, income expectations have also improved. Over the next 12 months, 40 per cent expect higher incomes up from 29 per cent last quarter with fewer farmers expecting lower farm incomes - 21 per cent compared with 35 per cent last quarter.

The improvement in income expectations comes after a generally difficult year for farm incomes in 2004/05. Overall, 45 per cent of producers reported lower gross farm incomes in this period and 28 per cent reported higher gross farm incomes. Wool producers were the hardest hit with grain farmers faring slightly better.

T

he 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 November 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.