27 March 2006

Results at a Glance:

• Rural confidence has improved in Tasmania.
• Investment intentions have improved.
• Income expectations are stronger.

Rural confidence among Tasmania's primary producers has improved in the last quarter, according to the latest quarterly Rabobank Rural Confidence Survey. Despite the improvement, rural confidence remains relatively weak, with more farmers expecting conditions to deteriorate than those expecting an improvement.

The survey shows 22 per cent of Tasmanian farmers expect the agricultural economy to improve in the next 12 months, down from 25 per cent last quarter. However, only 27 per cent now expect conditions to worsen during that period, compared with 38 per cent last quarter.

Rabobank senior manager for Tasmania, David Young said confidence continues to be negatively affected by increases in fuel and fertiliser prices, and by volatility in commodity prices.

A total of 94 per cent of Tasmanian farmers expect input prices to continue to rise over the next 12 months.

"The improvement in wool prices in early 2006 has improved optimism among the state's sheep producers. Dairy farmers are probably thinking things can't get much better with strong production and near record prices. International dairy prices have eased which may be affecting the outlook among some of the state's dairy farmers, however this has been mitigated to some degree by the weakening of the Australian dollar over the same period," Mr Young added.

Investment intentions have improved this quarter indicating a solid level of underlying confidence. Of the farmers surveyed, 90 per cent expect to maintain or increase investment in their business in the next 12 months, up from 79 per cent last quarter.

Income expectations have also improved with 81 per cent of farmers expecting their incomes to increase or stay the same in the next 12 months, compared with 67 per cent last quarter.

The increase in income expectations comes after an improved year for farm incomes in 2005. A total of 55 per cent of Tasmanian farmers reported higher gross farm incomes in 2005 compared to 2004, with only 24 per cent reporting lower farm incomes.

"Encouragingly, farmers in Tasmania also continue to be more confident about their long-term prospects than farmers in other parts of Australia. A total of 63 per cent rated their operations easily viable or viable, compared to the national average of 51 per cent," Mr Young said.

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 May 2006.

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. Rabobank operates in 38 countries, servicing the needs of more than nine million clients worldwide through a network of more than 1500 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.