26 March 2007

Results At A Glance:

• Rural confidence has eased in North Queensland.
• Sentiment has eased among sugar growers.
• Investment intentions and income expectations have remained steady .
  

Rural confidence has continued to ease in North Queensland, according to the latest results of the Rabobank Rural Confidence Survey.

The latest quarterly Rabobank Rural Confidence Survey - which surveys more than 2000 primary producers across a wide range of commodities and geographical areas throughout Australia - shows that 15 per cent of North Queensland primary producers expect an improvement in the agricultural economy during the next year, down from 18 per cent last quarter.

Rabobank regional manager North Queensland, Peter Ciranni said the easing in sentiment follows a period of improved confidence in the region.

"The decline in international sugar prices over the last six months has contributed to the easing in sentiment," Mr Ciranni said, adding that the recent smut disease outbreaks have also eroded confidence in some areas.

"Despite the fall in confidence this quarter, sugar farmers in North Queensland should still achieve a reasonable return this year, with harvests for 2007 expected to be around average and growers more optimistic that the smut issue is manageable," Mr Ciranni said.

Cattle prices have been depressed for some time, however favourable summer rain has lead to a firming of local prices, as farmers look to rebuild stock. Encouragingly, much of the rain has fallen within the catchment of the bigger dams resulting in rising dam levels, with many now at 50 per cent capacity.

Of those farmers surveyed who expect conditions to decline over the next 12 months, 32 per cent cited declining commodity prices as a major contributing factor, up from 23 per cent last quarter. Increasing input prices were also "top of mind", mentioned by 34 per cent of respondents.

According to Rabobank's Food & Agribusiness Research division, Australian rural commodity prices overall are at their highest level since 2002/03, buoyed by strong global wheat and corn prices, which have reached their second highest levels on record. Support has also been provided by local cattle prices having rebounded in recent weeks.

Investment intentions have slightly improved this quarter, with more producers expecting to invest more in their business over the next 12 months than those expecting lower investment. A total of 36 per cent plan to invest more in their business in the next 12 months, up from 26 per cent in the last quarter. Just 14 per cent expect lower investment in their farm business in the next 12 months, compared to 12 per cent last quarter.

Farm income expectations have remained steady with 27 per cent of North Queensland primary producers expecting higher incomes in the next 12 months, the same result as last quarter. A total of 27 per cent of respondents expect lower incomes in the next 12 months, compared to 29 per cent last quarter.

The quarterly Rabobank Rural Confidence Survey is a definitive monitor of outlook and sentiment in Australian rural industries. The most robust study of its type in Australia, the survey has been conducted since 2000 by an independent research organisation interviewing a panel of more than 2000 farmers throughout the country each quarter. The next results will be released in May 2007.

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 banks by Global Finance magazine. The bank operates in 43 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 branch locations 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.