28 November 2007
Results at a Glance:
- WA rural confidence has remained at a positive level and is now the strongest in Australia, with confidence having fallen in all other statesr.
- Farm labour shortage has emerged as a bigger issue in WA than any other state.
- Seasonal conditions continue to have the biggest impact on farmer confidence, with the rising Australian dollar also a factor.
Western Australian farmers are maintaining a positive outlook, after rural confidence levels in the state touched record lows just 15 months ago.
The latest Rabobank Rural confidence Survey – taken last month – found that WA primary producers maintained steady confidence levels over the past quarter, while their interstate counterparts became increasingly pessimistic. Western Australian farmers are now the most confident in Australia.
The survey also showed that farm labour shortage is a bigger issue in WA than other parts of the country, as the rural sector competes for labour with the state’s booming mining industry.
Overall, the survey – which questions an average of 2000 primary producers across a wide range of commodities and geographical areas throughout Australia each quarter – showed 42 per cent of primary producers in WA expect the agricultural economy to improve over the next 12 months, the same result as recorded last quarter. Just over one quarter of farmers were found to be expecting conditions to worsen – 28 per cent, compared to 27 per cent last quarter.
Rabobank state manager for Western Australia Crawford Taylor said the positive sentiment observed this quarter was primarily being driven by buoyant grain prices.
“Confidence has continued to build through 2007, following the poor conditions that prevailed in much of the state throughout 2006,” Mr Taylor said. “For parts of central and most of southern Western Australia, cash flow will be significantly up on 2006 on the back of favourable grain prices, however significant areas of the northern, and parts of the central and eastern grain belts will be unable to take advantage of these prices due to dry conditions.”
When looking forward, grain and mixed grain/sheep producers were the most confident while beef producers and lotfeeders were the most pessimistic in response to low prices, structural issues and higher grain prices, Mr Taylor said.
“Dairy farmers were also pessimistic, however confidence levels are likely to have improved post-survey with recent factory announcements of increased farm gate milk prices following the tightening of milk supply.”
Globally, rural commodity prices have continued to strengthen in recent months as world supply shortages and robust demand conditions have created a bullish environment in many markets. In US dollar terms, Australian rural commodity prices have reflected these world conditions reaching record levels in October, having increased by 29 per cent since the start of 2007.
“Unfortunately for Australian producers, recent global commodity price increases have been largely offset by a weakening of the US dollar versus the Australian dollar, resulting in Australian dollar rural commodity returns actually falling slightly in October,” Mr Taylor said.
“That said, prices in Australian dollar terms have still increased by 13 per cent since the start of the season.”
World grain and dairy prices have continued to outperform other sectors.
Of the farmers in WA expecting the agricultural economy to improve over the next 12 months, i ncreasing commodity prices were “top of mind”, cited by 53 per cent of respondents.
The survey also found that Western Australian farmers, not surprisingly, were experiencing difficulties in attracting labour. Farm labour shortage was a bigger issue in WA than any other state.
Of the 69 per cent of Western Australian farmers who required additional labour over the past 12 months, 14 per cent described the experience of attracting labour as ‘impossible’. A further 62 per cent indicated that they had experienced some difficulty in attracting adequate labour.
When asked what steps had been taken to overcome labour shortage, 41 per cent indicated they had increased their own working hours, whilst 20 per cent had asked family and friends for assistance, 12 per cent had been forced to pay more for labour and 11 per cent had accepted less-skilled labour.
Encouragingly, WA farmers’ income expectations had improved significantly, with 59 per cent of respondents expecting their gross farm income to improve in the next 12 months, up on last quarter when 44 per cent anticipated higher incomes.
Investment intentions had remained stable over the past six months with 27 per cent of primary producers expecting to increase investment in their farm businesses in the next 12 months, the same proportion as that recorded in the previous 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 an average of 2000 farmers throughout the country each quarter. The next results will be released in March 2008.
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 42 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 47 branch locations throughout Australia.
For further information about the Rural Confidence Survey, please contact Denise Shaw, Public Relations Manager (Tel: +61 2 8233 8744) or email on firstname.lastname@example.org.