Farmer confidence remains in negative territory, however, with more of the state‟s farmers still expecting conditions to worsen over the next 12 months than those expecting them to improve.
The latest survey – taken approximately one month ago – found 20 per cent of Victorian primary producers expect the agricultural economy to improve, compared to 13 per cent in the previous survey. A total of 44 per cent of farmers expect the agricultural economy to worsen over the next 12 months, down from 57 per cent last quarter.
A comprehensive monitor of outlook and sentiment in Australia‟s rural industries, the Rabobank Rural Confidence Survey questions an average of 1200 farmers across a wide range of commodities and geographical areas throughout the nation on a quarterly basis.
Rabobank state manager for Victoria Mark Bennett said the state‟s farmers were maintaining a guarded outlook in response to the global economic situation and softened commodity prices in some sectors.
Farmer confidence had, however, been buoyed by seasonal conditions, which had improved in recent months and were the main driver of improved sentiment.
"A very timely autumn break over the ANZAC weekend was received across our major cropping regions, with rains of 20 to 35mm," Mr Bennett said. "This allowed
sowing to ideal moisture, so the season in many northern areas of the state has got off to a good start. Further south, crops were planted and crop preparation took place for a later sowing date.
"Since the major autumn break, conditions had been dry and warm, which was becoming worrying, however rain on May 25 brought relief to many areas, particularly in the western and northern half of the state.
"Southern dairy and grazing areas have had a good season to date as recent rain has consolidated earlier falls."
Mr Bennett noted dairy remained the least confident of all major agricultural sectors in the state.
"Dairy farmers are getting themselves through the second half of the supply season on a lower than anticipated milk price, with an eye toward opening prices in July," he said. "Many northern irrigators have reduced herds as a result of the mid-season price reduction and the lack of water availability. It‟s hoped that improved rainfall in the late autumn/early winter will boost the natural season and provide the basis for inflows to the catchments in spring."
The survey found that of those Victorian producers who expected conditions to decline over the next 12 months, 41 per cent believed „overseas markets/economies‟ would be a major contributing factor, down from 52 per cent reporting that concern in the previous quarter. Falling commodity prices were also „top of mind‟, cited by 35 per cent of farmers.
While many commodity prices remain well below last-year highs, grains and fibres have all edged higher in recent months (in US dollar terms), buoyed by a combination of production downgrades (Argentina), strong Chinese imports (soybeans), US planting delays (corn and spring wheat) and tight stock levels. These increases, however, have been muted somewhat by the appreciation of the Australian dollar.
Reflecting the recent abatement in fertiliser, chemical and fuel price increases, only 10 per cent of farmers cited rising input prices as a concern, down from the high of 73 per cent recorded nine months prior.
In terms of farmers‟ own businesses, the Rabobank survey found 21 per cent of respondents expected to see improved performance over the next 12 months. This figure was up on last quarter and slightly better than farmers‟ perceptions of the future performance of the overall agricultural economy.
Victorian farmers reported lower incomes for the previous three months, with 55 per cent receiving lower incomes compared to the same period in the previous year and just 19 per cent higher incomes.
Investment intentions remained unchanged, with 78 per cent of respondents expecting to increase or maintain their current levels of investment in their farm business in the next 12 months, the same percentage recorded in the previous quarter.
The Rabobank Rural Confidence Survey also found that Victorian agricultural producers were increasingly feeling the impact of the global financial crisis.
A total of 54 per cent of those surveyed believed their business had been impacted, compared to 26 per cent with that opinion six months previously. Grain and dairy producers were the most likely to be impacted, with „lower commodity prices‟ the most common effect experienced. Other common impacts listed by producers included; „more difficult economic conditions‟ and „lower interest rates‟.
The most robust study of its type in Australia, the Rabobank Rural Confidence Survey has been conducted since 2000 by an independent research organisation interviewing an average of 1200 farmers throughout the country each quarter.
The next results are scheduled for release in August 2009.
Rabobank Australia is a part of the international Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 110 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and has an AAA credit rating from Moody’s and Standard & Poor’s. Rabobank operates in 43 countries, servicing the needs of more than nine million clients worldwide through a network of more than 1600 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 51 branches throughout Australia.
To arrange an interview with Rabobank state manager Victoria Mark Bennett or for more information on Rabobank’s Rural Confidence Survey, please contact:
Denise Shaw
Public Relations Manager
Rabobank Australia & New Zealand
Phone: 02 8115 2744 or 0439 603 525
Email:denise.shaw@rabobank.com
Kelly Lund
Public Relations
Rabobank Australia & New Zealand
Phone: 02 8115 4861
Email:kelly.lund@rabobank.com