Results at a glance:

• South Australian farmer confidence has improved for the second successive  quarter and is now the highest in the country.
• Seasonal conditions had the biggest positive impact on confidence levels.
• Sentiment is strongest among grain producers, particularly those operating in the Eyre Peninsula region.
• Of those SA farm businesses which required additional labour over the last 12 months, just over 40 per cent  experienced difficulty in attracting adequate labour

 

South Australian rural confidence has continued its recent rally, with the state’s farmers now the most confident in Australia, according to the latest quarterly Rabobank Rural Confidence Survey. 

 

The survey shows SA farmer sentiment improved significantly in the latest quarter, buoyed by good rains for the winter cropping season.

 

Taken approximately one month ago, the survey found 39 per cent of primary producers in South Australia expect the agricultural economy to improve over the next 12 months, up from 21 per cent last quarter.  A total of 11 per cent of farmers expect the agricultural economy to worsen, compared to 31 per cent in the previous survey.

 

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 South Australia James Robinson said the state’s farmer confidence had staged a remarkable recovery, following four successive quarterly declines to March 2009.

 

He said farmer sentiment had received a big boost from the generally widespread and sustained rain received over the winter months.

 

Of those South Australian primary producers surveyed who expected conditions to improve over the next 12 months, 65 per cent cited ‘improved seasonal conditions’ as a major contributing factor.

 

“South Australia received above-average rains for the month of July which consolidated the very good start to the winter cropping season,” Mr Robinson said.

 

“Crops are well advanced with most regions having good levels of sub soil moisture, although further rain is required in September and October to ensure above-average crops are achieved.”

 

Mr Robinson said the only real area of concern in the state was the northern Mallee which had received below-average rain for the year to date.

 

“Additionally, pastoral land is dry as there has been minimal rain in the pastoral regions during the winter months,” he said.

 

“Irrigation allocation from the Murray River remains at five per cent plus 100 per cent of carry-over water. This is adequate for irrigators to water stone fruit, citrus and almond trees during the flowering period. The upper catchment of the Murray Darling Basin has had minimal inflows which will result in a small water allocation for the current year.”

 

Mr Robinson said South Australian wine producers continued to be impacted by depressed prices. “Confidence in the wine sector, as in many other sectors, is being constrained by the global economic environment,” he said.

 

The survey showed that of those South Australian farmers expecting conditions to decline over the next 12 months, 50 per cent nominated ‘overseas markets / economies’ as a major contributing factor.  Falling commodity prices were also ‘top of mind’, cited as a factor of concern by 58 per cent of farmers.

 

Despite the improvement to the global economic outlook, the performance of key agricultural commodity prices remains mixed.  For example, wheat prices have declined by 30 per cent since their June 2009 peak, while at the same time sugar prices have risen sharply to above US 20 cents a pound.  Notwithstanding the commodity price movements, a significant challenge for Australia’s commodity exports has been the recent strength of the Australian dollar.

 

In terms of farmers’ own businesses, the Rabobank survey found 47 per cent of respondents expected to see improved performance over the next 12 months, significantly higher than farmers’ outlook for the performance of the overall agricultural economy.

 

The variance between the two measures indicated a higher underlying confidence, Mr Robinson said, with the state’s farmers feeling even more positive about their own situations than that of the agricultural economy as a whole.

 

The latest Rabobank survey found South Australian farmers overall reported higher incomes over the previous three months, with 36 per cent receiving higher incomes than at the same period in the previous year and 22 per cent receiving lower incomes.

 

Consistent with the improvement in confidence levels, investment intentions had also improved, with 90 per cent of South Australian respondents expecting to increase or maintain their current levels of investment in their farm business in the next 12 months, up from 87 per cent in the previous quarter.

 

The survey also found that of those SA farmers who required additional labour over the last 12 months, just 41 per cent indicated that they had experienced some difficulty in attracting adequate labour (the lowest of any state in Australia) with no producers describing the experience as ‘impossible’.

 

Attracting farm labour was also less of an issue that it had been two years ago (when this question was last asked), when 46 per cent had experienced difficulty.

 

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 November 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 a AAA credit rating from Moody’s and Standard & Poor's. Rabobank operates in 45 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 the country'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 South Australia James Robinson, 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