Confidence Falls in Rural South Australia

25 August 2003

Results At A Glance:

• Rural confidence fell in South Australia.
• Farmers' income expectations and investment intentions were stable.
• Confidence remains in the long-term viability of farms.
  
  

South Australian rural confidence has experienced a significant fall, according to the latest quarterly Rabobank Rural Confidence Survey.

The survey found 29 per cent of South Australian farmers expected an improvement in the agricultural economy in the next year. This compared with 46 per cent with this view in the previous survey period.

And, of those South Australian primary producers surveyed, 27 per cent expected conditions to worsen over the next 12 months, up from 21 per cent last quarter.

Rabobank state manager South Australia James Robinson said the survey results reflected an increased level of caution among SA farmers as the winter cropping program unfolds.

"There are pockets of the state, such as the Western Eyre Peninsula and the Mallee, which are still in need of follow-up rains, and this has impacted on confidence," he said.

Mr Robinson said the decreased confidence levels were also likely a reaction to volatile commodity prices.

The appreciation of the Australian dollar has also negatively affected sentiment, with 78 per cent of farmers in South Australia considering the rise to have negatively impacted their farm business.

The difficult season in 2002 was reflected in reports of gross farm income levels. A total of 57 per cent of SA respondents reported lower gross farm income levels in the 2002/03 financial year compared with the previous year. Only 28 per cent reported higher gross farm incomes in this period.

Despite the fall in headline confidence, other indicators were relatively stable. Investment intentions improved slightly with a total of 33 per cent reporting they intended to invest more in their properties over the next 12 months, compared to 31 per cent in the previous survey.

SA farmers were also optimistic about their future income projections, with 52 per cent expecting higher gross farm incomes over the next 12 months, compared to 49 per cent last quarter.

"It is encouraging to see this level of underlying confidence," Mr Robinson said.

Interest rates were not considered a significant concern by South Australian primary producers in the latest Rabobank survey, with 80 per cent believing rates would stay the same or decrease over the next 12 months, compared to 68 per cent last quarter.

Mr Robinson said South Australian primary producers continued to be more confident about their long-term viability than farmers in all other parts of Australia.

"A total of 73 per cent rated their operations easily viable or viable, while 21 per cent reported their farms were just viable," he 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 approximately 2100 farmers throughout the country. The next results will be released in December.

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. The bank operates in 35 countries, servicing the needs of more than nine million clients worldwide through a network of more than 1900 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 39 branches through Australia.

Contact

For further information please contact Denise Shaw, Public Relations Manager (Tel: +61 2 8233 8744) or email on sydney.pr@rabobank.com.

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