The Rabobank Rural Confidence Survey found sentiment among producers has turned around after a dry autumn for some parts of the country including Western Australia, Tasmania and South Australia.
The quarterly survey of 1000 producers found confidence was down in all states and all sectors except cotton.
The survey, completed in May, found the number of Australian farmers expecting the agricultural economy to improve in the coming year had declined to 15 per cent (from 31 per cent the previous quarter).
And more than a third of respondents (36 per cent) were now expecting conditions to worsen — up from 16 per cent.
A total of 46 per cent though had a stable outlook on the year ahead, anticipating the agricultural economy to remain the same.
The impact of economic pressures on farm business bottom lines was also found to be of increasing concern, with some farmers worried about softer commodity prices and higher input costs.
The downturn comes after a rebound in farmer confidence in the first quarter of 2024, driven by better-than-expected summer rainfall and a strong commodity market.
Rabobank’s Marcel van Doremaele said this quarter’s survey results reflected the “patchy” seasonal conditions across different parts of Australia during autumn.
Producers in the west and south of the country had struggled through a dry autumn that reduced the amount of winter crops planted, although conditions had been better in Queensland and parts of NSW.
Mr van Doremaele said although confidence had fallen from the high levels at the beginning of the year, overall conditions in the agricultural sector were still good.
“There has been rainfall in many agricultural regions, setting up the planting conditions for the winter cropping season, while the potential of a La Niña developing in the second half of the year is holding additional promise.
“And commodity prices — while down from the very high levels seen a couple of years ago — are overall reasonable, for example, in grain, dairy and cotton.
“Although farm gate milk prices will be lower in the season ahead, the dairy sector is still looking to a profitable year ahead and for beef producers, there is the outlook for stronger demand from the US coming through later in the year to provide some further price support.”
Drought/dry weather conditions was nominated as the biggest concern by farmers this survey (cited by 37 per cent), followed by rising input costs (35 per cent) and falling commodity prices (32 per cent).
Australian farmers were also mindful of the impact of government intervention and policies and overseas markets/economies — rated as a cause for concern by 24 per cent and 21 per cent, respectively.
There was still significant cause for optimism identified among farmers in the latest survey, with 37 per cent expecting a good season ahead and 28 per cent anticipating rising commodity prices.
Victorian farmers continued to ride the confidence roller coaster, recording the biggest drop nationally (of 52 points). Farmer confidence decreased from net 21 per cent last quarter to -31 per cent this quarter, pushed down by dry weather conditions, falling commodity prices and rising input costs.
NSW rural confidence fell from net 20 per cent last quarter to -11 per cent. NSW farmers were most concerned about rising input costs, with drought coming in at second place (reflecting regional variability) followed by commodity prices.
Farmers’ investment intentions remained stable. More farmers planned to increase their investment (unchanged from 21 per cent) than decrease it (13 per cent).
On-farm infrastructure — such as fences, yards and silos — was a focus, with 61 per cent of farmers across the country identifying this as an area for investment.
Adopting new technologies was the second highest planned investment (36 per cent), followed by irrigation/water infrastructure (24 per cent).
24°C