Farmers' confidence surges despite COVID-19 and trade concerns
Confidence among Australian farmers has managed to rise above pre-COVID levels despite of the continuing COVID-19 pandemic and trade tensions with China.
This latest Rabobank Rural Confidence Survey reveals that 43 per cent of farmers nationally expect conditions in the agricultural economy to improve over the coming year, an increase in the 24 per cent recorded in the September quarter. Those with a pessimistic outlook also fell sharply from 27 per cent last quarter to just eight percent, while 46 per cent of farmers were expecting conditions to remain the same.
The report noted that confidence is up in all sectors, but is especially strong among those who grow cotton and grain, as well as mixed beef and sheep producers.
The report also reveals that its farm viability index, which measures the farmers' assessment that belongs to them business viability, is now at its highest level within the survey's history at 97 percent. Forecasts for farm incomes over the year ahead have also rebounded considerably.
The report noted that good seasonal conditions and unprecedented commodity prices, that have been cited by 72 percent and 54 per cent of respondents respectively, were viewed as the main driving forces behind the improved farmer sentiment this quarter, with a positive outlook on the coming Twelve months as the main reasons for their optimism.
On another hand, concerns about overseas markets or economies were viewed as the dominant factor for 47 per cent expecting that business conditions will worsen, with 16 percent specifically expressing concerns about trade with China as a main factor.
Surprisingly, COVID-19 was seen to become less of a worry for farmers this quarter. Regardless of this, 10 per cent of the farmers expect that improvements in the conditions to improve with the easing of COVID-19 restrictions as a positive influence.
Rabobank Australia CEO Peter Knoblanche asserted the positive seasonal conditions across most of the agricultural regions in eastern Australia had enabled farmers to dramatically increase production and profits after years of drought.
“While 2021 has been a year of great uncertainty and challenge for everyone in the community, for farmers the extraordinary turnaround within the season has also made it one to remember,” Knoblanche said. “After years of drought, and low or no returns for some, the tables have well and truly turned.
“Graziers who were able to hold on to sheep and cattle during the drought are now being well rewarded for it, with livestock prices reaching unprecedented levels throughout the spring and demand over the year ahead forecast to remain strong,” Knoblanche added. “Some of the regions which had been hardest hit by drought are seeing grain receival records smashed, with the highest harvest tonnages in a minimum of 20 years, and in some places ever, being delivered across the NSW grain zone. Grain quality is also excellent in many areas. This harvest will generate a huge boost to incomes and cash flow for many.”
Knoblanche pointed out however that that there was general concern in the agricultural sector about international markets, particularly for some commodities – such as wool, wine, cotton and seafood – due to escalating trade tensions with China.
“This was evidenced in the survey with worry about relations with China nominated by 16 percent of farmers as a reason behind taking a pessimistic outlook around the year ahead, compared with just six per cent in the previous quarter,” Knoblanche concluded.
