Tuesday, 1 April 2008

The confidence of Australian farmers has rebounded strongly this quarter after promising summer rainfall and higher commodity prices, the Rabobank Rural Confidence Survey has found.

But the survey of more than 1200 farmers found that confidence is somewhat fragile, with producers waiting for widespread autumn rains to help with the harvest and their positive outlook likely to suffer if that doesn't happen.

The latest survey found 52 percent of expect the agricultural economy to improve over the next 12 months, up from 29 per cent in the previous study. Only 15 percent expect the agricultural economy to get worse, compared with 42 per cent in the last survey.

Rabobank general manager Peter Knoblanche said the survey had seen a general lift in farmer confidence.

“Favourable long-term weather forecasts along with promising summer rainfall in many parts of the country has provided encouraging signs for farmers that the coming season could be a good one,” he said.

“Rain through November to early February has also provided some relief for stock and pasture in many areas and very good summer crops in some areas. Strong commodity prices – especially in grain, cotton and dairy – are also providing good news for producers.”

But he said the results should not be interpreted to mean farmers had recovered from the drought.

“Farmers are still relying on a good autumn break with significant follow-up rain to come, which is going to be essential for them to have a reasonable season ahead and also to impact on confidence levels in the longer term,” Mr Knoblanche said.

He said irrigators in the Murray Darling basin still had very low storage levels and low water allocations, because the rains had not resulted in big inflows.

The survey found that rising input costs were the main concern for those farmers who indicated a reduction in confidence.

Of those primary producers who had expected conditions to decline over the next 12 months, 60 percent nominated rising input costs as a major contributing factor, up from 18 percent the previous quarter.

The strong Australian dollar and drought were also ‘top of mind’, cited by 20 per cent and 22 per cent of respondents respectively.

Rabobank found farmers generally believed that higher costs, such as fertiliser, could be handled and profits gained if normal seasonal conditions prevailed and commodity prices remained steady.