RURAL sentiment among Australian farmers was recorded at its lowest level in more than four years at the start of 2023.
The latest quarterly Rabobank Rural Confidence Survey, released in March, found sentiment in the rural sector fell as farmers continue to navigate a range of economic and financial uncertainties.
Results of the survey showed the number of farmers expecting the agricultural economy to improve over the coming 12 months dipped to 11 per cent in the first quarter of 2023, compared to 15 per cent in December 2022.
Commodity prices were the main factor driving the negative outlook, with 68 per cent of respondents expecting conditions to worsen, which was a significant increase on 21 per cent previously. Rising interest rates were also an increasing concern (20 per cent, up from 11 per cent previously).
While some relief was felt around the high cost of farm inputs – such as fuel, fertiliser and energy – it remains a concern for 35 per cent of farmers (down from 49 per cent last quarter) expecting conditions to worsen over the next year.
An increased confidence in overseas markets/economies contributing to good economic conditions was nominated by 26 per cent – up from 18 per cent – as cause for their positive outlook.
Rabobank Australia CEO Peter Knoblanche said the latest survey reflects the combination of commodity prices, global economic challenges and high production costs facing farm businesses.
“Despite having their resilience tested throughout 2022, most Australian farmers ended last year on a high, buoyed by seasonal conditions and high commodity prices which saw our industry break farm production value records for the third year in a row,” he said.
“However, as we see the heat come off many commodities – albeit down from significant highs – farmers recognise conditions will start to return to more ‘normal’ levels.
“This survey captures their realistic expectations that commodity prices will likely not return to the highs this year that we saw in the previous 12 months.
“Although there’s relief with some input prices easing, the anticipation of further interest rate hikes will continue to place pressure on farm budgets.”
Despite a record harvest for many throughout South Australia, farmers across the state started 2023 with lowered confidence, eroded by falling commodity prices and rising interest rates.
“The, at times, excessive rain in 2022 did set up our nation’s grain farmers for record harvests and maintained beneficial feed base conditions for livestock businesses through summer, but again, we see the realistic expectations that 2023 won’t present the same conditions,” Mr Knoblanche said.
Sentiment was varied across different commodity sectors, and while beef and dairy had the most pessimistic outlook, other sectors were more optimistic.
This survey also found a heightened focus on seasonal resilience, with more farmers channelling funds towards irrigation/water infrastructure – 30 per cent of those planning to increase their investment (up from 26 per cent).
A comprehensive monitor of outlook and sentiment in Australian rural industries, the Rabobank Rural Confidence Survey questions an average of 1000 primary producers across a wide range of commodities and geographical areas throughout Australia on a quarterly basis.
The next release of results is expected in June 2023.
