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Aussie farmers' confidence boost over 'near perfect' conditions

Statewide

The head of Australia’s largest specialty agribusiness bank is hailing conditions for agriculture as “near perfect”, spelling good news for the broader economy.

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Resilient farmers are refusing to buckle under the pressure of Covid-19 as they capitalise on seasonal and economic conditions to drive their businesses forward on a wave of “historically-high levels of optimism”.

The sparkling assessment comes from Rabobank CEO Peter Knoblanche in the wake of the bank’s latest quarterly rural confidence survey, released today.

Results from farmers nationwide reveal 90 per cent of those surveyed expect current conditions to continue or improve further over the coming 12 months.

Disruptions to global shipping and supply chain networks and ongoing challenges to source farm labour decimated by Covid-induced travel restrictions internationally, remain high on the list of concerns.

Otherwise, conditions were “near perfect”, Knoblanche said, with strong demand across commodities, and prices in several sectors at or near record highs, alongside excellent seasonal conditions, low interest rates and a lower Australian dollar.

“The Australian farm sector has largely been sheltered from the broader impacts of Covid-19 restrictions and is a shining star in the Australian economy right now,” Knoblanche said.

“Above-average rainfall in the late half of winter across many agricultural regions has set up the sector for another big spring, with prospects of a second year of high- yielding crops and excellent conditions for livestock.”

Positive sentiment was strongest among West Australian farmers, although solid across all states, while grain and cotton producers were the most confident, by sector, thanks to the combination of prices and seasonal conditions.

Here is the snapshot for Queensland:

Forty-three per cent of Queensland farmers expect conditions to improve over the year ahead.

Queensland rural confidence hit an 18-month high on the back of strong commodity prices, with the rise in sugar prices driving much of the upswing in sentiment.

Sugar

Significant international supply constraints have seen sugar prices hit four-year highs, boosting confidence in the Queensland sugar sector – with 61 per cent of producers surveyed forecasting better business conditions over the year ahead.

Cotton

Cotton planting has started in Queensland where forecasts tip a second consecutive large increase in planted hectares. Favourable soil moisture and good water availability in almost all cotton regions and strong prices are driving producer confidence.

Forward prices are also strong, with Cotton Australia estimating more than 30 per cent of next year’s cotton crop has already been sold from grower to merchant.

Livestock

As reported previously by InQueensland, records continue to be broken in beef and sheep meat markets, with local re- stocker demand on top of the ongoing, worldwide demand for protein, repeatedly pushing livestock commodity prices to new highs and supporting strong sector confidence.

The survey found 54 per cent of beef producers expect the current, excellent conditions to continue over the year ahead, while 39 per cent tip conditions will improve further.

Similar sentiment was recorded among sheep producers – 58 per cent expect similar conditions over the coming 12 months, while 34 per cent expect an improvement.

Wool producer confidence was holding despite ongoing market uncertainty stemming from Covid-19, while dairy sector confidence was also solid this quarter, with 56 per cent of surveyed producers optimistic current conditions will continue, while 36 per cent expect conditions to improve.

Investments rise

While conceding farm input costs and land prices were rising, Knoblanche said sustained farmer confidence provided a platform for growth, new investment and a stable business environment for farmers to plan succession and foster younger people into the industry.

“This is a really formative period for family-farming enterprises, because consecutive years of good returns encourage young family members to return to the land, and it enables good succession planning to take place, which is often not possible during drought years,” he said.

Conditions are also seemingly ripe for farmers to invest in their businesses, bringing wider benefits to the sector’s supply chain partners either side of the farm gate.

According to the results, of those intending to increase investment, three quarters plan to spend on-farm infrastructure such as silos, fencing and new yards.

More than half intend to purchase new machinery or equipment, while increasing livestock numbers was a priority for 49 per cent of those planning to invest more on farm.

With 65 per cent of Queensland still in drought, farmers were focusing on investments in infrastructure to assist drought preparedness to help better-manage climate variability in the future, Knoblanche said.

“With land prices continuing to skyrocket, many farmers are focusing on investments that maximise their returns through productivity if expansion is too expensive or land too hard to procure,” he said.

“These are great times for Australian agriculture. This is a defining period for our industry, and one which will pave the way for our sector for many years to come.”

 

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