Squeeze on returns subdues Australian farmer confidence

Pressure on farming returns – resulting from a combination of lower commodity prices, a prolonged high Australian dollar and rising input costs – has seen a further slump in Australian farmer sentiment, according to the latest quarterly Rabobank Rural Confidence Survey. The nation’s farmer confidence has fallen further into negative territory, with more primary producers expecting conditions to worsen than improve.

The latest survey – completed last month – found 34% of primary producers expected the agricultural economy to worsen in the next 12 months, compared to 28% in the previous quarter. The number expecting conditions to improve fell to 12% (from 16% previously) while 51% expected conditions to remain stable.

A comprehensive monitor of outlook and sentiment in Australian rural industries, the Rabobank Rural Confidence Survey questions approximately 1200 farmers across a wide range of commodities and geographical areas throughout Australia on a quarterly basis.

Rabobank general manager Rural Australia Peter Knoblanche said many Australian farmers were feeling the pressure of a combination of overall falling commodity prices, along with a sustained historically-high Australian dollar and rising input prices. In particular, continuing weakening in prices for key commodities was negatively impacting farmer confidence.

“These factors are putting the squeeze on farm returns, or if they haven’t yet impacted, farmers are anticipating they will in the future,” Mr Knoblanche said.

“Producers are dealing with a situation where production and yield are generally favourable, but they’re not getting the profit margins they did a year ago. In part, this is due to a downturn in agricultural prices as a result of subdued investor confidence stemming from the problems in Europe and a slow-down in China’s economy. Another part is due to an over-supply in the market for some commodities off the back of favourable seasonal conditions in major production regions around the world,” he said.

Rabobank Australia is a part of the international Rabobank Group, the world’s leading specialist in food and agribusiness banking. For further information visit Rabobank Australia.