Farmer confidence has rebounded strongly off the back of improved dairy farmer sentiment, the fourth quarter Rabobank rural confidence survey showed.
But despite a sizable uplift from a historical low in September, sentiment did remain low overall with a majority of primary producers expecting the performance of the broader agricultural economy to worsen over the coming two months.
The latest survey — completed during the last two weeks of November — found farmer confidence in the agri economy was up to a net reading of -47% from -72% previously.
The survey found 58% of farmers were expecting conditions in the broader agricultural economy to worsen over the next 12 months (down from 77% last quarter) with 11% expecting conditions to improve (from 5% previously).
Rabobank senior agriculture analyst Emma Higgins said while farmer confidence remained weak, farmers across all sectors were now more optimistic about the prospects for the agri economy than they were three months ago.
Government policy emerged as the major reason for optimism in the latest survey with this cited by more than half of farmers holding a positive outlook on the year ahead. Falling commodity prices (52%) and rising input prices (46%) continue to be the major concerns among those with a negative outlook.
Farmers’ confidence in their own farm business performance also rose strongly, with growers the most optimistic about the year ahead for their own businesses and sheep and beef farmers the most pessimistic.
The number of farmers self-assessing their own farm business as unviable has halved from last quarter.
ANZ’s latest Agri Focus report said global commodity markets varied in performance from “weak” to “improving”. Dairy and log prices had lifted, both supported by relatively subdued supply.
Meat prices remained under pressure as global supplies were generally strong and demand was still subdued.
Across the October 2023 to September 2024 season, ANZ was forecasting a 17.5kg lamb would return, on average, $110 a head.
That was $20 less than last season and $40 less than the 2021-22 season.
Returns from mutton were expected to be even more dismal, at about half the five-year average.
The sharp drop in returns at a time when farm operating costs were high was putting pressure on producers’ cashflows, particularly for farms reliant on lamb.
Other income streams, such as beef and wool, were also weaker than normal.
Both demand and supply conditions should improve next year, although it might not be until later in the year for some sectors, the report said.
