The ‘rise and rise’ of input costs and fallout from the war in Ukraine are weighing on sentiment in Australia’s agricultural sector, with farmer confidence declining in the latest quarter.
Results of the quarter two Rabobank Rural Confidence Survey, released today, reveal optimism about high agricultural commodity prices and the prospect of a third consecutive bumper grains harvest has been reined in by the increasing cost of vital farm inputs such as fertiliser, fuel, freight and machinery and broader inflationary pressures in the Australian economy.
In addition, the latest survey reveals 50 per cent of Australian farmers believe the ongoing conflict between Russia and Ukraine will have a negative impact on farm businesses, while 25 per cent expect the effect could be positive.
While farm income projections for the 12 months ahead remain stable, the number of farmers looking to increase investment has declined slightly this quarter. The latest survey, completed last month, found 28 per cent of Australia’s farmers now expect business conditions to improve in the coming 12 months (down slightly from 31 per cent with that view in the previous quarter), while 16 per cent are anticipating a deterioration (from 14 per cent previously). More than half (53 per cent) expect business conditions to remain stable in the year ahead.
This marks three consecutive quarterly declines in net rural confidence and brings farmer sentiment back to levels last seen in June 2020, after the first pandemic lockdown. Confidence is highest in the cotton and grain sectors, while also very strong among dairy producers, with high prices combined with excellent seasonal conditions providing the perfect setting for those three industries.
For more information:
Rabobank Australia & New Zealand
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