March 30, 2009

 

Australian farmer confidence slumps to two-year low

 

 

Australian farmer confidence slumped to a two-year low in the March quarter as difficult market conditions and softening commodity prices dented sentiment, according to a survey published Monday (March 30) by Rabobank Australia Ltd.

 

While confidence is yet to hit the lows experienced in the worst drought years of 2002 and 2006, the survey found that 48 percent of farmers now expect conditions to worsen in the coming year, compared with 39 percent in the fourth quarter of 2008.

 

Only 16 percent of farmers expect conditions to improve in the year ahead, down from 23 percent previously.

 

Peter Knoblanche, Rabobank's Australia general manager, said the survey shows farmers' worries about the future are overshadowing current favourable seasonal conditions across much of Australia, as well as other positive factors such as lower input costs, a weaker currency and lower interest rates.

 

He said the decline in confidence appears to be related more to farmers' concerns about the likely future negative impact of the global financial crisis, rather than anything they have experienced to date.

 

"Economic conditions internationally have adversely impacted commodity prices, particularly those which are more exposed to discretionary consumption such as wine, cotton, wool and dairy," Knoblanche said.

 

"It appears what is driving the fall in confidence is worry about the potential impact of the global financial crisis over the next 12 months," he said.

 

Of those surveyed who expected conditions to worsen over the next 12 months, 58 percent nominated overseas markets and economies as a major contributing factor, up from 23 percent in the previous quarter.

 

Falling commodity prices were also cited by 37 percent of farmers, down from 21 percent previously.

 

"This is the first survey I can remember where such a negative outlook hasn't t been driven by the effects of drought," Knoblanche said.