June 1, 2009

 

Australia farmer confidence improves

Underpinned by better seasonal conditions, confidence levels among Australian farmers have improved but remain at a relatively low level following a year's decline, according to a quarterly survey issued Monday (June 1) by Rabobank Australia Ltd.

 

The improvement in confidence occurred despite concerns of many farmers regarding global market conditions, softening commodity prices and ongoing dry conditions in some parts of the country, the bank reported.

 

"The best way to describe the mood of many of the nation's farmers at the moment is one of cautious optimism," Peter Knoblanche, Rabobank's General Manager for Rural Australia, said in a statement.

 

The survey, undertaken a month ago, found 20 percent of farmers expect the agricultural economy to improve over the next 12 months, up from 16 percent in the previous survey, while 37 percent expect conditions to worsen, down from 48 percent previously.

 

Underlying supply and demand fundamentals in agriculture remain favourable, Knoblanche said.

 

While the prices of some key commodities including wheat have softened and dairy products and wine have struggled after some big price falls, compared with many other industries, farming is in a relatively good position, he said.

 

David Crombie, president of the National Farmers Federation, said the economic downturn hasn't been too bad for agriculture.

 

"There have been some elements of the economic downturn that have been quite good for agriculture," he said.

 

Some markets have struggled due to tight credit, but the weaker Australian currency has benefited exporters, as has lower costs for farm inputs such as fuel, fertilizer and chemicals, while tight labour markets have eased, he said.

 

Knoblanche said many commodity prices remain well below last year's highs, but grains and fibres have all edged higher in recent months in US dollar terms, buoyed by a combination of production downgrades in Argentina, strong Chinese imports of soy, US planting delays for corn and spring wheat and tight stock levels.

 

Grain, beef and sugar producers are most likely to increase their investment with farmers in these sectors looking to take advantage of relatively favourable conditions, with most cereal-producing areas having received enough autumn rain to sow a crop so this will fuel investment, while beef producers will look to rebuild herds to take advantage of pasture growth, he said.

 

Many sugar cane growers will look to invest to leverage the positive international outlook for the sweetener, he said.

 

Sentiment levels lifted in all states, the survey found.