Farmer confidence stages a recovery

Australian farmer confidence has rebounded sharply from its lowest level since 2006, with improved commodity price expectations and seasonal conditions lifting sentiment across every state, according to Rabobank's latest Rural Confidence Survey.

National farm confidence rose to a net -19% in the third quarter, up from -48% in the prior quarter. The proportion of farmers expecting conditions to worsen fell to 32% from 58%, while those expecting conditions to remain unchanged increased to 52%.

Commodity price expectations were the leading source of optimism, cited by 48% of farmers, followed by favourable seasonal conditions at 29%.

Rabobank group executive for country banking Australia Marcel van Doremaele said sentiment had steadied despite ongoing geopolitical tensions and supply chain risks.

"Although input costs continue to be the dominant factor weighing on confidence this quarter, and cost pressures remain elevated, farming businesses have experienced the initial price shocks," van Doremaele said.

"Despite ongoing tensions in the Strait of Hormuz and Black Sea, sentiment has been steadied by recovery of key supply chains and stronger commodity signals,'' he said.

Input costs remained the biggest concern, although the proportion of farmers citing them fell to 54% from 60%. Concern about energy security also eased to 14% from 25%.

Seasonal conditions were another source of improvement, with a quarter of farmers nominating negative conditions as a concern, down from one third last quarter.

However, government intervention and policy emerged as a growing concern, cited by 38% of farmers, up from 23%.

Improved sentiment also translated into stronger investment intentions. Some 28% of farmers plan to increase spending over the next 12 months, up from 21%, while those expecting to reduce investment fell to 12%.

"Investment intentions have also strengthened across technology and machinery, reflecting Australian farmers' willingness to embrace opportunities to innovate, improve efficiencies and grow the productivity and profitability of their businesses," van Doremaele said.

South Australia recorded the strongest recovery, with confidence moving into positive territory at net 8%, while Queensland remained the least confident at -37%.

The survey canvassed about 700 primary producers across Australia in August.