WESTERN Australian farmers, particularly those with sheep and grain enterprises, are the most positive in Australia about their immediate outlook, a national survey has found.
The latest Rabobank Rural Confidence Survey was completed last month before the latest rains fell across much of pastoral WA and in Queensland.
In the survey 1200 farmers across Australia found WA farmers this March quarter went against a national trend of declining optimism.
With good seasonal conditions compared to some other States and positive indicators across some key commodities, WA farmers were more hopeful of a successful year, with 85 per cent expecting their incomes to remain stable or increase over the next 12 months, according to Rabobank.
Its WA regional manager Crawford Taylor said a “last innings” recovery by the grain sector to produce a better than expected 14 million tonne harvest at the end of last year and the sheep industry’s continued “excellent run” with meat and wool prices had set the stage for a profitable 2018.
“The sheep sector, in particular, continues to thrive in WA with consistently strong meat and wool values,” Mr Taylor said.
“With a tight domestic market and strong export opportunities, we’re expecting the sheep sector to remain in a strong position in 2018.
“We’ve also seen some decent rain events across the State and while there are definitely beef producers, particularly in the western Kimberley who have received some damaging falls, it has meant that dry conditions have been taken off the table this quarter as a cause of concern.”
A net confidence statistic for WA farmers’ outlook about the performance of the agriculture sector over the next 12 months increased from 11pc in the December quarter to 23pc in the current quarter, Rabobank said.
This compared to a national net minus 2pc confidence rating, down from 16pc in the December quarter to one of its lowest levels in four years, and primarily influenced by dry conditions in Queensland at the time of the survey, according to Rabobank’s national report.
Only 6pc of WA producers held a negative outlook for the coming year, down from 11pc previously and compared to 21pc nationally, up from 12pc last quarter.
In WA, 61pc were anticipating conditions similar to last year and 29 per cent expected an even better year ahead.
Nationally, 56pc expected conditions to remain relatively unchanged while 19 per cent expected improvement – down from 28pc.
Across commodity sectors, WA sheep and grain producers were identified as being most bullish about their prospects, with the number of sheep producers expecting an improving year almost doubling to 34pc, from 18pc last quarter, according to Rabobank.
Those expecting stable conditions fell 10 points to 66pc while none of the sheep producers surveyed had a pessimistic outlook on the year ahead.
In the grain sector, producers were similarly positive, with 43pc now holding a positive outlook, up significantly from 23pc last quarter.
A total of 43pc anticipated similar economic conditions to last year and only 8pc thought conditions would deteriorate.
While cropping in WA experienced a rollercoaster 2017, Mr Taylor said most producers had avoided catastrophe and were positive about the current market.
“Last year we saw some fluctuation in wheat prices and, with a record global production year, it is expected that significant global stocks will keep the price rangebound for at least the first half of this year,” he said.
“However, there is some upside on the horizon as the erosion of these stocks, combined with our export advantage to nearby markets, has the bank’s RaboResearch analysts expecting wheat prices to move at least slightly higher by the second half of this year.
“For those producing barley, the price outlook is more positive and it’s creating a bit more depth in the market, which is fantastic.”
While sentiment among WA beef producers improved this quarter, it remains slightly negative with 11pc of respondents anticipating an improving year and 12pc a worsening one.
More than three quarters of WA’s beef producers surveyed anticipated similar conditions to last year.
“There is some definite downward pressure being anticipated in the beef markets this year with growing global and domestic stocks expected to apply pressure in the second half of the year,” Mr Taylor said.
“However, there currently remains limited domestic cattle availability and this, combined with recent rain, should help buoy producer confidence levels.”
As well as feeling more confident about their income outlook this year, WA producers indicated their highest level of intention to invest in their businesses since early 2008.
“We’re seeing investment in sheep country, particularly in the southern parts of the state,” Mr Taylor said.
“Competition and values have moved higher compared with 2017.
“It’s also been great to see family operations competing strongly for land and winning.
“While in the past there has been strong demand coming from corporate and investment funds, the financial strength that families have built up thanks to three successful farming years has provided an opportunity to consolidate their farming position, and some big investments are now being made.”
While property investment intentions remained strong, there was also a significant increase in producers likely to invest in on-farm infrastructure (69pc, up from 40pc), livestock numbers (40pc, up from 30pc) and in adopting new technologies (39pc, up from 20pc), he said.
Mr Taylor said WA grain growers often tended to be early adopters of agricultural technology.
“Farmers here are keen to take advantage of any technology that can lead to better decision making on farm, whether that’s adoption of better farming techniques, drone technology, cloud-based management or even driverless-equipment,” he said.
“If it can give them an edge, they are definitely interested.
“We’re fortunate here that the strength of the grower groups means growers are able to create opportunity for technology to be tested and trialled and potentially adopted faster than might otherwise be possible for solo operators.”
Nationally, apart from concerns about a lack of rain which were partially resolved the last weekend in February, the other main issue of concern impacting on farmer confidence was commodity prices, the survey found.
It was listed by 48pc of farmers who had a negative view on the coming year, however they were predominantly dairy and sugar producers.
“The outlook for farmgate milk prices in the 2018-19 season is a little uncertain, although prices are expected to remain at profitable levels, as global supply pressure is building on markets,” said Rabobank Australia chief executive officer Peter Knoblanche.
“In sugar, the global market remains oversupplied, exerting downward pressure on prices,” Mr Knoblanche said.
“(But) while farmers may be indicating some nervousness about their short-term prospects when it comes to seasonal conditions, there is plenty of evidence that long-term confidence in the sector is not just sound, but robust.
“You only have to look at investment activity, both from within and outside the sector, to get a gauge of how Australian agriculture is faring, and the survey found a quarter of farmers are actively looking at increasing their investment in the coming 12 months,” he said.
Mr Knoblanche said positive global economic factors, improved market access, low interest rates and some softer input prices, such as for fertiliser and irrigation water, had helped build confidence, but it was the “anxious wait” for the autumn break that had impacted farmer confidence in this survey.
The quarterly rural confidence survey has been conducted by independent researchers for Rabobank since 2000.