Rain adds hope to farm mood, despite lingering drought pain

Rain revives farmer mood, bringing some relief from dry fears

Agribusiness
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The latest Rabobank Rural Confidence Survey index rises to almost neutral as farmers take heart from late break

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After months of seriously dry weather patterns and deepening drought, the sniff of rain in the air has sent farmer confidence rebounding, reinforcing the well known truth that primary producers are the ultimate optimists.

While still bracing for a tough winter and with soil moisture and water catchments remaining abysmally dry in many areas, the latest Rabobank Rural Confidence Survey index has climbed from -11 in autumn to almost neutral.

Farmer sentiment lifted nationally after varied, but useful, May rain in many parched districts.

Tasmania's upbeat mood led the way, particularly in the north.

Western Australia was the only state not recording an upswing when the survey was conducted late last month.

However, after an extremely dry start to the year, WA has since received a series of wet events bringing a welcome late break to most cropping regions.

Improved farmer sentiment was apparent across most commodities according to Rabobank, although confidence stayed subdued in the cotton and sugar cane sectors.

The lift in dairy farmer sentiment has been somewhat muted by the elevated input cost environment for feed and water - Peter Knoblanche, Rabobank

Higher farmgate milk payments, plus rain in southern Australia, gave dairy farming the biggest confidence boost of all agricultural industries, albeit from low levels.

"Processors have come into the market with strong milk price signals for the 2019-20 season," said Rabobank Australia chief executive officer, Peter Knoblanche.

"However, the lift in dairy farmer sentiment has been somewhat muted by the elevated input cost environment for feed and water."

Overall, almost a quarter of the 1000 farmers surveyed by Rabobank felt their gross farm incomes would rise in the new financial year (up from 21 per cent of respondents in March), while 40pc expected a similar income to 2018-19.

A third were not so positive, tipping weaker financial results in the year ahead.

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The findings reinforced feedback from National Australia Bank's agribusiness staff in March, suggesting agribusiness confidence levels were up, despite persistently challenging conditions.

Better seasonal conditions in Queensland and the positive mood left after a bumper WA harvest had bolstered banker expectations, although key business indicators remained negative, notably weaker profitability and employment early this year, and seasonal conditions.

NAB's agribusiness customer executive, Neil Findlay, said the strongest industries were wool, fisheries and horticulture, while dairy's high input costs posed continued challenges.

Wheat, dairy, dollar positives

Rabobank's Mr Knoblanche said a number of recent positives, including price improvements for dairy and wheat, and a softening dollar, were good news.

However, many key agricultural regions had struggled through a severely dry autumn, waiting for the seasonal break to replenish well below average soil moisture levels, poor pasture growth and low dam levels.

Thankfully, recent weather fronts had brought late widespread rain to WA, parts of South Australia and some of drought-thirsty eastern Australia.

Victorian farmer confidence had bounced to its highest level in 18 months after widespread early May rain enabled croppers to plant, then enjoy a month of follow-up falls.

Peter Knoblanche

Peter Knoblanche

Yet drought remained the industry's primary concern, with almost 75pc of those farmers with a pessimistic outlook blaming the big dry for their worries.

NSW drought fears

In fact, 90pc of NSW farmers cited drought as the reason their business conditions were likely to deteriorate further in 2019-20.

Mr Knoblanche noted SA had its driest start to the cropping season in more than 100 years, while drought-breaking weather patterns continued to shun much of NSW and southern Queensland.

Queensland's southern cropping region remained dry, but there had been good opening rain in Central Queensland and the Channel Country had enjoyed substantial flows as a result of February's floods.

"There's no doubt it will be a long road to recovery for those devastated by North Queensland flooding, as graziers rebuild herds and undertake the mammoth job of repairing fences and water infrastructure," he said.

Nationally the appetite for spending on farm investments remained steady, despite the drought, with a fifth of farmers looking to boost spending in 2019-20 and 64pc maintaining current investment levels.

Intentions were strongest among larger farm businesses more than $1m gross annual income, with 32pc in this category planning to lift their investment.

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The story Rain adds hope to farm mood, despite lingering drought pain first appeared on Farm Online.

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