Rain lifts grower confidence says Rabobank

Rain lifts grower confidence says Rabobank

Grains
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Grower confidence has rallied after last week's season-changing rains that hit most of Western Australia's grain growing regions.

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GROWER confidence has rallied after last week's season-changing rains that hit most of Western Australia's grain growing regions.

On the back of the State's driest autumns on record, the latest Rabobank Rural Confidence Survey found a "substantial waning" in sentiment among WA's rural sector in the past quarter, as farmers anxiously awaited autumn rains, entering the cropping season with severely depleted soil moisture levels.

Farmer confidence had declined considerably from the highs of late 2018 and early 2019 - with this quarter's survey reporting a net WA rural confidence index of minus eight per cent (down from +6pc last quarter).

The survey, completed last month, had found substantially more WA farmers were pessimistic about the outlook for the coming 12 months, with 28pc holding a negative view, up from 18pc last quarter.

Those with a positive view had also declined to 20pc (from 24pc previously), although 46pc still expected similar conditions to the previous year.

However, Rabobank regional manager for Western Australia Steve Kelly said recent major weather fronts which had moved across the State over the past week may prove to be a "game changer" for the prospects of the State's agricultural sector this year.

The rains have brought a desperately-needed late break for most cropping regions - particularly the western half of the Wheatbelt, and eased the pressure on the State's graziers.

Mr Kelly said some areas of WA had experienced their driest five months on record to May this year.

"And for grain growers - particularly in the northern Wheatbelt - it has been one of the worst starts to a planting season we've seen and many had elected to dry seed in the hope of late rain," Mr Kelly said.

"Across the grain-growing regions we have seen a lot of shifting out of canola and a lot of dry seeding for the start of the season."

These conditions had seen the number of WA grain growers with a negative outlook rise sharply in the latest survey to 44pc, up from just 12pc in the March quarter.

"However, the weather fronts that have come across the State in recent days have brought very widespread rainfall across many regions and have really put WA back in the game," Mr Kelly said.

He said the recent rainfall would provide enough moisture in many areas to allow dry seeded crops to get out of the ground.

"There is now some sort of a chance for an average crop for parts of the Wheatbelt, although follow-up rain will be even more critical than ever to see the crops along," Mr Kelly said.

And although parts of the south eastern Wheatbelt and Esperance missed out on significant rainfall, he said crops in some parts of the Esperance region still had an opportunity if a later finish to the season eventuated.

WA farmers' income projections had remained relatively robust, with nearly half of the surveyed farmers (49pc) expecting similar farm incomes in the coming 12 months as last year's strong result.

There were, however, fewer producers this quarter expecting their incomes to increase (20pc, down from 29pc last survey) and a greater number anticipating a weaker financial performance (28pc, up from 21pc last quarter).

This had flowed through to investment intentions, which remained strong, albeit slightly down from last quarter.

The latest survey found 27pc of WA farmers were currently looking to increase investment in their farm businesses over the next 12 months (34pc previously), with an additional 61pc planning to keep investment at current levels (up from 59pc last quarter).

This quarter, the survey also questioned farmers about their uptake and use of sensor technology - such as drones, moisture probes, yield mapping, EID (electronic identification) and auto drafting.

This topic was last asked about in the survey in June 2017.

Mr Kelly said although the use of sensor technologies remained reasonably low among farmers at 27pc of those surveyed in WA (similar to usage levels in June 2017), the technology continued to be more widely adopted in larger farming businesses with gross incomes exceeding $1 million (at 41pc).

"Of these larger-scale producers employing the technology, 77pc said they used it as a tool to support decision making and 70pc said the use of these technologies and data had helped increase profitability," he said.

"Variable-rate technology and sensor technology which help reduce chemical and fertiliser costs remain high on the shopping list for many farmers."

The Rabobank Rural Confidence Survey questioned an average of 1000 primary producers across a wide range of commodities and geographical areas throughout Australia on a quarterly basis and was a comprehensive monitor of outlook and sentiment in Australian rural industries.

As the most robust study of its type in Australia, the Rabobank Rural Confidence Survey has been conducted since 2000 by an independent research organisation.

The next results are scheduled for release in September 2019.

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