CONFIDENCE levels of farmers in Western Australia have hit a decade high, eclipsing levels reported across the nation, however recent frost damage has tempered earlier-season industry expectations that a 20 million tonne crop could be in reach.
That was all according to the latest quarterly Rabobank Rural Confidence Survey which was released on Tuesday.
Despite the frost at the beginning of the month, the large crop with elevated pricing is still expected to underpin farm business profitability, which is boosting investment intentions right across the agricultural sector.
In the survey, close to one-in-five farmers expressed their intention to expand their business via property purchase in the next 12 months, with appetite particularly strong in the grains sector.
It also found more than half of WA's farmers (52 per cent) have a positive outlook for the agricultural economy for the coming 12 months, up from 38pc in the previous survey.
Those expecting a continuation of current economic conditions stood at 46pc, with only 2pc anticipated a deterioration.
That is the highest level of confidence reported in the State since March 2011.
In another indication of the WA sector's current financial strength and stability, the Rural Confidence Survey's Farm Viability Index - measuring farmers' assessments of their own business viability - edged higher in the last quarter to sit at its third highest level in the survey's 20-year history.
Rabobank regional manager for WA Steve Kelly said the full impact of the frost was unknown and would become clearer in coming weeks, however hopes of above-average grain production along with strong commodity prices - not only for wheat and canola, but also sheep and beef - was behind the positive sentiment.
"For some, there is still the view from a season and price perspective that conditions are as good as we have seen for some time, however the recent frost has reminded us the potential is yet to be realised," Mr Kelly said.
That optimism was reflected in the survey results, with 66pc of those surveyed in the northern Wheatbelt expecting conditions to improve in the months ahead - holding the strongest sentiment.
However, the northern Wheatbelt has also sustained some frost damage and the extent is not yet known, meanwhile waterlogging damage has been reported in crops on the South Coast and a kind finish will be required to realise the potential in crops that were re-sown.
"The other concern plaguing an otherwise positive outlook is the availability of farm labour," Mr Kelly said.
"I think the survey results would have been even higher if there weren't concerns over sourcing labour as there is a lot of concern amongst farmers around having enough staff.
"The Federal government's recently-announced Ag Visa was a welcome step, with the uncapped number of low to highly-skilled workers from Association of Southeast Asian Nations (ASEAN) countries expected to be in place by the end of the month."
The survey, which was conducted before the early-September frost event found sentiment to be highest in WA's grains sector, with 76pc of WA's graingrowers having a positive outlook on the 12 months ahead - up from 35pc last quarter.
However, sentiment was also strong in sheep and beef, with 44pc of sheep producers expecting an improvement in conditions and the majority of beef producers (79pc) expecting a continuation of current conditions.
"Strong lamb and sheepmeat prices together with a recovery in the wool market have underpinned positivity in the sheep sector," Mr Kelly said.
"While many of the key pastoral regions have enjoyed a good season and when you combine this with strong beef prices, it is no wonder beef producers are also positive about the outlook."
While the combination of the good season and prices was expected to flow into the bottom line of farming businesses, there had also been a significant increase in the cost of crop inputs this season.
More than half of surveyed WA farmers (54pc) are expecting to generate a higher gross farm income in 2021/22, with strong prices underpinning income projections in the grain sector.
"Wheat prices in the mid-$300s are in the top 10pc of wheat prices while canola is at levels never seen before at over $900 per tonne," Mr Kelly said.
"That is fuelling strong investment plans in not only the grains sector, but the ag sector more generally, with 39pc of WA farmers (and 50pc of graingrowers) looking to increase investment in their farm businesses over the coming 12 months."
Farmers are planning to invest in onfarm infrastructure, plant and machinery and the adoption of new technologies.
Mr Kelly said the survey also found a strong expansionary appetite for property purchase among WA farmers this quarter.
"If the season pans out and grain prices remain high at harvest, this demand for rural property will remain strong," he said.