Rabobank’s latest Rural Confidence Survey has shown a higher percentage Australian farmers expect improved conditions in the coming year, rising to 48% from 42% in the previous quarter. Even Queensland’s outlook improved despite negative sentiment from the north, while Cyclone Yasi brought well-needed rains to South Australian growers.

Rabobank’s general manager for Rural Australia Peter Knoblanche, says only 14% of farmers expect the agricultural economy to worsen, compared to 19% last quarter.

“Summer rainfall has positioned most producers very well as we head into the winter season. Sentiment is very much being driven by an expectation of continuing high commodity prices and, more so, an ability to capitalize on them,” he says.

“Looking at futures, and the underlying drivers of price, the industry has every reason to be confident about the year ahead.”

Of the 1200 farmers surveyed, 57% recorded improved farm incomes and 52% expect to have higher incomes in the next 12 months.

“Irrigators have been the big beneficiary of the rains with storages at near capacity and allocations expected to approach 100 per cent. Dryland producers have seen soil profiles fill and pastures remain green as we head into the winter season,” says Knoblanche.

“Producers in several areas have commented that they cannot remember seeing green pasture in March, and I can tell you they wouldn’t mind seeing it as we head into April as well.”

Knoblanche notes many regions are still recovering from flood and cyclone damage, but Western Australia, South Australia and Tasmania are significantly more optimistic than they were last quarter.

“As well as being devastating for the communities worst hit, the floods and extreme weather events in Queensland, Victoria, WA (Western Australia) and parts of New South Wales have been a set-back for some producers due to the impact on yields, crop losses and harvest delays,” he says.

“Prime sugar and banana-growing country has been left damaged, if not completely destroyed, in the north of the state. And there have been infrastructure issues delaying delivery of product to market.”

“However the majority of the farming sector in eastern and southern Australia is in a good position due to the additional rainfall and positive seasonal conditions.”

‘Surprising’ Queensland result

Rabobank’s Queensland state manager Justin Harrison says it is ‘somewhat surprising’ the proportion of optimistic farmers in the state has risen by three percentage points to 31%.

He says the improvement came of a relatively low base though and was mainly driven by southern regions that weren’t as affected by Cyclone Yasi or the floods.

Queensland’s improvement came despite confidence falls in North Queensland, where the proportion of primary producers who expect improved farming business fell seven percentage points to 23%.

“North Queensland farmers were struggling for the most part of 2010, however confidence was gradually returning with stepped improvements recorded for the final three quarters of 2010, but unfortunately poor weather conditions over summer have devastated many parts of the region,” says Rabobank North Queensland general manager Peter Ciranni.

“The east coast between Townsville and Cairns was the hardest hit with many banana growers losing their entire plantation.

“The soft commodity market is particularly buoyant at present which is fantastic for those able to take advantage of it. Banana growers in the Atherton Tablelands who were not affected by the cyclone are propping up supplies and getting great prices.”

Record harvest for South Australia

South Australia’s farming confidence improved from 42% to 47% in the recent survey, with increased yields and positive side effects from Cyclone Yasi.

“The recent harvest was a record for South Australia – with 10.3m (metric) tons for all crops harvested. Farmers in the state are elated with $3.3 billion realized at the farm gate,” says Rabobank South Australia state manager James Robinson.

“Up until recently many producers were struggling due to almost a decade of drought so to get a viable crop and to have record-breaking yields is just phenomenal. It is good for regional South Australia and good for the state.

“The future outlook for the state is positive with many regions receiving above average rainfall in summer. Northern pastoral stations received their annual rainfall in a couple of days due to the effects of Cyclone Yasi moving into the state.”

More than 50% confident in Tasmania, Western Australia, New South Wales and Victoria

The proportion of Western Australian farmers who expect improved performance has more than doubled in the recent survey, jumping from 31% to 64%.

Rabobank Western Australia state manager Crawford Taylor says the result reflects a cautious optimism of farmers who are ‘hopeful’ for better seasonal conditions compared to a poor 2010.

“Farmers battled very dry conditions for most of 2010. The surge in confidence is an indication that the state’s farmers are attempting to put 2010 behind them and are looking ahead to a better 2011,” he says.

The survey showed 73% of Tasmanian farmers expect conditions to improve or stay the same this year, with the majority benefiting from widespread rain.

“The heavy falls were patchy and regionalized with some regions receiving close to 300 mm in a 36 hour period,” says Rabobank Tasmania general manager Gregg Bott.

“Over the course of the summer however, the majority of the state benefited and most primary producers are now very well placed as they look forward to winter, with the exception of poppy, pyrethrum and potato farmers on the North West coast, and really croppers in all areas that were impacted by heavy rain received at the wrong time.”

In New South Wales, heavy rain has led to a downgrade in crop quality but high yields and robust commodity prices have helped offset those negative effects.

“Irrigators are always the big winners when we have significant and prolonged rain events. Most dams feeding into the Murrumbidgee and Murray Rivers are at capacity and the Wyangla dam in the Lachlan Valley is at its highest level in a decade and still filling,” says Rabobank NSW state manager Ian Cooper.

The survey showed the confidence of New South Wales farmers has not changed from the previous quarter, with 53% expecting improved conditions in the next 12 months.

While the summer rainfall was beneficial for many of the drier parts of Australia, in Victoria it led to significant flooding and harvest delays. However, 52% of farmers there expect improved conditions compared to 49% in the previous quarter.

“Heavy summer rainfall caused huge delays in harvest, with many farmers in the Western District and parts of the Wimmera only just completing their harvest in March,” says Rabobank’s Victoria state manager Mark Bennett.

“But, with some unfortunate exceptions, the wet weather has tended to be a net positive for farmers, as yields have been solid and downgraded crops still commanded a reasonable price. In addition, sub-soil moisture profiles are now high.

“The flood situation in the North West of the state has transformed large farming areas into lakes, with some producers facing serious circumstances for months to come – sentiment among farmers who are affected by the flooding has been severely impacted, which is understandable.”