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Rural confidence levels have declined for their third consecutive quarter, though they still remain “cautiously optimistic”, as Australian farmers grow concerned about rising costs and the impact of the war in Ukraine.
Rabobank’s Rural Confidence Survey has revealed that at the halfway point in 2022, worries are starting to significantly chip away producers’ positivity.
Vital farming needs such as fertiliser, fuel, freight and machinery and broader inflationary pressures in the Australian economy are all issues impacting agricultural bottom lines.
The survey from the second quarter of 2022 showed that 50 per cent of Australian farmers believed the ongoing conflict between Russia and Ukraine would have a negative effect on farm businesses, with its impacts on key inputs of fuel and fertiliser sending prices for both skyrocketing.
Though 25 per cent of respondents believed that the conflict could ultimately help their businesses, primarily by maintaining high commodity prices and affecting supply and demand.
This perspective was most prominent in the grain sector, owing to the conflict hindering Ukraine’s ability to meet its normal level of supply. But even so, the subsector appears split on the subject. Half of all grain growers surveyed this quarter said they expected the conflict to have a positive impact on their business, while 40 per cent said it would have a negative impact due to increased input, fuel and freight costs.
As Rabobank Australia chief executive Peter Knoblanche explained: “We are seeing the conflict impact global supply and push prices higher, and also deliver higher local prices with strong demand for Australian grain as the world turns to our producers to help meet critical food needs.
“But as the next round of EU sanctions come into force, there is a lot of caution among farmers about what this will mean for the longer term, which is flowing through to lower levels of optimism.”
Farmers in NSW reported the highest level of confidence, though their expectations of further improvement in current conditions are falling back. Grain producers in the state were the most optimistic, with cotton producers also maintaining a positive outlook even though wet conditions have challenged the ability to harvest crops and forced the need to replant.
In Queensland, beef producers were the most optimistic in the state, and producers’ investment intentions remain at near-record levels.
Two-thirds of Tasmanian farmers said they believed that commodity prices would stay high and their seasonal conditions would be optimal, so they project a continuation of the state’s agricultural strength, even while facing rising input costs.
Sentiment in South Australia and Victoria remained relatively stable.
Only Western Australia reported a noted positive jump in outlook. Farmers in the state appear to be counting on rising commodity prices and international market opportunities to help their businesses grow.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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