Victoria has retained its position of having the highest rural confidence levels in the nation for the third consecutive quarter, as a part of the Rabobank Rural Confidence Survey.
Buoyed by both commodity prices and seasonal conditions, eight out of 10 Victorian farmers are anticipating higher or stable gross farm incomes in the coming year.
The latest survey, completed last month, found that Victorian farmer confidence had rebounded to a net reading of 26 per cent, after dipping to seven pc the previous quarter.
The proportion of the state’s farmers expecting agricultural economic conditions to improve in the next 12 months increased to 36 per cent, up from 24 per cent in the previous survey.
The percentage expecting conditions to worsen fell to 10 per cent, from 17 per cent, while more than half (52 per cent) had a stable outlook on the coming year.
Rabobank regional manager for Southern Victoria and Tasmania Hamish McAlpin said the positive sentiment prevailing across the state was largely due to late winter rains.
Mr McAlpin said the heavy rainfall experienced in Victoria at the weekend had less of a negative impact on crops than had been anticipated.
“Fortunately the heaviest falls focussed on predominantly grazing country in the north east of the state, rather than cropping areas,” Mr McAlpin said.
“Although, horticulture in the northern part of the state will experience some negative impacts as a result of the large volumes of water.”
He said Victoria generally had a good spring, moving into summer.
“Although the warmer weather took a while to get here, the widespread falls in October helped crops reach their potential, with a seven million tonne winter grain crop on the cards,” he said.
“That said, there has been some significant damage to crops from frost, particularly the early November event, with lentils in the north and cereals in the south the biggest casualty.”
He said the season was favourable for dairy farmers, particularly in the south-west of the state and also west Gippsland.
“Good seasonal conditions, together with the improved price outlook, we’re seeing dairy farmers play catch-up after two very tough years,” he said.
“Although there is a fair bit of focus on the Murray Goulburn sale process, which is creating some short-term uncertainty.”
Of all farmers in the state, sheep producers were the most bullish about their prospects.
A total of 46pc of sheep graziers reported a positive outlook on the year ahead, with a further 51pc expecting stable conditions in the agricultural economy.
“Lamb prices have been strong for a number of years now, while wool prices continue to hit new records,” he said.
In the beef sector, confidence levels were also strong and well-up on the previous quarter.
“This has been aided by the recent lift in beef prices as restocker demand has reignited following widespread rain in parts of Queensland and northern New South Wales,” he said.
Across the sectors, commodity prices were deemed to be the biggest driver of positive sentiment, cited by 66pc of those Victorian farmers with an optimistic outlook.
This percentage rose to 82pc in the sheep sector, with sheep farmers the most bullish about price prospects.
Seasonal conditions were also behind the optimism in the state’s agri sector, nominated as a key driver of confidence by 53pc of those with a positive outlook.
Victorian farmers also reported healthy expectations for gross farm incomes in 2018, with 38pc expecting their incomes to increase over the coming 12 months, while a further 43pc expected their financial position to remain stable.
Dairy farmers, in particular, expected farm incomes to increase, with 51pc anticipating an improved financial result in 2018.
Mr McAlpin said the survey found longer-term farmer confidence was also robust, reflected in investment intentions, with 25pc of the state’s primary producers looking to increase their investment, and 67pc looking to maintain current levels over the next 12 months.
“While much of this investment is being pegged for on-farm infrastructure, we are seeing an increase in the number of family farm operations actively looking to buy the property next door or the block down the road,” he said.
“This has been underpinned by sustained profitability in the sheep, beef and cropping sectors, as well as a pay down in debt and the low interest rate environment.”