New research released by Rabobank yesterday reveals Victorian farmers are among the most confident in the nation, with dairy farmers and grain growers optimistic about the season ahead.
The Rabobank Rural Confidence survey found dairy farmers were behind much of the upswing with 45 per cent expecting conditions to improve on the back of strong farm gate milk signals and improving seasonal conditions in southern Victorian.
Although it was a tale of two halves in Victoria's dairy sector, as milk production continues to tumble in the northern Victoria as farmers contend with high water and fodder costs, Rabobank said.
Meanwhile the Victoria's grain growers retained their upbeat outlook on the year ahead - and are more positive than their counterparts across the country - as Victorian producers forecast a positive spring ahead.
Rabobank regional manager for southern Victoria and Tasmania Hamish McAlpin said good winter rainfall, consolidating on the state's late autumn break, was behind much of the positivity.
"The Wimmera is looking fantastic, particularly around Horsham, where the soil moisture profile is almost full," Mr McAlpin said.
"Yield potential begins to dissipate as you head into the Mallee, however, with below-average prospects around Mildura."
Mr McAlpin said the crops were also faring well in the Goulburn Valley near Echuca, Shepparton and Benalla, and in southern Victoria at Ballarat and Hamilton.
The quarterly survey, commissioned by Rabobank questioned 1000 Australian farmers, including 250 Victorian primary producers, and found 37 per cent of the state's farmers had a positive outlook on the agricultural economy in the coming 12 months, up from 31 per cent on the previous quarter.
Sixty-five per cent of those who recorded an optimistic outlook cited seasonal conditions as a key reason for their view while commodity prices were nominated by 53 per cent.
The survey, conducted by independent research organisation Kynetec, has taken place quarterly since 2000.
"While it is still early in the season, and frost risk looms large, a reasonable spring could see many harvest their best crop in three years and in some pockets, one of the best crops on record," Mr McAlpin said.
"But it all hinges on timely rainfall in the next few months."
He said the outlook for grain prices also remained positive, with growers "acutely aware of the dry conditions over the border and the impact on local supply and demand".
While there was an improvement in grain grower confidence this quarter, with 44 per cent expecting conditions to improve in the coming year (up from 33 per cent in the previous survey), Mr McAlpin said it was the state's dairy producers who had posted the strongest upswing in sentiment.
"Most dairy regions in southern Victoria have benefited from good winter rainfall, but it is the strong price environment that has driven the rebound in confidence," he said.
With lack of milk and latent capacity in the processing sector driving record-high opening milk prices, Mr McAlpin said this was starting to feed into business bottom-lines, with 65 per cent of dairy farmers expecting a higher gross farm income in 2019/20 than the previous financial year.
"We are also starting to see this flow into investment intentions, with 22 per cent of dairy farmers looking to increase their investment in the coming year by upgrading ageing infrastructure, rebuilding herds or buying next door," he said.
In the livestock sectors, the survey revealed confidence had improved among the state's beef producers, with 41 per cent expecting an improvement in conditions (up from 26 per cent) while sentiment in the sheep sector had waned, with 16 per cent expecting an improvement (down from 24 per cent).
The next results are scheduled for release in December 2019.