Confidence boost on back of prices, conditions

Farm business confidence highest in more than six years

Coronavirus
FARM CONFIDENCE: Skipton prime lamb producer Al Gabb is one of many Victorian farmers, expressing confidence in the next twelve months.

FARM CONFIDENCE: Skipton prime lamb producer Al Gabb is one of many Victorian farmers, expressing confidence in the next twelve months.

Aa

Farm business confidence high and rising.

Aa

Exceptional seasonal conditions, coupled with historically high livestock prices, see Victorian farm business confidence at ts highest level since 2014, according to the latest Rabobank survey.

The survey showed coronavirus concerns have all but dissipated among farmers in all commodities, with sentiment in the latest Rabobank Rural Confidence Survey the highest it's been since mid-2014.

The survey found the number of Victorian farmers expecting business conditions to improve over the coming 12 months also more than doubled since September.

Rabobank's southern Victorian regional manager Deborah Maskell-Davies said strong commodity prices and seasonal conditions were outweighing any concerns farmers had about international markets and the economy.

Ms Maskell-Davies said the fact the COVID-19 restrictions had eased in Victoria, and life was returning to normal for many people, would have contributed to the improved sentiment.

The survey found the number of farmers expecting conditions to improve in the coming 12 months more than doubled to 39 per cent (up from 16pc), while half of those surveyed expected little change to current conditions.

The number of farmers expecting conditions to worsen now stood at just 10pc, well down from 33pc who held that view three months ago.

For those expecting conditions to worsen, overseas markets and economies were the most significant concern (58pc),while China trade relations were registering as an increasing worry (20pc cent, up from 10pc last quarter).

Timboon dairy farmer Nick Renyard agreed that the trade tensions would be the main thing, weighing on farmers' minds.

"But it has been an exceptional season and it just keeps on giving," Mr Renyard said.

"There will be a lot of catch up, on things that have been put off, in the past year.

"Some farmers were putting in a lot more annual grasses because they are a lot cheaper.

"They are going back to more of a quality perennial base, rather than the cheaper annuals."

He said he had done some upgrades to his dairy, while other producers were investing in collars and ear tag systems, to make stock management easier.

"Farmers have some more money to do that sort of thing.

"We have upgraded an irrigator, we have sold an old traveller and bought a new hard hose irrigator, so there's a bit of investment there."

He said it had been "sensational silage harvest", so fodder stores would also be very good.

"It definitely helps, after some of the shocking years we have had."

Ms Maskell-Davies said conditions across Victoria were now exceptional, even in areas badly damaged by bushfires at the start of the year.

Seasonal conditions

The survey found optimism levels were mainly being driven by the season, with 71pc citing seasonal conditions as the reason for their confidence.

At the same time, 5pc nominated commodity prices, especially in the beef sector.

"Seasonal and production conditions in cropping areas are mostly good and there is lots of hay and fodder production right across Victoria; it has been a huge year for it," Ms Maskell-Davies said.

Dairy farmers were having a terrific season, with good seasonal conditions, lower water prices for irrigators, the opportunity to replenish fodder stocks and low grain prices all helping keep production costs down.

That combined with good milk prices.

This was reflected in the survey's dairy results, with Victorian dairy farmers increasingly confident about their prospects over the coming year - 36pc were expecting an improvement in conditions, up from 20pc in the September survey.

Dairy producer, Lachie Sutherland, Larpent, said farmers in all sectors were feeling optimistic.

"It's the exceptional season which helps - in terms of late spring and early summer growth," Mr Sutherland said.

"That really helps - our markets will be a bit better and the price of grain is coming back, as well, with a plentiful harvest.

"People are positive, because they are not forced to buy fodder, they have a lot in the bank."

He said he was milking 380 cows.

"Agriculture is thriving, at a time when COVID has taken a grip on the large centres, it's providing employment opportunities for people who are out of work.

"Often agriculture is given a bit of a hiding by people in the city, but it's far from that now.

"All the meat job is good, even cull cattle, are attracting good prices."

Peter Young has a dairy farm at Buffalo and said the shallow soils and clay base on his property meant he had experienced some difficulties.

"It's very flat, so when it gets wet, it just stays wet," Mr Young said.

"Because it stayed wet for so long, I started getting pugged in May and was still getting pugged at the end of October.

"That's when cattle do the damage, when it is continually raining."

But he said he had now oversown his farm, and with the prospects bright for summer, he was confident he'd be able to recover lost productivity.

"If you are on red soil, or sandy soil, or slate, you're laughing, you have had a terrific year," Mr Young said.

"The milk price looks right, at the moment, COVID seems to have settled down, so it's all pointing the right way."

Grain and sheep growers

The survey found the state's grain growers were the most upbeat about their prospects, with 45pc reporting an expected improvement in business conditions, nearly double the 24pc of grain growers with that view three months ago.

In the beef sector specifically, 44pc of Victorian producers have an optimistic outlook on the next 12 months (more than double September's figure) and a further 43pc expected little change to current conditions.

Ms Maskell-Davies said beef sector confidence had been spurred on by extraordinary returns, which continued to exceed industry expectation.

Sheep sentiment has also been bolstered by the season, with 60pc of the state's sheep graziers expecting little change in the current conditions, while 28pc cent expect an improvement - up from 7pc with that view in the previous quarter.

Ms Maskell-Davies said confidence has rebounded in the sheep sector with prime lambs selling well and Merino producers were also selling for excellent prices.

"Sheep producers are selling stock very well and wool producers are navigating their way through the current volatility and most are selling when they normally would," she said.

Sheepmeat producer Al Gabb, Skipton, said while wool was "not worth skittles" to him, he had great confidence in the lamb market.

"I actually think it is a bit better than what I actually thought it would have been," Mr Gabb said.

There were no concerns about the Chinese market.

'There is only so much of everything that is produced in the world; things like wine are probably more of an indulgence than a staple.

"We are not changing any decisions, on our farm, because of China, we still grow barley, and I think the prices are reasonable."

He felt the demand for protein, globally, seemed to be on the rise.

"I think we can produce a good quality lamb that is going to be in demand, around the world - and here, of course.

"While sheep numbers are in a rebuild phase, it's about the old supply and demand."

Mr Gabb said he expected to turn off around 3000 lambs, increasing to 3500-4000 next year.

Ms Maskell-Davies said it had been an incredible year for stud stock sales, which were not affected by COVID uncertainty or restrictions.

Confidence strengthened in all regions of Victoria, but farmers in the Murray Goulburn Valley were the most upbeat about their prospects, with 61pc expecting an improvement in conditions over the year ahead.

Confidence also increased in the Wimmera/Mallee, where cropping conditions have picked up, and south-west Victoria, where sheep sentiment was improving.

Growing optimism

With the seasonal conditions lining up with strong commodity prices, the state's farmers have grown increasingly optimistic about prospects for their farm business performance.

The survey results show 37pc of Victorian farmers expect their business to generate a higher gross farm income in the coming 12 months, up from 23pc three months ago.

With the forecast growth in farm, incomes came increased investment intentions.

This quarter, 30pc of the state's farmers said they planned to increase investment in their business over the coming 12 months - up on the 20pc with that view in the September quarter and the strongest level of investment planned in close to six years in Victoria.

Of those looking to increase investment, on-farm infrastructure - such as fences, yardsand silos - was the priority for more than half of respondents, while planned spending on new plant and machinery had increased to 55pc (was 41pc).

Increasing livestock numbers as well as investing in technology were also options for on-farm spending.

The survey also found one-third of those intending to increase investment were looking at property purchase, to expand their farming operation, particularly in the state's grains sector.

Ms Maskell-Davies said the state's rural property market continued to defy expectations - a further sign of longer-term confidence in agriculture.

She said farmers were also looking at property expansion as a way of drought-proofing their enterprises, either moving to areas with higher rainfall or building more autonomy into their enterprises with the capability to make fodder or grow grain.

The survey found the state's farm viability index - measuring farmers' assessment of their business viability - was also very strong, with 97pc of those surveyed indicating their businesses were viable.

"The Victorian farm sector is in very good shape, with the season and prices combining to put farmers in a really good position at the end of 2020," Ms Maskell-Davies said.

Have you signed up to Stock & Land's daily newsletter? Register below to make sure you are up to date with everything that's important to Victorian agriculture.

Aa

From the front page

Sponsored by