Farmers are optimistic despite COVID challenges, study shows

Farmers are optimistic despite COVID challenges, study shows

Stock and Land Beef
WET: Gippsland beef farmer Alan Paulet, Glengarry, was one of many farmers in Victoria who experienced a wet winter when his farm on the Latrobe River flooded.

WET: Gippsland beef farmer Alan Paulet, Glengarry, was one of many farmers in Victoria who experienced a wet winter when his farm on the Latrobe River flooded.

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Confidence is up across all farming commodities.

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High commodity prices and good seasonal conditions have fuelled Victorian farm sector confidence, offsetting any concerns about a potential fallout from COVID-19, the latest quarterly Rabobank Rural Confidence Survey has found.

The survey, released on Tuesday, found Victorian farmer sentiment rose considerably this quarter, with more than one third of the state's farmers expecting business conditions to improve in the coming year, while more than half expect a continuation of the excellent conditions.

Very few Victorian farmers forecast conditions to deteriorate, the study found.

Confidence is strong across most regions and commodity groups, with Victorian grain growers driving much of the upswing in sentiment, while dairy farmers were also very positive about commodity prices.

Rabobank regional manager for southern Victoria Deborah Maskell-Davies said seasonal and business conditions were both tracking well, with sustained high agri commodity prices and favourable weather conditions driving profitability and optimism.

She said Victoria had recorded a particularly wet winter, which - combined with forecasts for good spring rainfall - had set up producers well for the remainder of the year.

"Dairy, beef, sheep and cropping farmers are all experiencing buoyant prices, and many farmers have enjoyed quite a sustained period of profitability," she said.

"After a slow start, crops are now starting to take off and grain growers are forecasting average to above-average yields.

"The continuation of such favourable conditions is really allowing farmers to consolidate their debt, purchase more land to expand their enterprises, and upgrade equipment and infrastructure in their businesses.

The survey shows 34 per cent of the state's farmers believe conditions can improve even further over the year ahead (up from 25pc last quarter) while 57pc expect current conditions to remain.

Just 6pc (down from nine per cent) expect conditions to worsen.

Of the small proportion expecting conditions to worsen, very few attributed their negative sentiment to COVID-19.

Of those Victorian farmers expecting conditions to improve, 79pc attributed their optimistic outlook to commodity prices (compared with 69pc last quarter) while 71pc pointed to continuing good seasonal conditions.

The survey recorded a significant jump in confidence among the state's grain growers since the June survey, with 63pc tipping an improvement in business conditions (up from 22pc last quarter), while 37pc of growers expect similar conditions to last year.

Ms Maskell-Davies said "a bit more sun" would be welcomed by grains producers as winter had been largely wet and overcast, and farmers were eager to see crops finish off well.

The survey saw sentiment also improve in the sheep sector, with 70pc expecting similar conditions to last year, while 22pc expect conditions to improve.

Business confidence remained strong among beef producers, with 33pc expecting business conditions to improve and 56pc anticipating a continuation of current conditions over the next year.

"Commodity prices are still outstanding for beef and sheepmeat which is helping position producers well for the year ahead," Ms Maskell-Davies said.

"Beef and sheep producers are having to pay a lot more across all categories of stock - trade stock, bulls, rams and replacement breeding stock - which is a challenge."

While sentiment eased slightly in dairy, it remained strong and in line with sentiment in the beef and sheep sectors, with 28pc expecting an improvement in business conditions over the year ahead, and 61pc expecting similar conditions to last year.

Ms Maskell-Davies said continuing good milk prices, alongside favourable pasture and fodder-making conditions, plus sound water allocations, were all helping sustain the positive dairy sentiment.

She noted, however, that labour concerns continued for dairy farmers and sourcing people to work in intensive industries generally was becoming difficult.

The survey reveals farmers in the Murray-Goulburn Valley as well as the High Country region and the Wimmera/Mallee were particularly buoyed by the season, however, Ms Maskell-Davies said parts of the Mallee were still dry and spring rain would be "essential" for production in that area.

According to the survey, farmers in the Murray-Goulburn Valley and Wimmera/Mallee were the most positive in the state about the year ahead - with 46pc expecting conditions to improve.

Ms Maskell Davies said there had been some 'slight apprehension' - mainly among dairy farmers - in the wetter areas of Gippsland following a very wet winter, however, any difficulties were expected to be "more than offset by sustained positive prices".

The survey found 43pc of the state's producers expect their farm incomes to increase in the next 12 months (up from 32pc), while a further 47pc expect a similar financial result to last year.

Those expecting a weaker financial result stood at just nine per cent (down from 16pc last quarter).

Victorian grain and beef producers were optimistic about the prospects for their gross farm incomes - revising up their income projections on last quarter's forecasts - with 46pc of grain and beef producers, respectively, expecting a stronger gross farm income in 2021/22.

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