In the wake of a record national grain harvest farmers are banking unusually big bucks and tipping 2022 will be another bumper year for commodity prices and farm sector confidence.
Agribusiness bankers say the mood and cash returns in cropping and livestock circles are still near, or beating, historic highs.
Despite concerns about leaping fuel, chemical and fertiliser prices, and freight network log jams, primary producers continue to make robust investment spending plans, anticipating a third consecutive year of big commodity prices and generally positive seasonal conditions.
Just over a half of Australia's farmers expect last year's very good business conditions to continue, according to Rabobank's latest quarterly sentiment monitor.
A further 31 per cent expect things to be even better in 2022.
Australia's biggest agribusiness lender, National Australia Bank, has reported its grain customer business cash inflows in Victoria, NSW, South Australia and Western Australia hitting their highest level since it began compiling its monthly Economics Data Insights in 2015.
At the same time business cash earnings from beef cattle customers remained high in all states thanks to bullish demand for red meat, good pasture conditions and post-drought herd rebuilding keeping the Eastern Young Cattle Indicator at near record levels above 1100 cents a kilogram.
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Interestingly, farmers across the Tasman are far less upbeat as local and global economic pressures bite them.
In fact, they are quite unhappy.
Kiwis depressed
Soaring farm input prices, labour shortages and costs, plus New Zealand government regulations on emissions, water and compliance costs have slashed kiwi farm confidence to its lowest point in 13 years, according to NZ Federated Farmers' latest six monthly survey.
Despite currently rising meat and dairy returns, almost two thirds of producers (64pc) believed general economic conditions would worsen this year.
NZ farm investment sentiment was also dwindling, but in Australia Rabobank said 40pc of farmers planned to increase their business investment in 2022.
Rabo's survey of about 1000 producers found farm infrastructure topping the investment spending list, followed by new machinery and equipment and a growing commitment to new technology.
West Australian farmers were the most keen to buy more land.
NAB's agribusiness and regional executive Julie Rynski, said grain growing customers in WA were reaping the benefits of that state's record 23.1 million tonne winter crop.
Bin busting crop
"WA's January income was around 25pc higher than the same period in 2019 when growers experienced a strong season combined with high drought-induced eastern states' demand," she said.
WA winter crop receivals for 2021-22 were now estimated to be up 37.3pc on the prior season.
Nationally, cropping cash inflow trends reflected high commodity prices and a bin busting winter crop, now estimated to total 61.9m tonnes - up 10.8pc for 2021-22.
Elsewhere in the cropping sector, business cash inflows from cotton remained elevated thanks to excellent seasonal conditions, which were supported by replenished irrigation storages and the promise of good dryland crop performances this year.
Rabobank noted sugar cane producers had also been particularly upbeat prior to the recent flooding disaster in southern Queensland and NSW's North Coast where farms and processing mills were inundated.
In fact, Rabobank found cane had been the most optimistic of all commodity categories in February, primarily due to positive global prices trends, helping Queensland to post the highest rural confidence levels for the past quarter, alongside Tasmania.
Optimism in the livestock sector was also outstanding.
Low interest rates and continued strength in our markets are helping farmers create opportunities for growth and expansion
- Peter Knoblanche, Rabobank
Rabobank Australia chief executive officer, Peter Knoblanche, said even in the face of some immensely-challenging seasonal conditions and natural disasters in some regions, consistently-high commodity prices in the past three years had put the nation's farmers in a "very strong position".
"Low interest rates and continued strength in our markets are helping farmers create opportunities for growth and expansion which are driving greater productivity across the sector," he said.
For the country more broadly, the latest survey revealed "commodity prices are king'", with 83pc of those expecting improved prospects this year citing prices as the driving factor.
Seasonal conditions were also fuelling positive sentiment.
Wary of more costs
However, farmers are also wary of rising input costs chewing into their promising returns, with almost two-thirds of 17pc of farmers who predicted a deteriorating business outlook attributing their concern to rising production costs.
Mr Knoblanche said the bank was closely monitoring the impact of the Russia-Ukraine war on markets and supply of key agricultural inputs - particularly urea and, to a lesser extent, potash.
He agreed any rise in input prices was likely to weigh further on farm sentiment.
In NZ, Federated Farmers president, Andrew Hoggard said while 61pc of kiwi farmers reported making a profit - up 5.5 percentage points in six months - 11pc expected profitability to now drop, largely because of a blowout in production costs.
"We're getting strong returns on meat and dairy right now thanks to high global and food security concerns, but clearly farmers are seeing a lot of that revenue going right back out again with higher fuel and fertiliser prices, rising labour costs and the hot inflation that is affecting every other New Zealander."
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