Farmers are going into 2023 with far fewer concerns about foot and mouth disease, plus stronger seasonal expectations and improving sentiment about their sector's prospects, although not their business costs.
High fuel, electricity, fertiliser and farm chemical prices, and labour shortages and costs have dented what is otherwise considered a generally upbeat outlook thanks to solid commodity prices and mostly good growing conditions for crops and livestock.
Some farmer expectations are more cautious after copping a bruising from excessive wet weather.
Surprisingly, what's not weighing heavily on the farm mood, at this point, is the likelihood of more official interest rate rises to follow the past eight months' increases to 10-year highs, and inflation at 32-year highs.
Rabobank's final survey of rural confidence for 2022 found sentiment edging up after four consecutive quarters of decline, with appetite for investing rising in the past quarter.
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Overall income expectations for the new year were creeping higher.
Following the shock of some serious crop, stock and property losses during a wet winter and spring in eastern Australia, fewer farmers than three months ago were expecting agricultural business conditions to worsen in the new year.
In fact, in NSW, which has taken the brunt of the floods, confidence rallied, while the mood in soggy Victoria simply plateaued.
South Australian farmers were the nation's most confident, helped by far more supportive rainfall patterns and big crop results.
Better expectations
Overall, about 15 per cent of Australian producers anticipated better business conditions ahead (up from 14pc in September), while half had a stable outlook (up from 43pc).
The number expecting operating conditions to deteriorate shrank from 36pc to 31pc.
In fact, the survey revealed the highest levels of seasonally-driven optimism seen for 12 months, with the number of those tipping an improved year ahead who cited seasonal conditions as the main reason almost doubling since September.
However, the snapshot of rural sentiment around Australia was far from a "one size fits all" picture.
Rabobank Australia chief executive officer, Peter Knoblanche, said agriculture was facing a mixed bag of challenges with the seasonal resilience of farming businesses continuing to be tested.
About a third of those who expected the rural economy to worsen in 2023 largely blamed too much recent rain and flooding for their darker mood, with eastern states dairy farmers and cotton growers and some grain growers particularly despondent.
Mixed results
"This extreme wet has reined in the earlier seasonal optimism for some, while for others La Nina will deliver a record grain harvest and set up their feed base and soil moisture reserves for the new year," Mr Knoblanche said.
He noted many farmers had previously weathered drought and bushfires before encountering the big wet.
Fortunately domestic and global demand for rural commodities was still underpinning productivity and profitability.
"With three years of improved seasonal conditions now under our belts, farmers have the confidence to make long term investments in their businesses," Mr Knoblanche said.
However, the high cost of farm inputs remained a concern for nearly half of those who expected the agricultural economy to worsen, although cost concerns had eased slightly since mid year.
Labour costs
Higher input costs and labour shortages registered as a big concern with grain growers, particularly those also struggling with adverse weather losses and crop quality downgrades.
Western Australian confidence has also been suppressed by high farm input costs and unease about how long commodity prices will hold up.
Rabobank's pulse check with 1000 producer respondents found farmers mostly less worried about softening commodity prices as they ended 2022.
Fears about biosecurity issues had also plummeted.
Last quarter, more than half of all beef producers were concerned about FMD but none raised it as a concern in the latest survey.
The lull in biosecurity concerns and good red meat market conditions near last year's records contributed to an overall lift in confidence levels on the livestock front.
Beefed up
Beef sector confidence was also up on the back of improved seasons as 17pc of cattle producers expected a better agricultural economic outlook (up from 10pc) and only 22pc expected it to worsen.
The sheep producer mood also lifted, although not as much as the beef sector.
Sugar cane growers were the least optimistic of all sectors, with just 10pc holding a positive sentiment and half expecting conditions to worsen.
Meanwhile, the number of farmers planning to boost spending on their farm businesses in the coming 12 months edged up two points to 27pc, with 64pc looking at similar levels of investment.
Key priorities planned by about 80pc of those who were spending were on-farm infrastructure, including fences, silos and yards, while half had earmarked capital for new plant and machinery.
Almost half were growing their livestock numbers (up from 37pc last quarter).
About 26pc of farmers who planned to lift their investment said the wanted to buy property to expand their operations.
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Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
