WA rural confidence still in negative territory

Rural confidence in WA is up but remains in “negative territory” — with more producers expecting farm business conditions to deteriorate rather than improve, according to Rabobank. The agribusiness banking specialist’s third quarter Rural Confidence Survey reveals overall net rural confidence has improved from -21 per cent last quarter to -8 per cent, largely due to good winter rainfall in most growing regions. The quarterly survey questions an average of 1000 primary producers across a wide range of commodities and geographical areas throughout Australia. Third quarter results revealed that while winter rainfall had dampened concerns among WA producers, the impact of government policies — especially to the live export market — remained a leading cause for worry. However, the number of WA farmers expecting the agricultural economy to improve in the next 12 months lifted to 24 per cent from 19 per cent last quarter. Fewer producers believed economic conditions would get worse, with the figure now at 32 per cent, compared with 39 per cent last quarter. Concern over government intervention and policies increased from 46 per cent to 48 per cent this quarter, with changes to live export policy flagged by 33 per cent of WA producers compared to 16 per cent last quarter. The lift reflected the timing of the survey, which followed the announcement in July that Australia’s live sheep export industry will cease in May 2028. Other concerns were shown to have eased with significant relief around seasonal factors, with only 19 per cent of WA producers nominating drought as a worry, down from 42 per cent in the previous survey. There was also less concern about rising input costs (18 per cent, down from 28 per cent) and falling commodity prices (21 per cent, down from 32 per cent). Rabobank WA state manager Steve Kelly said though seasonal pressure had eased for WA grain growers, their outlook was tempered by grain prices, with additional falls in prices occurring during the survey period. “Winter crop production in WA is forecast to rise year-on-year, but income will be capped by global drivers, strong domestic production and the potential of a forecast rise in the Australian dollar versus the US dollar by year-end,” Mr Kelly said. Following an upward trend in Australian cattle prices through July, livestock markets were showing greater optimism. The Western Young Cattle Indicator has lifted 28 per cent since May 1, with Rabobank forecasts indicating cattle prices should continue to rise in coming months, reflecting increased demand from the US on global markets. The survey also found an increasing number of WA sheep producers looking to commodity prices as cause for positivity. “For the sheep sector, while demand in key markets remains subdued, the drop in national weekly slaughter volumes appears to have rebalanced the market and supported prices,” Mr Kelly said. Investment intentions among WA producers softened this quarter, with intended increased on-farm investment declining from 22 per cent to 13 per cent. Mr Kelly said this was understandable as most producers, especially grain growers, waited until December to shore up their investment plans, based on harvest. He said grain producers had already outlaid considerable expenditure on fertiliser this season. “Although input costs were less of a concern in the latest survey (listed by 18 per cent compared with 28 per cent last survey), this season’s crop has been a costly one to put in,” he said. “Although the unit price has dropped, additional fertiliser that has been used increasing investment in the crop.” Mr Kelly said there was an increase in WA producers intending to invest in new plant and machinery, especially in the northern Wheatbelt.