Australian farmers are having a positive outlook of the future of the beef and sheep industry as graziers fetch historically high prices for lamb, mutton, wool and beef, according to the latest quarterly Rabobank Rural Confidence Survey.
Rabobank national manager Country Banking Australia Todd Charteris said prices were a particularly strong driver of the bullish sentiment in the sheep and beef sectors, reported by 85 per cent and 83 per cent of sheep and beef graziers, respectively.
“There has rarely been a better time to be a grazier,” he said. “With prices for beef, lamb and mutton continuing to hit new records, and wool prices also at an historical high – albeit back down from its recent peak.”
Charteris said while dairy farmers were also buoyed by their price outlook for the upcoming season, on-farm cash flow is expected to remain tight for the next few months. Dairy price outlook also pushes their optimism, with overall net confidence remaining at positive levels (with more farmers positive than negative) since early 2015. This is the longest period of positive sentiment in the survey’s history.
Meanwhile, confidence remained relatively subdued in the grains sector, as pricing woes were compounded by the variable start to the winter cropping season – with planting rains falling short in Western Australia, South Australia and Queensland.
Unsurprisingly, Charteris said, grain growers were the least bullish about prices, with any support for local wheat prices expected to come from an anticipated softening of the Australian dollar, rather than a shift in global fundamentals.
“As such, we are seeing prices play a part in crop rotations, with an increase in the area planted to canola and pulses, particularly chickpeas and lentils, at the expense of barley and oats,” he said.
Charteris said the season was also stymying confidence in the grains sector, with planting rains falling short in many regions including parts of Western Australia and Queensland, the Eyre Peninsula in South Australia and also northern New South Wales.
“In contrast, the season has got off to a flying start in Victoria as well as the Riverina region of New South Wales,” he said.
The survey done last month found 28 per cent of the nation’s farmers were expecting conditions in the agricultural economy to improve in the coming 12 months (up slightly from 25 per cent with that view in the previous survey), while 59 per cent were expecting conditions to remain stable – the same reading as last quarter. Those with a pessimistic view of the year ahead stood at just 10 per cent.
Overall, commodity prices remained the biggest driver of prevailing optimism, with 77 per cent of surveyed farmers expecting conditions to improve citing rising commodity prices as reason for their positive outlook – up from 74 per cent in the previous survey.
This quarter, the survey also questioned Australian farmers for the first time about their uptake and use of sensor technology, such as drones, moisture probes, yield mapping, EID (electronic identification) and auto drafting.
He said although the uptake of sensor technologies was found to be relatively low to date (at 23 per cent of all farmers surveyed) – its usage was much higher (at 57 per cent) in larger farming businesses with gross incomes above $1 million.
“While sensor technologies are increasingly being used and talked about, particularly yield mapping in the cropping sector, there is still a long way to go,” he said. “For many, the uptake is being hindered by the cost of the technology compared with the benefits for both productivity and profitability.”
The next Rabobank survey results are scheduled for release in September 2017.