Upbeat WA underpins farm sector mood for 2019

Milk prospects slide, but cotton and WA lift national ag mood


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Despite less available water for crops this summer, cotton sector sentiment has bounced after recent rain and surging prices.

Despite less available water for crops this summer, cotton sector sentiment has bounced after recent rain and surging prices.

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Australian farmers are uneasy about the outlook for 2019, but less gloomy than three months ago

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Drought still weighs heavily on the farm sector mood, but cotton growers are generally smiling again after recent price rises and rainfall in NSW and Queensland, and Western Australians are quite bullish about the year ahead.

Dairy farmers, however, are really feeling the pinch as water and feed shortages and other operating costs threaten to further erode the nation’s milk production efforts.

While Australia’s latest Rabobank rural confidence survey results saw a lift in overall farm sector sentiment from recent 12-year lows, 55 per cent of milk producers expected conditions to deteriorate in 2019.

Overall the survey of 1000 producers found only 40pc of Australian farmers had a pessimistic outlook for the year ahead, which was an improvement from the 56pc feeling gloomy three months ago.

Drought remained the primary concern, although poor global prices continued challenging the sugar sector.

The national milk pool is at risk of falling to a two-decade low,” - Peter Knoblanche, Rabobank

Rabobank’s chief executive officer, Peter Knoblanche, tipped a sizable milk production slide, particularly in northern Australia and the Murray Darling basin.

“The national milk pool is at risk of falling to a two-decade low,” he said.

Beef and sheep producers were also still under pressure from seasonal concerns, including high feed costs forcing graziers to decide whether to feed livestock or make more de-stocking moves.

“Decisions facing graziers are becoming tougher to make, with many already making the easier ones of selling old or young stock, and now being faced with decisions around their breeding animals,” Mr Knoblanche said.

In contrast, sentiment had turned around in the cotton industry, where confidence was helped by the strong market outlook.

Domestic prices above $600 a bale have given heart to any growers with sufficient soil moisture and water availability to plant.

Yet, total production will still be curtailed to half last year’s yields because of dry conditions.

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Useful rainfall in southern Queensland cropping and pastoral areas helped the state to lead the survey’s recent confidence lift, ahead of NSW and South Australia.

“It is a good start, and will assist with planting of the summer crop, but it hasn’t been enough to materially improve soil moisture profiles, which remain deficient across much of eastern Australia,” Mr Knoblanche said.

Australia was now harvesting its smallest winter crop in 10 years.

WA producers represented a big portion of the 34pc of grain growers feeling positive about the year ahead.

With domestic grain prices set to stay elevated well into 2019 for those who had been able to get a crop off, 75pc of WA farmers saw the agricultural economy improving, or holding stable.

They had generally enjoyed good to very good growing conditions after the state’s late break pushed winter crop yield prospects to about 15 million tonnes.

WA farmers see the agricultural economy improving, or holding stable, after the state’s late break pushed winter crop prospects to about 15 million tonnes.

WA farmers see the agricultural economy improving, or holding stable, after the state’s late break pushed winter crop prospects to about 15 million tonnes.

While 42pc of Australian farmers expected their own gross farm incomes to deteriorate next year, almost half of WA producers tipped an income rise.

WA’s farming sector showed the greatest investment appetite in the survey, with 34pc of the state’s producers looking to increase investment in their farm business in 2019, compared to the national average of 18pc.

That said, across the country, two thirds of farmers still intended to maintain investment at current levels.

Overall, farmers indicated they felt prepared to navigate the impacts of drought.

Producers have become more proactive, rather than reactive, in the way they manage drought - Peter Knoblanche

A total of 94pc of survey respondents indicated some level of preparedness for drought, with more than half reporting they were more prepared now than five years ago.

Mr Knoblanche said farmers had put in place structures and developed strategies to help manage the variables in seasonal conditions, including building up cash reserves when seasons allowed and investing in water and feed infrastructure.

“Producers have become more proactive, rather than reactive, in the way they manage drought,” he said.

“But even the best strategies become harder to execute the more prolonged, and severe, the drought is.

“Parts of Queensland and NSW have been facing adverse seasons for a number of years now.”

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