The wool market slump, dairy trade jitters and frustrations about being banned from livestock and machinery sales have elevated farmers' concerns about coronavirus, taking some shine off the sector's earlier surging confidence levels.
Although almost half the farmer population says COVID-19 has so far had no impact on their business, rural confidence has slipped from the historic highs recorded three months ago, according to Rabobank's latest producer mood survey.
However, positive seasonal conditions since good February rain and solid commodity prices in most sectors continue to keep most farmers' spirits up.
That's particularly the case in NSW, the only state to see farm confidence leaping ahead, with 52 per cent of its producers bullish about the future and 45pc expecting their farm incomes to exceed last year.
Spending plans still solid
Rain has also sustained farmer investment intentions, notably in Tasmania where a third plan to increase their spending, while Australia-wide an average 25pc intended to invest more in their enterprise in 2020-21.
About 56pc of the 1000 respondents planned on-farm infrastructure spending - up from 50pc in March.
Although the overall mood about the future of agriculture and their own businesses was generally upbeat, Rabobank reported coronavirus market realities and longer term unease had hit home for many.
The number of farmers expecting conditions to improve fell from 46pc early this year to 33pc in May, while 23pc felt business conditions would deteriorate, up from 15pc last quarter.
Those expecting conditions to be unchanged remained about the same.
Nearly half of those anticipating conditions to worsen cited falling commodity prices as the reason, while 28pc specifically identified the impact of COVID-19 as undermining overall expectations.
I'm less optimistic the long term implications will be clear, or if there will be a thorough understanding of how agriculture may have fundamentally changed
The Australian Farm Institute is also uneasy about long term implications for the industry.
In particular AFI was concerned whether strategies and policies around supply chain reliability and exports were capable of withstanding global setbacks such as the market fracturing and uncertainty caused by the pandemic.
"The signs are positive that three months from now there will be some resolution to COVID-19's immediate impact, but I'm less optimistic the long term implications will be clear, or if there will be a thorough understanding of how agriculture may have fundamentally changed," said executive director, Richard Heath.
Agribusinesses and governments may need to consider how more domestic manufacturing capacity could be encouraged to reduce dependence on imported food and farm imputs, and alternatives sought to reduce Australia's dependence on a few key export markets, he said.
Significantly, Rabobank noted optimistic sentiment in the sheep sector had dived from about 36pc of producers having upbeat expectations three months ago to just 23pc now, largely because of depressed wool prices offered by China, which buys about 80pc of the clip.
A further 36pc of sheep producers expected business conditions to worsen.
Trade uncertainty in the dairy sector triggered a near three-fold jump in the number of milk producers expecting conditions to worsen to 31pc, but beef producers were still fairly bullish, with 35pc tipping better conditions thanks to strong commodity prices.
- Rain revives confidence: 46pc of farmers bullish on ag
- Coronavirus panic in Asia adds to SunRice supply tensions
- Ag's fuel security unease as virus dangers clash with sowing
In the grains industry 42pc of growers nationally had higher business expectations thanks almost entirely to the better seasonal outlook, while 44pc of cotton growers also expected conditions to improve (up from 27pc).
A wetter-than-average three-month outlook triggered much of the cotton mood turnaround, suddenly making the sector the most confident of all about prospects for the coming year, despite the past few months of coronavirus disrupted demand.
Greatly-improved seasonal conditions and good commodity markets mean Australian farmers are still quite positive about business conditions despite the broader business impacts and disruption caused by the pandemic
Rabobank Australia chief executive officer Peter Knoblanche said uncertainty about COVID-19 was undoubtedly hanging over the farm sector and had "taken the shine off" strong levels of confidence recorded earlier this year.
"However, greatly-improved seasonal conditions and good commodity markets mean Australian farmers are still quite positive about business conditions despite the broader business impacts and disruption caused by the pandemic," he said.
Only 8pc of farmers felt they were vulnerable to a major negative impact likely from coronavirus, but 44pc identified minor negatives, including supply chain disruption and inputs being more expensive or harder to obtain, or being unable to attend livestock sales and machinery auctions.
AFI's Mr Heath said it was too early to say what long term impacts coronavirus was having on the sector, but many areas of strategy were now being reconsidered in the context of "substantially different operating conditions".
While Australia had been spared the savage impacts felt by US agriculture, such as a 40pc fall in its pig processing capacity as labor ran short in April which led to 200,000 hogs not being processed every week, the failure of just-in-time supply chains was a defining global feature of COVID-19.
He said one of the big issues facing agriculture after coronavirus would be a need to build supply chain resilience against global shocks.
Producers, exporters, farm services businesses and policy makers may need to consider how more domestic manufacturing capacity could be encouraged to reduce dependence on imported food or other goods, and if it was healthy for agriculture to be so highly dependent on a few key overseas buyers.
Other likely questions might include how we should manage the need for strategic reserves of fuel, fertiliser and chemicals and whether surplus production within all food categories was require so imports were not required.
- Start the day with all the big news in agriculture! Click here to sign up to receive our daily Farmonline.