The federal government's contentious plans to ban the live sheep export trade have collided with rising concerns about the seasonal outlook to slash farm sector optimism.
Increasing unease about poorer agricultural commodity prices is generally weighing on farmer sentiment, too.
Just over half Australia's farmers expected the agricultural economy to worsen and their incomes to fall in the next 12 months while only 15pc planned to increase investment in their businesses, according to Rabobank's latest quarterly Rural Confidence Survey.
The slump in sentiment, to one of its lowest points in two decades, was particularly bad in NSW and Western Australia.
Victoria was the only state to be only slightly downbeat, but generally more positive than in the rest of the nation.
Cotton growers were the only commodity group where net confidence had bounced - up from minus 20 in June to 5pc this month.
Australia-wide, the proportion of farmers expecting the rural economy to worsen grew from 35pc to 51pc with only 10pc expecting an improvement.
A shrinking cohort of 37pc tipped the sector to remain relatively stable.
However, Rabobank said farmers appeared to be feeling less pressure from interest rates and the impact of movements in overseas markets.
In WA, where falling commodity prices consistently topped the list of concerns this quarter, government intervention and policies were the big worry for the half who expected their agricultural economy to worsen.
This (the planned live export ban) is weighing on the minds of sheep producers - not only those in WA,
- Marcel van Doremaele, Rabobank
Rabobank's Australian country banking group executive, Marcel van Doremaele, said this reflected the looming phase out of live sheep exports, which was a particularly sensitive issue for many farmers.
Although the proposed live-export ban attracted survey attention only in WA, softening sheep industry prices nationwide were compounded by the federal government's plans to for the industry.
"This is weighing on the minds of sheep producers - not only those in WA," Mr van Doremaele said.
He also noted "very different seasonal situations at play" in NSW, with central, western and northern areas very dry, while further south farmers had generally enjoyed good seasons.
Mix seasonal deal
Seasonally, Australian farmers had been dealt a mixed hand.
"While some winter rainfall dominant regions received beneficial falls to set them up for spring, other areas are grappling with the double-whammy of a dry start and a dry finish for crops," he said.
"The crucial spring period has many producers on a knife's edge, especially in regions where winter didn't deliver rain as hoped.
"It has certainly been a period of adjustment for our agricultural sector, as we come off historically high commodity prices, especially for the cattle and lamb sectors."
Nationally, growing concern about drought was nominated by a third of farmers as a key issue, and lower commodity prices were cited by 60pc.
However, of those with an optimistic outlook, expectations of rising commodity prices were a key driver for 61pc and 20pc of the optimists cited confidence in overseas markets as important.
Mr van Doremaele said the more upbeat producers reflected hopes the sector had weathered the worst of price cycles.
Sheep producers down
Sheepmeat producers had the lowest levels of sentiment, with 61pc of sheep producers expecting the farm economy to worsen (up from 40pc three months ago), concerned by falling commodity prices (71pc) and drought (21pc).
Beef sector confidence also fell from net minus 21pc to minus 37pc, however, the number of beef producers who believed the economy would improve lifted slightly to 13pc.
In the dairy industry confidence fell to minus 29pc with farmers' concerned about rising input costs and drought.
While competition for milk among processors had delivered strong prices locally, dairy farmers were also assessing the impact of industry events further afield, including questioning prospects for the heifer market into China and how Fonterra's reduced milk payouts in New Zealand could hurt our domestic market.
Overall, the survey of 1000 farmers found more producers looking to rein in investment plans.
Only 15pc expected to increase spending in their farm business in the coming year, although two thirds would maintain investment at existing levels.
"As budgets tighten, appetite for spending is naturally curtailed," Mr van Doremaele said.
"That's not to say there isn't still interest in strategic investment such as land expansion, however farmers are factoring in interest rates, softer commodity prices and the seasonal outlook before committing to investment projects."
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).
