A wetter than expected summer and the subsequent rebound in sheep and cattle prices has sent farm sector confidence surging back to levels not seen for nearly two years.
Almost a third of producers now expect their incomes to rise in 2024 and their spending intentions are climbing again, too, particularly for rural property, fencing and grain storage infrastructure.
Farmers ended 2023 increasingly worried about drought and El Nino weather patterns, depressed livestock markets, reduced incomes and high farm input costs.
Now, although autumn has been drying off in many areas, Rabobank's latest quarterly survey of rural confidence reported nearly a third (31 per cent) of producers felt the farm sector economy would improve this year.
That's more than double the 14pc with optimistic sentiment in December when confidence sank in every state.
Even concerns about lingering high interest rates had eased, although worries about rising farm input costs were up and unease about the stability and strength of overseas markets also increased.
Overall, Rabobank's net confidence index bounced dramatically, back in positive territory for the first time since June 2022, rising from -41pc to 15pc.
More farmers were now optimistic than pessimistic, with only 16pc anticipating the farm economy to worsen compared to 55pc just three months ago.
Victorian and NSW producers led the rebound largely in anticipation of favourable seasonal conditions and commodity prices, although Tasmanian and West Australian sentiment stayed in negative territory, dragged down by a dry summer and ongoing unease about commodity prices.
Victorian confidence jumped from a net -39pc to 21pc driven by optimistic sheep producers, while NSW had the biggest rise from -46pc to 20pc, despite some regions still needing good rain.
Summer rain was a key reason many Australian farmers had moved confidently into 2024, according to Rabobank's national country banking boss, Marcel van Doremaele.
Most farmers emerged relatively unscathed from what they anticipated would be a pretty dire summer
- Marcel van Doremaele. Rabobank
"Summer certainly presented some weather challenges, with four cyclones making landfall in the 2023-24 wet season, major storm damage and extreme heat and bushfires," he said.
"However, most farmers emerged relatively unscathed from what they anticipated would be a pretty dire summer, although there are still regions concerned about dry conditions."
He said while commodity prices remained well below the highs of 2022, the outlook was more positive with beef and sheep prices set to be above last year's lows when big livestock numbers were sold off and the dry outlook further depressed prices.
Markets were starting to reset.
Rising commodity prices topped the list of reasons farmers gave for their positive outlook with 58pc of those expecting the farm economy to improve pointing to higher markets, while 40pc nominated better seasonal prospects.
The latest survey of 1000 farmers, completed last month, found improved subsoil moisture in many cropping zones and a better feed base in regions meant drought had fallen away as a concern for those worried the ag economy would worsen - down to just 8pc compared with 45pc in December.
Investment plans
The positive outlooks have firmed up investment intentions with 21pc of farmers saying they were looking to spend more in their business this year (up from 15pc) and only 12pc cutting investment (down from 29pc).
"Farmers took a very conservative approach to spending last year, mindful of reduced incomes and the uncertain summer forecast," Mr van Doremaele said.
Now 61pc intended to lift investment in farm infrastructure and 34pc of those who planned to increase investment spending were looking at boosting livestock numbers.
Plans to invest in more labour also lifted from 14pc to 21pc.
However, new plant and machinery spending intentions were down (from 44pc to 35pc), as was appetite for irrigation and water infrastructure at 24pc.
Just over a quarter of survey respondents who planned more investment were looking at property, although that figure remained virtually unchanged from last year.
Rabobank said much of the mood uptick was attributable to red meat industries, with sheep sector net confidence bouncing from -45pc to 27pc and beef sentiment up from -40pc to 29pc after domestic re-stocker activity helped beef prices rise more than 50pc since October.
Grain growers were more tempered in their outlook, despite confidence lifting from -38pc to -15pc.
Concerns around falling commodity prices and rising input costs remained high among those who felt the economy would worsen.
"Although grain producers are likely to remain under pressure as a result of plentiful global and local supply, there's a silver lining as farm input prices for fertilisers and plant protection products are forecast to be below last season," Mr van Doremaele said.
Cotton grower sentiment just crept into positive territory helped by firmer prices and the availability and affordability of water.
Confidence among dairy farmers lifted from net -42pc to -7pc as dairy margins looked set to benefit from ongoing domestic farmgate price strength.
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).
