Rural confidence has stabilised in Western Australia, but remains relatively weak, according to the latest results of the Rabobank Rural Confidence survey.
Rural confidence has stabilised in Western Australia, but remains relatively weak, according to the latest results of the Rabobank Rural Confidence survey.
Overall, 20 per cent of WA farmers expect the agricultural economy to improve in the next 12 months, compared to 19 per cent last quarter. And the number expecting conditions to deteriorate in the next 12 months also changed little - 27 per cent compared with 29 per cent last quarter.
Rabobank state manager for WA, Crawford Taylor said the continued weakness in confidence is not surprising given the various factors in play.
"While the summer rainfall in much of the agricultural area gave farmers a store of subsoil moisture, however, most farmers are now in need of rains to ensure a break to the season," Mr Taylor said.
"The continued increase in farm input costs continues to adversely affect farm confidence and make cropping programs more risky," he said.
Of the farmers expecting the agricultural economy to worsen in the next 12 months, 62 per cent said higher input costs were a major concern compared with 50 per cent last quarter. The potential for lower commodity prices also continues to be a key concern cited by 40 per cent of respondents compared with 46 per cent last quarter. Significantly, seasonal conditions were only mentioned by five per cent of respondents.
Mr Taylor said that confidence was weak among all industry sectors. "After improving last quarter, sentiment among sheep producers declined as a result of the volatility in wool prices and falls in prime lamb prices. Confidence remains weakest among grain producers, who suffer the greatest impact from the increases in input costs," he said.
Investment intentions also remained stable in this survey period, consistent with the stability in headline confidence. A total of 26 per cent intend to increase investment in their farm business over the next 12 months, unchanged from the previous quarter. And only 13 per cent expect lower investment in their farm business, compared to 11 per cent last quarter.
Income expectations improved further this quarter with 47 per cent expecting higher incomes in the next 12 months, compared with 34 per cent last quarter. Fewer farmers expect lower gross farm incomes - 15 per cent compared to 21 per cent last quarter.
The Rabobank Rural Confidence Survey is a quarterly monitor of outlook and sentiment in Australian rural industries. The only study of its type in Australia, it is conducted by an independent research organisation interviewing a panel of more than 2000 farmers throughout the country. The next results will be released in August 2006.
