Easing commodity prices, rising interest rates and concerns about a return of drought sent sentiment among Australian farmers to its lowest level in more than four years, according to Rabobank.
The Rural Confidence Survey conducted by the Agricultural Bank showed that only 11 percent of farmers expect the agricultural economy to improve over the next year compared to 15 percent in the previous quarter.
It is at its lowest level since late 2018.
Western Australia and Tasmania bucked the trend with the only states reporting an uptick in sentiment.
Sentiment also varied across the different commodity sectors. Meat and dairy producers were the most pessimistic.
A third of all farmers surveyed expect business conditions to worsen in the next 12 months, while half believe business will be as usual.
A major driver of negativity is lower commodity prices, with 68 percent believing conditions will get worse.
Interest rates are also a growing concern for one in five farmers.
Producers are also worried about the weather, with 13 percent of farmers worried about drought, while those worried about heavy rains dropped from 32 percent to six percent.
Rabobank Australia Chief Executive Officer Peter Noblelanche said the latest survey reflects a combination of commodity prices, global economic challenges and high production costs facing agribusinesses.
“Despite testing their resilience throughout 2022, most Australian farmers ended the past year on a high supported by seasonal conditions and higher commodity prices,” said Noblenche.
“However, as we see heat off many commodities – albeit low from great heights – farmers understand that conditions will start to return to ‘normal’ levels,” he said.
“This survey reflects their realistic expectation that commodity prices are unlikely to return to the high levels this year that we have seen in the past 12 months.”
Official figures show that the total value of Australian agricultural production is expected to reach a record high of $90 billion in 2022-23.
But this is expected to drop by ten percent to $81 billion for 2023-24.
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