Rabobank says WA farmer confidence highest in five years, fuelling strong investment

Strong agricultural commodity prices, an unexpectedly big grain crop last year and widespread rains in recent months have driven West Australian farmer confidence to a five year high.

Nine out of 10 farmers across WA say they expect business conditions to improve or remain similar to last year, according to the latest quarterly Rabobank Rural Confidence Survey, released today.

This optimistic outlook, along with low interest rates and capital gains, is driving near-record investment in the sector.

The survey, completed last month, found 40 per cent of the State’s farmers expect conditions in the agricultural economy to improve over the next 12 months — up from 26 per cent three months ago.

More than half expect similar conditions to last year and just six per cent expect a deterioration.

The survey also showed confidence was up strongly across most commodity sectors, particularly grains.

Rabobank regional manager for WA Steve Kelly said the ability of the grains sector to generate such good returns in the 2020 season — despite receiving below-average rainfall — demonstrated the strong productivity gains farmers had achieved.

“Getting such a big crop off without a lot of moisture really shows the uptake of new and improved technologies in terms of grain varieties, precision planting, harvesting capability, soil amelioration and spraying techniques,” he said.

“Coupled with wheat and canola prices in the top decile throughout the year, 2020 ended up being a really successful year for most growers.”

Recent March rains had also given farmers a boost for the year ahead, he said, with good subsoil moisture in hand.

Sheep and beef producers are also enjoying strong balance sheets which have been bolstered by record sheep, lamb and beef prices.

The number of sheep producers expecting conditions to improve in the coming year more than doubled to 40 per cent, while 35 per cent of beef producers were also optimistic about their prospects

“The sheep outlook remains positive,” Mr Kelly said. “With the lowest national flock size in decades, we saw record numbers of sheep heading east last year as their flock-rebuilding efforts continued.”

Mr Kelly said the wool price had lifted from last year’s low, which also buoyed confidence.

Meanwhile, beef prices continue to reach new heights “with prices for steers and heifers at levels never seen before”.

The survey found WA farmers’ investment intentions were now at the second-highest level in the survey’s 20-year history, reaching levels not seen since early 2008.

Mr Kelly said the combination of a strong 2020 and the prospect of another good year with above-average commodity prices was underpinning significant investment in the sector.

Rabobank said 38 per cent of surveyed WA farmers looked to increase investment in their business over the coming 12 months, up from 28 per cent in the previous survey. A further 58 per cent were intending to maintain investment at current levels.