Government policies, drier seasonal prospects and overseas market uncertainty are keeping a lid on farmer expectations for the new financial year.
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Although rising interest rates do not yet rank as a big fear, fewer farmers plan to buy property or increase their spending on livestock or farm infrastructure, according to Rabobank.
Only 17 per cent anticipated their incomes would rise in 2023-24, and 41pc expected a fall.
The big agribusiness lender's latest quarterly check on rural confidence around Australia found while the sector's mood improved marginally on the back of easing worries about farm commodity prices and input costs, it remained firmly in negative territory overall.
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Rabobank's survey of 1000 producers showed confidence sitting at minus 22 per cent after slumping early in the 2022-23 financial year to minus 25pc by March - its lowest point since late 2018.
Much of the latest uptick was attributed to a surge of Queensland optimism, although confidence in that state was still at minus 13pc.
"We can't credit the improvement to just winning the State of Origin opener - seasonal conditions and commodity prices are the real drivers of the optimistic outlook in Queensland," said Rabobank's Australian country banking group executive, Marcel van Doremaele.
Those factors also helped the mood slightly in Victoria, but sentiment remained tempered elsewhere and even dropped significantly in Tasmania and Western Australia.
Expectations steady
In general, about half of Australian farmers foresaw no change to how the agricultural economy would perform in the next year, although the number anticipating improved conditions grew slightly from 11pc to 13pc in the past few months.
About a third of farmers tipped conditions to worsen.
Falling commodity prices ranked as a continuing worry for 56pc of those who felt the sector's prospects would deteriorate and 29pc were concerned by rising input costs, but both those fears were less obvious than last quarter.
In fact, two thirds nominated rising commodity prices as a driver for their confidence.
Seasonally, they're still experiencing a mixed bag on a national level, which also drives a conservative outlook
- Marcel van Doremaele, Rabobank
However, more farmers were now concerned about government intervention, with the number citing government policies as a reason for apprehension now at 18pc.
Mr van Doremaele said seasonal confidence had shrunk with only a third citing it as a reason for optimism and talk of El Nino weather patterns tempering confidence.
"Seasonally, they're still experiencing a mixed bag on a national level, which also drives a conservative outlook," he said.
Notably, the 42pc of grain growers who were pessimistic about their prospects nominated a dry start to the season as a key reason.
Sugar, beef revive
The sugar industry was the only sector where confidence moved back into the black, climbing from minus 28pc to 22pc in the space of three months, while beef sector confidence also improved slightly to minus 21pc.
Overall beef producers were most concerned about government interventions, rising interest rates and drought, while worries about falling commodity prices and input costs were slightly fewer.
Dairy producers were more upbeat than last quarter with their confidence levels lifting from minus 22pc to minus 15.
Confidence fell within the grains industry, to minus 25 per cent, on the back of concerns about drought, falling commodity prices, rising input costs and rising interest rates.
About 40pc of all producers expected the agricultural economy to worsen, up from 35pc in March, with their main concerns being around rising input costs and overseas markets and economies.
Nationally, the number of farmers planning to increase their investment activity in the next 12 months dipped to 21pc, although infrastructure such as fences, silos and yards remained at the top of their shopping lists.
Investment rethink
"Farmers are realigning their investment intentions to focus on projects that will deliver essential productivity gains, including labour saving infrastructure and technologies," Mr van Doremaele said.
Fewer (21pc) nominated expanded property purchase plans, while those intending to increase livestock numbers also declined from 41pc to 32pc.
Concerns around interest rates remained stable, with slightly more farmers (16pc) actually shunning the wider community's rate rise anxiety.
They planned to increase their total farm debt in 2023-24 to cover working capital costs and capital expenditure.
Just 17pc expected to borrow to buy farmland, mostly in Queensland.
"While we're still seeing strong demand for rural properties - especially well presented, 'blue chip' offerings - overall there's a decrease in the number of farmers intending to buy new farming land in the next 12 months," Mr van Doremaele said.
"This reflects how our industry is reassessing where key factors such as markets, input costs, and of course, interest rates, have landed following recent adjustments.
"Farmers are taking a hard look at what this means to their bottom line."
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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).
