Confidence improves

By Geoff Adams

Autumn rain appears to have lifted farmer sentiment in the Goulburn Murray region and across Victoria, according to the latest Rabobank Rural Confidence Survey.

The early-season promise, provided by widespread rains in early May and good follow-up falls since, has seen grain grower confidence outstrip the other surveyed commodity sectors in the state.

But it was the state’s dairy sector which saw the biggest lift in confidence, albeit from low levels, signalling early signs of a recovery in dairy farmer sentiment.

The latest survey, released this week, found close to a third of Victorian farmers (31 per cent) had a positive outlook on the agricultural economy over the coming 12 months — up from 23 per cent with that view in the previous quarter.

And of those with an optimistic outlook, 64 per cent cited seasonal conditions as a key reason conditions were likely to improve, while commodity prices were nominated by 37 per cent.

That said, there are still a greater number of farmers in the state (at 39 per cent) holding the view that conditions are likely to remain similar to last year, while a further 22 per cent expect them to worsen.

Rabobank’s Southern Victoria and Tasmania regional manager Hamish McAlpin said there was a lot of anxiousness leading up to what was a late autumn break, but widespread falls in early May had started to turn the season around, with follow-up rain received since. But he said it remained very dry in east Gippsland, although rain was received in the far east of the region, with farmers battling drought conditions for the past two years.

Mr McAlpin said despite the good start for many across the state, spring rainfall would be critical, with soil moisture levels remaining low at depth following ‘‘the extended dry’’ in many parts of the state.

‘‘With the Wimmera and Mallee receiving virtually no summer rainfall, follow-up falls will be needed to deliver solid yields,’’ he said. ‘‘But it is certainly a good start to the season, with crops starting to emerge well.’’

The heaviest of the falls, he said, were north of the Great Dividing Range, particularly in the upper north-east regions around Corryong and the Kiewa Valley.

‘‘This has seen the catchments for the Murray and Goulburn systems start to wet up and has alleviated the need for temporary water — which spiked around $640/Ml a few weeks ago and is now trading around $550/Ml — but many rain events will be needed to fill the catchments,’’ Mr McAlpin said.

By region, the biggest lift in confidence (although from a low base) was reported in the Goulburn Murray region, with 58 per cent of surveyed farmers there expecting conditions to improve (up from 28 per cent in the March quarter).

Mr McAlpin said this improvement in sentiment had also been driven by the region’s dairy producers, with ‘‘competition for milk intensifying as processors try and cover supply shortages out of an already depleted milk pool.’’

‘‘And it is this competition, together with stronger global fundamentals, that has driven expectations for full-year prices in the 2019-20 season to close at record high levels, with some dairy producers locking in multi-year contracts at elevated prices,’’ he said.

Mr McAlpin said while there was good evidence of a stronger milk price next season, headwinds remained in the form of high feed and water costs. And this was reflected in the survey, he said, with 36 per cent of dairy respondents expecting their prospects to improve (up from 18 per cent), but 33 per cent expecting a similar outcome to last year, and 30 per cent believing conditions could worsen.

Across other commodity sectors, the survey found grain growers to be the most positive about the coming 12 months, while sentiment improved among beef and sheep graziers.

Mr McAlpin said while the autumn break had come late, some farmers had been able to get a feed wedge before winter.

‘‘Pasture growth has also been helped by the mild weather we experienced before it turned cold in late May, although the feed wedge is not as big as usual,’’ he said.

‘‘But it remains desperately dry in east Gippsland, with much of the region looking for significant rain through winter and spring to bring much-needed relief.’’