NSW farmers are the country's most optimistic, according to Rabobank's latest Rural Confidence Survey.
Despite growing concerns about commodity prices and market instability, the sentiment of NSW farmers is still trending at its highest level since the 2016-17 season.
According to Rabobank Australia chief executive Peter Knoblanche, cropping prospects have boosted optimism in the state, spurred on by regular and well-timed rain, which saw the largest planting of winter crop hectares in four years, indicating excellent yield potential.
“New South Wales beef producers also expressed a very positive sentiment, driven by record prices and continuing demand,” he said.
While Victorian farmers were upbeat about the current season and spring, the fallout of the coronavirus pandemic was also weighing more heavily on producers than it had in the previous quarter.
“The fallout from the second Victorian lockdown and the restrictions on livestock processing had only just been surfacing at the time the survey was undertaken,” Mr Knoblanche said.
“So while this factor may have influenced some responses, it would not have been fully reflected in this quarter's results.”
The survey showed only 16 per cent of Victorian farmers were expecting prospects to improve in the coming year, compared with 26 per cent who held that view in June.
Meanwhile, one third of the state's farmers were expecting conditions in the agricultural economy to worsen.
The concerns NSW farmers had about commodity prices and market instability were common right across the nation, as was the impact of COVID-19.
The latest survey, completed last month, found 24 per cent of the nation's farmers expected conditions in the agricultural economy to improve over the coming year, compared with 33 per cent with that outlook in the previous quarter.
However, the number of farmers with a pessimistic outlook on the year ahead stood at 27 per cent (up from 23 per cent last quarter), while 44 per cent expect business conditions to remain relatively unchanged.
Beef, grain, cotton and dairy farmers are the most optimistic about the year ahead, but not all for the same reasons.
While price uncertainty is concerning grain and cotton farmers, the return to more normal production levels following drought and good harvest forecasts is supporting confidence in those sectors.
Meanwhile, strong commodity prices for beef and farm-gate milk prices for dairy and forecasts of a positive spring season are bolstering sentiment.
However, farm sentiment has deteriorated further among sheep producers, nearly all due to market uncertainty.
“For many farmers, this spring will be the season that allows them to consolidate their business position and start to ‘catch up’ after years of drought,” Mr Knoblanche said.
“The crops are looking good and livestock numbers are rebuilding.
“So that is all positive news for farmers on the home front.
“But concerns about the impact of COVID-19 on trade, on consumer sentiment and what that means for markets is definitely worrying many.”