The March quarter survey shows Victorian farmer confidence slipped into negative territory for the first time since late 2024, driven largely by persistently high costs for fuel, fertiliser, energy and labour.
While the survey was completed before the latest Middle East conflict escalated, Rabobank says global uncertainty is adding further pressure through input price volatility.
Rabobank’s state manager for Victoria, Sally Bull, said the added pressure of the conflict had compounded the existing issues.
“Even without the knock-on impacts of the Iran war, structural changes had unfortunately already been making high input costs a permanent factor Victorian farmers have to manage,” Ms Bull said.
“Machinery, fuel, energy, fertilisers, crop protection chemicals, labour and water costs have all been elevated, and this is weighing on farmers’ minds.”
Northern Victoria’s dairy sector is among the most negatively affected groups in the survey, with dairy confidence sitting at -29 per cent, a fall of 51 per cent from the last quarter.
Forty-one per cent of dairy farmers expect conditions to worsen, with 47 per cent reporting input costs as their most dominant concern.
Dry summer conditions and softened milk prices were also common concerns.
Ms Bull said dairy farmers had to make tough management decisions over the summer, with many choosing to purchase feed rather than using their water allocations to grow it.
“Water for irrigation is expensive, and farmers are considering if they use their water allocation or buy in grain to feed their stock and sell their water.”
Grain growers across the Mallee and northern cropping zones also reported weaker confidence, with survey results slipping as low as -22 per cent, on the back of soft global prices and oversupply.
However, there is cautious optimism on the seasonal outlook following late-summer rain that arrived after the survey was completed.
In parts of northern and north-west Victoria, growers are reporting some of the best autumn starting conditions in decades, with soil moisture profiles restored and winter cropping programs getting under way more easily than expected after a difficult summer.
The impacts of the strong autumn come post-survey and are not reflected in the results.
Despite the seasonal lift, Rabobank says price uncertainty continues to limit confidence, with many growers waiting on follow-up rainfall and stronger market signals before making major decisions.
Across Victoria, investment intentions have eased as farmers adopt a more cautious approach.
Only 25 per cent of farmers plan to increase investment this quarter, with 64 per cent opting to hold expenditure steady.
On-farm infrastructure remains the top investment priority, at 71 per cent, while spending on irrigation and water infrastructure has increased to 27 per cent as producers look to build resilience against future dry periods.
Rabobank says while confidence has fallen across all regions of the state, Victorian farmers remain relatively well positioned compared to other parts of the country, supported by generally solid seasonal prospects and long-term demand for agricultural commodities.
However, for many in northern Victoria, the message is clear: managing costs, water and risk will be critical in the year ahead.
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