Confidence cops a hit

FALLING commodity prices and seasonal uncertainty have caused a big drop in farmer confidence across Tasmania.

Results from the latest Rabo-bank Rural Confidence Survey show sentiment across the state has fallen for the second quarter in a row. Tasmanian confidence fell to -44 per cent, down from While the proportion of Tas-manian farmers expecting the agricultural economy to im-prove over the next 12 months remains steady,  51 per cent expect conditions to worsen, up from 36 per cent last quarter.

Once again, commodity prices were the driving factor for negativity although fewer nominated this as a reason for conditions to worsen, compared with the previous quarter.

However, there was increas-ing worry about drought with 19 per cent nominating it as a concern, up from 6 per cent.

Rabobank area manager for Tasmania, Stuart Whatling, said while there was a long-term trend of farmer confidence dip-ping at this time of year due to seasonal uncertainty, this year it was compounded by price pain.

“The continued downward trend of red meat prices,  com-ing off historical highs, is the driving factor for lowered rural confidence in Tasmania,” Mr Whatling said.

“The red meat industry has also been hit by a double whammy of reduced prices hand in hand with increased interest rates and input costs. When you factor in the time of year, with spring lambing upon us and concerns about a dry spring and summer – especial-ly in the South and on the East Coast – it’s contributing to de-creased confidence levels.”

Although concerns around falling commodity prices were highest for sheep and beef pro-ducers, they also remained top of mind for dairy producers.

“In the dairy sector, although farm-gate milk prices remain at a profitable level thanks to do-mestic demand, we’re seeing some factors impacting confi-dence,” he said.

Mr Whatling said these in-cluded the decline of the Chi-nese dairy heifer market and Fonterra’s recent downgrade for New Zealand production.

He said risk factors for Tas-manian dairy could include However, he said the state’s main milk-producing regions had a wet, warmer winter so soil temperatures were good leading into spring.

“If we do shift into an El Niño pattern, this could actual-ly bring more rain for the West Coast where the dairy industry is concentrated, although con-versely this means drier condi-tions elsewhere in the state.”

Half of Tasmanian farmers expect their income to decrease over the next 12 months, up from 38 per cent the previous quarter.

so, 79 per cent of Tasmanian respondents view their business as viable, up from 74 per cent.

Mr Whatling said this could be due to the impact of recent investments such as irrigation and water infrastructure.

Investment intentions also  took a hit with the proportion expecting to lift investment in their farm business down to 16 per cent from 32 per cent.

Investment is directed to-wards on-farm infrastructure, new technologies, property pur-chases and labour.