Farmers believe 2021 is shaping up to be an “instrumental” year in the long-term prosperity of the Australian farming sector, as commodity prices and seasonal conditions buoy confidence across the country.

Despite a small fall from the previous quarter, Rabobank’s latest quarterly Rural Confidence Survey showed almost 90% of Australian farmers are expecting the “generally excellent” business conditions currently being experienced in the agricultural sector to either continue or improve over the year ahead.

Rabobank Australia CEO Peter Knoblanche said the latest survey results were a reflection of just how positive the current operating environment was for Australian agriculture, with an “ideal combination of positive seasonal, financial and commodity market factors”.

“There is certainly a view out there among many farmers that business conditions right now are excellent. Many would say it’s as good as it gets, and they can’t see how it could get any better,” he said.

“Strong prices for grain and terrific growing conditions in most regions have driven another near-record winter crop planting program across the country, with early estimates for a second-straight year of bumper tonnages of wheat, barley and canola when harvested at the end of the year.”

Commodity prices in the beef and lamb sectors are supporting producer confidence, with low supply and high demand for protein pushing prices to levels not seen before. Dairy confidence is also strong on the back of favourable milk price contracts and improved water allocations, while excellent seasonal conditions underpinned solid sentiment among cotton and grain producers.

Across all sectors, commodity prices were the primary driver of confidence this quarter, cited by 69% of farmers expecting conditions to improve. Seasonal conditions buoyed sentiment among 51% of farmers who had a positive outlook on the year ahead.

The survey’s farm viability index, measuring farmers’ assessments of their own business viability, edged higher again in the latest quarter to sit at a new record 20-year high.

Some 40% of farmers expect gross farm incomes in the next 12 months to increase, while 45 per cent expect similar incomes to last year.

Following a strong production year and with another on the horizon, many Australian farmers were making longer-term investment plans and putting money back into their own enterprises through equipment and infrastructure upgrades and – for almost a quarter looking to increase investment – property expansion.

About 34% expect to increase investment over the year ahead, while 60% will maintain business spending at current levels.

About 35% of farmers nationally are expecting conditions in the agricultural economy to improve over the year ahead. While this was down marginally on the March quarter, Knoblanche said this was “likely a reflection of the view among some that business conditions in agriculture are about as good as they get”.

A further 54% of respondents were expecting the current positive conditions to continue for the coming 12 months, while just 8% expected a deterioration.

While the current mouse plague was causing anxiety for farmers in affected areas, primarily in central western and northern New South Wales, it had not registered as a major concern in the survey. Only 5% of those expecting conditions to worsen cited this as the reason for their pessimism.

Knoblanche said 2021 was shaping up to be an instrumental year in the long-term prosperity of the Australian farming sector.

“For most farmers, we are seeing a second year of very good seasonal conditions, high to very high commodity prices, low interest rates and favourable infrastructure investment incentives from government.

“The benefit of another year like this for Australian farming shouldn’t be underestimated. This will allow many farmers to really consolidate their position after years of drought – to further reinvest in their businesses to make them more efficient and resilient, and to expand and grow their businesses for the future.”

Tasmania leads confidence

Confidence is strongest in Tasmania and New South Wales, where 45% and 44% of farmers respectively are tipping conditions to improve.

Farm confidence in Tasmania hit a six-year high, with dairy farmers upbeat on the back of good opening milk contracts and a great lead-in to winter, while a large boost to water allocations in NSW and the prospect of another big grain production year were sustaining high levels of farmer confidence.

In Victoria, record-breaking prices in the livestock and dairy sectors helped calm concerns about low rainfall in some regions and increasing difficulty in securing farm labour.

A dry run into winter for South Australia was having some impact on sentiment among the state’s farmers, which eased this quarter, but the state remains historically optimistic for this time of year.

Western Australia’s “best start in a decade” to the state’s winter cropping program was underpinning agricultural sector confidence.

Queensland rural confidence reached its fifth-highest level in the survey’s 20-year history. Sentiment was strong across all commodity sectors as improved seasonal conditions in many areas buoyed farmers’ spirits after years of drought.

Rabobank has forecast 22.93 million hectares of total crops will be planted this year – a 2% increase on last year and just shy of the record 2016/17 year.

This is contributing confidence among grains producers, with 57% expecting a year like last year and 34% an improvement. Cotton sector sentiment has surged with a good harvest underway and production all-but assured for the next couple of years thanks to a boost in water supplies. As a result, 86% of growers expect better conditions over the year ahead, a doubling from the 43% with that view three months ago.