SA farmer confidence is at its lowest this year, with the hot, dry finish to the cropping season impacting harvest yields, according to the latest Rabobank’s Rural Confidence Survey.
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Despite a positive outlook from beef and sheep sectors, the survey – completed last month – found just 21 per cent of the state's producers had an optimistic outlook for the 12 months ahead - down from 40pc in the previous survey.
About 22pc expected conditions to deteriorate - up from just 9pc previously – while 48pc expected conditions to remain the same.
Longer-term confidence remained sound, with farmers retaining investment intentions and expressing a strong appetite for training and education – with 40pc of farmers looking to upskill over the coming year.
Rabobank SA state manager James Robinson said the crops, which had looked so promising up until late September, had been "knocked around by the unseasonably hot weather, as well as the limited rainfall during spring".
He said the recent devastating bushfires in agricultural areas north of Adelaide had brought home the severity of the current seasonal conditions.
However, despite the hot, dry spring, SA’s harvest was anticipated to be roughly in line with the five-year average, he said.
“Crops are faring well in the eastern Eyre Peninsula, but the lack of subsoil moisture has seen farmers in the South East cut their crops for hay or silage,” he said.
There are also concerns about the quality of this year's crop on the back of recent storm activity which "dumped up to 150 millimetres in some areas", Mr Robinson said.
“While it is too early to assess the damage, it appears that the impact hasn’t been too severe, although we may see more feed wheat in the market as a result,” he said.
Mr Robinson said farmers were bracing themselves for a hot, dry summer, which was the ‘norm’ for this time of year, but could potentially be exacerbated by the prevailing severe El Nino weather pattern.
"This is reflected in the survey results, with 79pc of those expecting conditions to worsen citing concern about seasonal conditions," he said.
On the flipside, farmers who had an optimistic outlook were buoyed by commodity prices, reported as the key driver of positive sentiment by the 55pc of respondents expecting conditions to improve – particularly beef and sheep producers.
“Livestock prices continue to hold up well, which has helped those producers who have been offloading stock earlier than usual because of the dry conditions,” he said.
Mr Robinson said grain prices remained under pressure however, with the “world awash with wheat” and little upside given subdued global demand.
In line with overall confidence levels, farmers also revised down their farm income expectations, with 31pc expecting a weaker financial performance in the next 12 months (up from 16pc previously). Those expecting a stronger result fell to 22pc (down from 35pc), with 43pc expecting a similar gross farm income to last year.
The survey revealed that longer-term confidence remained sound however, with 29pc of farmers this quarter (up from 16pc) looking to increase investment in their farm business in the coming 12 months, while a further 58pc were looking to maintain it.
Mr Robinson said while farmers had the appetite to increase their scale, they were more likely to “buy the block next door, rather than look at a place further away” so they could utilise their current management structures and infrastructure.
A comprehensive monitor of outlook and sentiment in Australian rural industries, the Rabobank Rural Confidence Survey questions an average of 1000 primary producers across a wide range of commodities and geographical areas throughout Australia on a quarterly basis.
The next results are due March 2016.
