SA farmers more confident after May rains

The survey showed overall net rural confidence in the state had continued to edge marginally higher across the past quarter, despite parts of SA having their driest start to the season in more than 100 years.

A total of 29 per cent of SA farmers surveyed reported a positive outlook on the 12 months ahead, just slightly up on the 27pc with that view in the previous quarter.

The survey, completed last month, also found 43pc of SA producers were anticipating similar prospects to last year while the number of farmers concerned about a deteriorating agricultural economy remained steady at 22pc.

Rabobank SA regional manager Roger Matthews said recent follow up rains would have vindicated farmer optimism and likely bolstered confidence further.

While sentiment across the state remained in positive territory in the survey - with more farmers having an optimistic than pessimistic outlook - there was significant variance across the regions.

The South East region was the most optimistic, with 37pc of farmers reporting a positive view of the coming 12 months and only 20pc holding concerns that the year would worsen.

Mr Matthews said while rainfall had been patchy in other parts of the state through autumn, the SE had been enjoying an excellent season.

"The SE had a sensational year last year and the start of the growing season in 2019 has again been good," he said.

"The lower Eyre Peninsula has also had considerable rain, to the point of hampering sowing efforts.

"While across the Mallee, the year has been less than stellar so far and, while many would have sown much of their program, crops are still emerging."

At the time the survey was taken, Mr Matthews said many growers on the Yorke Peninsula were still waiting on the break that came through in May.

"This has been reflected in their confidence levels being down a little in the survey," he said.

The YP held the most negative sentiment of the regions surveyed, with only 20pc of growers reporting a positive outlook and 25pc concerned agricultural economic conditions would deteriorate.

Across the state, concerns about drought were the key factor driving pessimism among farmers - cited by 74pc of those who had a pessimistic outlook - while falling commodity prices were also nominated by 37pc.

But on the flipside, commodity prices were also giving cause for optimism, with improving prices cited by 64pc of SA farmers with a positive view on the year ahead.

"We saw the SA vealer steer price rise in early May as rainfall meant more producers were holding on to younger cattle, restricting supply," Mr Matthews said.

"But the price eased through May and is likely to remain steady until enough rainfall spurs graziers to more actively engage in restocking.

"For sheep, we are seeing lamb prices continue to climb, with prices at the highest levels seen for this time of year.

"The limited supply, strong export market and our depreciating dollar has supported our research team's forecast for sheepmeat prices continuing to rise at least to the peaks seen last year."

The ongoing strength of the sheepmeat market has been reflected in the investment intentions of SA sheep producers.

The percentage of sheep producers seeking to increase their level of investment remained strong this quarter with 35pc continuing to hold this view - in line with last quarter's result.

This is significantly higher than the state average, with 19pc of SA farmers, overall, reporting that they had plans to increase investment in their farm businesses.

That said, 67pc of the state's farmers still intended to maintain the current level of investment in their businesses over the next 12 months, with 15pc of those surveyed intending to wind back their level of investment (up from 8pc in the previous quarter).

Mr Matthews said upgrading facilities within the farmgate was a key focus for producers this quarter.

"The survey found of the farmers looking to increase their investment, 68pc were interested in upgrading on-farm infrastructure," he said.

This quarter, the survey also questioned farmers about their uptake and use of sensor technology - such as drones, moisture probes, yield mapping, electronic identification and auto drafting. This topic was last asked about in the survey in June 2017.

Mr Matthews said although the use of sensor technologies remained reasonably low at 24pc (similar to usage levels among SA farmers in June 2017), the application of its input into business decisions had increased this quarter.

"We're seeing technology such as drones, moisture probes and yield mapping being more fully adopted rather than just dabbled with," Mr Matthews said.

"For many producers, they may have adopted a lot of these practices a few years ago but the return on investment is only just starting to kick in."

The survey found 63pc of farmers who had sensor technology in place were using it to support decision making (from 59pc in June 2017) and 32pc (in line with two years ago) had found the sensor data-based decisions had increased profitability.

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 and is a comprehensive monitor of outlook and sentiment in Australian rural industries.