Farmland buying, investment plans bullish despite ag's mood dipping

About a quarter of all farmers intend increasing their farm business investment in the next 12 months according to Australia-wide feedback from Rabobank's latest quarterly survey of confidence in the sector.

The September results also revealed about 25 per cent of those producers planned to invest in land.

In NSW spending intentions were much higher than the national average thanks to much improved seasonal prospects this year which spurred about 35pc of respondents to ramp up investment plans into 2021.

That's up from 31pc just a few months ago.

Although nationally the number of farmers foreseeing higher gross incomes in the coming year has slipped slightly, Rabobank's Australian chief executive officer Peter Knoblanche said rural property investment remained a stand out trend.

Farmer interest in buying extra property had tracked strongly for several quarters.

Continuing strength in the property market was an indicator of underlying confidence in Australian agriculture "beyond any present uncertainty".

"It's a sign of confidence in agriculture as an industry and it's being helped by very low interest rates, good seasons and in most sectors, good income prospects," he said.

"While the survey reveals farmers are growing more concerned about the impact of COVID-19 on the agricultural sector, intentions to grow their holdings and keep investing in their farm business are still very strong which is very encouraging."

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The confidence report, compiled from quarterly surveys of about 1000 farmers across a wide range of commodities and geographical areas, found 31pc expected higher gross earnings in the next 12 months.

Again, NSW farmers were the most optimistic, with 46pc expecting better seasonal conditions would revive earnings after several tough years of drought.

Around Australia almost 40pc believed farm incomes would stay the same.

With irrigation storages filling, cotton farmers were the most optimistic about income prospects, despite lower crop price trends.

Just over half expected earnings to lift after surviving a run of depleted water supply years and declining crop areas.

The cotton, beef, grain and dairy sectors rated as the most optimistic about agriculture's general economic prospects in the year ahead.

Cotton had the strongest investment appetite, with 46pc of farmers looking to lift spending in their businesses.

On-farm improvements and drought recovery measures were the focus of much of this planned spending boost.

Nationally, of those farmers planning to increase investment, 62pc were looking at fences or new sheds and silos, while 52pc earmarked spending on pasture improvements, fodder, crops and fertiliser.

Increasing livestock numbers was also a priority for 45pc.

Overall, the agribusiness bank found Australian agriculture's turnaround from drought in many regions was underpinning a general level of optimism across the industry.

However, it wasn't enough to stop farmers worrying about the market consequences of coronavirus and an uneasy atmosphere around overseas trade.

Although farm sentiment began the year near a five-year high it has drifted lower, with all states, except Queensland and Tasmania, recording some mood decline in the past few months.

Yet, while the number of farmers with upbeat expectations of the agricultural economy slipped notably since June to 24pc, a further 44pc expected business conditions to remain relatively unchanged.